1. Joining the gig economy. Gig workers need immediate and affordable health insurance coverage if they are to be successful. Short-term medical insurance can start in just 24 hours and costs about 50 percent less than traditional health insurance.
2. Stuck in employer waiting period. Many employers have a 90-day waiting period before health insurance benefits begin. A temporary short-term health plan helps bridge the gap for workers who are between jobs or stuck in a new employee waiting period.
3. Moving to new state. Insurance certificates for an ACA plan in one state are no longer valid when someone moves to another state. Enrolling in a new plan can take time, and the deductible starts over. Short-term medical plans with a lower deductible can serve as a temporary solution to provide immediate coverage for an unexpected illness or accident that occurs.
4. College students. Even though the ACA allows for children to stay on their parent’s health insurance plan until the age of 26, not all insurance companies will cover students attending college out of state. It could also be less expensive to remove a student from a parent’s policy and enroll in a short-term health plan.
5. “Aging off” parents’ insurance plan. Low-cost short-term health insurance can be a good option for individuals turning 27 who do not have access to employer coverage or need a more affordable option. This is especially important for those who age off of their parent’s plan later in the year -- a short-term plan can be an excellent bridge of coverage to January 1.
6. Early retirees. Those retiring before they are 65 do not yet qualify for Medicare, but many may have too much household income to qualify for an ACA subsidy. Those “budget-conscious, not-quite-yet-senior-citizens” can find a new option through short-term medical.
7. Freedom from doctor network. In 2017 1.9 million individuals who enrolled in an ACA plan only had one insurance carrier to choose from, often with restricted provider networks. Short-term health plans typically have no doctor network, meaning that all providers are accepted, giving policyholders the ability to see any physician or facility without the worry of staying in-network.
8. Divorce. Roughly 115,000 women lose their health insurance in the months following divorce, according to a study conducted by University of Michigan researchers published in the Journal of Health and Social Behavior. A short-term health plan can be purchased for a minimum of 30 days or for multiple months, depending on how long someone going through a divorce needs to get back on their feet.
9. Too rich for Medicaid, too poor for subsidies. Across the U.S., 2.4 million people don’t make enough to qualify for a tax credit to purchase health insurance on the ACA exchange, yet make too much money to qualify for Medicaid benefits. This group of “coverage gap” individuals could benefit from low-cost short-term insurance.
10. COBRA. When an individual enrolls in COBRA, they must pay the entire insurance premium plus a 2 percent administrative fee. Many would be better off purchasing a short-term health plan and saving their extra dollars while they job hunt. Additionally, those who had been employed by firms with less than 20 employees are not eligible for COBRA.
“An Affordable Care Act plan is a fine solution for individuals and families who qualify for financial subsidies to lower their health insurance costs,” Smedsrud says. “But for the eight million Americans who don’t qualify for an ACA plan subsidy and for those in a variety of life events, they should know there are other affordable options.”
Short-term medical plans currently are restricted to 90 days of coverage, but the Department of Health and Human Services is accepting comments about a proposal to extend coverage up to 364 days. Smedsrud emphasizes that such plans are not for everyone, but can cover special circumstances.
Short-term plans generally do not cover pre-existing conditions, can deny coverage to individuals with chronic health conditions, have leaner benefits than ACA plans and are not considered qualified health benefits for purposes of premium subsidies based on income.
“When life throws a curveball, short term health plans can be a low-cost insurance solution while covering doctor office visits, hospitalization and more,” Smedsrud says. “It is not for everyone nor should it be considered a permanent plan. But there are millions who need temporary coverage because there are lots of curveballs in this turbulent time.”