A temporary health insurance is a type of insurance that fills the gap between two insurances, it is usually required when you are going through a transition. This transition could be as a college graduate, changing jobs, and early retirees. The term of the temporary health insurance does not last long. Till April 1, 2017, an individual was allowed to take the insurance only for a three-month term. The rule is suggested to change by July of this year; once the change is executed, the temporary insurance term will be longer than three months. It will be available for a maximum period of 11 months (not more than 364 days). The states, however, are permitted to change this period and levy their own rules. The temporary or short-term insurance is not available in states like New York, Massachusetts, Rhode Island, and Vermont. Read along to find out more about temporary health insurance.
Limitations of temporary health insurance plans
The temporary health insurance plans are different from the metal plans that are available for long-term insurance plans. They do not have to meet the standards set by the Affordable Care Act (ACA). In order to adhere to the ACA standards, the insurance must cover at least 60% of the medical costs as well as cut the out-of-pocket expenses. The metal plans need to cover the 10 essential health benefits including the preventive, wellness services, and maternal care. As for short-term insurance plans, the insurers can limit them to the following:
- Deny you the coverage because you have an existing health condition
- They can exclude the health benefits that are deemed essential under the healthcare reform, including substance abuse treatment or mental health services.
- They can also charge you deductibles above the out-of-pocket levels for metal plans.
- Deny a renewal for your services at the end of the term.
The temporary health care insurance is sold to a customer directly through brokers or websites; it is only sold by insurance companies. No government subsidy can help you in purchasing a temporary insurance, neither can the government exchanges sell them.
Coverage of temporary health insurance plans
UnitedHealthcare, Blue Cross and Blue Shield, and Agile Health are some of the private insurance companies that offer temporary health insurance plans. These plans are not constant like the metal plans they can vary extensively on the basis of coverage, deductibles, and the dollar caps on the coverage. Just like the long-term insurance plans, even these plans have networks of medical providers. Similarly, you will be paying an extra amount if you are working with out-of-network medical providers and hospitals.
Let us look at the details of the UnitedHealthcare temporary insurance plans:
The short-term health care plans by UnitedHealthcare are under the name UnitedHealthOne. They have a wide choice of deductibles that range from $1000 to $10,000. The least expensive plan out of the ones offered will cover the doctor visits for injury and illness, mammograms, x-ray and lab work, pap smears and PSA screening, emergency room visits, and hospitalization. Once the deductible is taken away the insurance company pays for 50 percent of the amount due. The plan, however, does not cover the outpatient prescription drugs, mental health services or preventive care, and it caps lifetime benefits to $250,000. On the other hand, the most expensive plan pays for 80 percent of the amount after the deductible is taken away. It includes the prescription drug as well as the mental health coverage. It caps the lifetime benefits at around $1.5 million.
These plans have a much lower premium amount as compared to the metal plans.
Low premiums, less coverage
According to a company that calculates and compares the health insurance benefit plans, the average cost of a three-month temporary insurance plan for a 30-year old would be around $79 a month. While the least expensive bronze plan found by the website was approximately priced at $311 a month without any subsidies. The temporary plans usually appeal to people that want to secure themselves from the catastrophic events and pay a lower premium while enjoying lesser benefits on regular medical expenses. For most people who take the temporary health insurance, it is induced by their economic situation and the circumstances. If they are not doing well financially, they can still afford a penalty levied on the temporary insurance as compared to the metal insurance. As the metal insurances have a bigger coverage and a higher premium, it is inconvenient to pay a large amount and the penalty is also similarly higher. As for the temporary health insurance, the premium is low and so is the penalty for delayed payment of the premiums.
However, it is important for people to understand that the short-term insurance plans are not made to be full-time insurance cover providers. They are for individuals who are in a transition phase and do not have any other option but to adopt it.