What Are Short-Term Medical Insurance Plans?

Short term medical plans are the easiest type of health insurance plan to purchase. Designed to keep for a few months (sometimes longer), they're cheap policies that will fill in any gaps you have in coverage. By avoiding a 62-day lapse in coverage, pre-existing can often be covered under a more permanent policy that may be applied for at a later date.

When you apply for a temporary health insurance policy, like other types of coverage, often you can do the purchasing online through a reputable website. The process should only take a few days or less, and the number of medical questions is substantially fewer than health care plans that are designed for the long haul. You can expect about 4-7 medically-related questions along with the obvious informational questions such as date of birth, zip code and type of plan desired.

However, although contracts are approved quickly and it takes about a half-hour to complete the paperwork, you must answer ALL of the questions "no" or there is a high probability that you will be denied. One of the unique features of this type of coverage is the requirement to answer all of the questions (not just most) to the satisfaction of underwriting. Also, if you have been previously denied coverage, you probably will not be able to purchase a short-term medical plan. Dependent medical insurance, however, is on average, issued and approved quicker, since there are very few health concerns.

Since policies are approved so quickly, it is not unusual for a health insurer to approve a policy with an effective date the next day. In some instances, contracts are approved instantaneously, based on the answers provided from the application. Billing can be monthly or for the entire duration of the plan. A discounted rate is usually offered if the full policy payment is made.

How do you shop for a temporary medical plan? Of course cost is going to be a major factor. The reliability of the carrier must be considered. For example, UnitedHealthcare has very competitive short-term health insurance rates and they always should be in the mix. Humana and Blue Cross will also offer low cost plans and their rates should be looked at.

Just as importantly are the types of benefits the plan offers. For example, is there a single deductible for the entire term of coverage or do you pay a separate deductible each time you have a claim? Is there coinsurance and what is the maximum out of pocket expense? Can the policy be renewed and for how long? An experienced broker can review what impact these points have on your short term policy.

The "single deductible" option will be slightly more expensive, but it could be a huge money-saver. For example, if during a six-month policy term you have three separate $20,000 claims, you would pay just one deductible. However, without this option, you would be responsible for paying three separate deductibles, a huge increase in your out of pocket costs.

One of the biggest differences in short term and long term health insurance are the policy costs. Usually, temporary plans are significantly less expensive (approximately 50%) than a comprehensive long term policy. An exception would be the short term plans that include office visit coverage that is not subject to a deductible.

A major change in medical conditions will not impact the benefits paid on a long-term plan. the policy can be renewed to age 65 without risk of cancellation because of a change in health. However, a short-term plan must be renewed and a new application submitted every anniversary date. So it is possible that a policy will not be renewed because of specific health issues.

Although applying for both types of coverage do not require a physical, the underwriting process is different. A short term application will take about 20-30 minutes to complete and submit online. It's not unusual for the contract to be approved within 12-18 hours...and sometimes within one hour! Physicals are not part of the underwriting process and occasionally, the policy is approved instantaneously.

A long-term plan will require an application with more in-depth medical questions. Instead of a half-dozen questions, there are likely to be 30-60 questions. And sometimes more. If you are taking current medications, you will be asked to provide details regarding the dosage, the effect the medication has on your condition, and of course how long you have been taking it. It is also possible that conditions that are no longer present (but once were) will impact the rate you pay.

Having previous health condition issues don't necessarily mean that you will be declined or charged a higher rate. The concern of the US health insurer is the reemergence of that issue and what type of treatment will be needed. In most cases, it will not impact rates, such as a knee surgery two years ago or the removal of a gall bladder. But each situation is different and an underwriter has the final decision.

Any recent surgeries will be closely looked at. The underwriter will want to verify that you are no longer under doctor's care, are not in rehab and have completely recovered. For example, if you had knee surgery two months ago and have one more follow-up visit to make sure the knee is properly healed, you should wait until AFTER that visit before applying for a policy.

However, there is a provision of more permanent policies that many consumers are not aware of. When you purchase a medical insurance policy and intend to keep it for many years, you can still cancel coverage at any time. If you were able to secure group benefits three weeks after purchasing your private coverage, you can still cancel the policy. Each insurer understands that while that was not your original intent, sometimes circumstances change quickly.

Even though temporary health care rates are very inexpensive, sometimes it's hard to make a blanket statement regarding which company has the best rates. The reason is that rates not only vary from one state to another, but they also can be different in two counties next to each other. And since there are often multiple zip codes in the same county, there can be more than one premium for one county!

Since a higher deductible will typically provide a lower cost, the temporary plans with the highest out of pocket expense will charge the least. For example, UnitedHealthcare, one of the largest and most respected insurers, offers a $5000 deductible short-term plan in most states. Premiums, as you might expect, are very low for single person policies. If the insured is under age 40, premiums are extremely affordable for just about everyone.

Many Blue Cross and/or Blue Cross Blue Shield plans also offer multiple deductible options on short-term plans. Available in virtually all states, BC/BS is one of the most recognized and popular options for health care coverage in the US. Although they do offer higher deductibles (such as $2,500), they are one of the few carriers that offers low $250 deductibles in some states. Although you will pay far less if you actually use the coverage, a deductible around $250 will tend to be the most expensive. However, it probably will still cost less than a suitable copay plan.

Assurant is a national carrier that sells policies that are designed to be kept for short periods of time. Their 0% coinsurance option with a higher deductible may be one of their most competitive options. Assurant (part of Time Insurance) is available in most states and offers other forms of plans including a lower benefit plan with less stringent underwriting guidelines.

One important factor to keep in mind is that almost every available policy from the major companies does not have a stipulation that you have to keep it in force a minimum period of time. So, if you're unsure the length of time you are going to need coverage, you can apply for a non short-term plan and simply keep it as long as you like. Of course, the premium will be higher, but you will not be obligated to keeping the coverage any longer than you need.

A long-term policy can sometimes be your best "short term" solution. While it may appear that you only need your health care plan for a few months, it's possible that your new employer either may not offer medical coverage, or the rates are extremely high and unaffordable. In those situations, by initially purchasing a more permanent plan, you can keep the policy instead of having to apply for a new contract.

So during the job-search process, if you started treatment for a serious health condition (such as cancer), and you already had a permanent plan in place, you will be able to renew the policy without having to answer medical questions or be required to take a physical. And you can still cancel the policy at any time.