Short-term health insurance is designed to provide medical coverage for a limited period. Originally, it was designed as a bridge between long-term and short-term plans. Now, it's a popular option for those who only need medical insurance temporarily or for a specific event. Its benefits include a lower coinsurance rate and out-of-pocket maximum.
Copays are cheaper than coinsurance.
While coinsurance is more expensive, copays are cheaper for short-term health insurance. A copay is a fixed amount you pay when visiting a doctor. It is less complicated to calculate than coinsurance because it is displayed as a dollar amount. For example, if you visit a primary care physician for $500, you will pay only $50. This is much less than paying 30% of the bill for a visit.
Whether you opt for copays or coinsurance will depend on your circumstances. For instance, if you go to the doctor for a cold, you might have to pay $30. Your health insurance provider will cover the rest of the cost. This is particularly advantageous if you are on a tight budget. Another benefit of copays is that they do not count against the maximum out-of-pocket expenses. For this reason, it's always a good idea to read the benefits summary of each plan you're considering.
The out-of-pocket maximum is lower.
A short-term health insurance plan has a lower out-of-pocket maximum than a long-term plan. The maximum out-of-pocket limit is what a person must pay for covered health care services within a year. The health insurance company will pay the rest of the expenses if the person reaches the out-of-pocket limit. The out-of-pocket maximum may also be lower if the plan covers dependents.
In general, the out-of-pocket maximum is less than the deductible amount of money a person has to pay. In a short-term health insurance plan, the out-of-pocket maximum can be lower than the deductible. You can pay as little as $50 or $75 per visit. The health insurance company will pay for the rest of the expenses, including prescription drugs.
The out-of-pocket maximum of a short-term health plan is generally lower than the deductible of a long-term plan. However, if you're sick or have an accident, you should check with your insurer if your insurance will cover the costs. If you need urgent care, you'll pay less out of pocket. You can also choose to have a specialist check-up, which will help lower your out-of-pocket expenses.
Preexisting conditions are not covered.
Insurers selling short-term health plans have fewer regulatory requirements than comprehensive health plans and can deny enrollment to people with preexisting conditions. They can also exclude coverage for specific services needed to treat preexisting conditions. Moreover, short-term plans do not qualify for marketplace subsidies, which lower premiums for consumers with preexisting conditions.
In addition, short-term health insurance plans have a limited duration, so they are usually not renewable. After the end of the term, the deductibles and coverage amount reset. If you have a preexisting condition, you will have to pay for it all over again if you want to remain covered.
Short-term health insurance companies can exclude people with preexisting conditions even if they are in good health. They can do this by examining the applicant's medical history and may deny coverage for preexisting conditions. Some insurers consider a condition preexisting if the member has suffered symptoms within five years, and a reasonable person would have sought care for it.