Short term medical plans are a less than perfect bridge for individuals and families in between credible minimal essential health insurance coverage. Even though short term medical plans can deny applicants for pre-existing conditions, charge more for being a female, and have caps on how much the plan will pay, they can be a solid backstop to ridiculous emergency room bills. The rates for short term medical plans will usually be in the neighborhood of a California Bronze individual and family PPO health plan.
Short Term Medical bridges the insurance gap
Most often short term medical plans are used when an individual or family can’t immediately qualify for Special Enrollment Period to enroll in a minimum essential coverage Obamacare health plan. This might occur for a student graduate, self-employed or newly hired employee. Another scenario is if the COBRA coverage terminates in the middle of the month leaving a gap until the new health plan starts the 1st of the next month. Short term medical plans are not consider minimum essential coverage and therefore will not prevent a tax payer from being assessed the Shared Responsibility Payment by the IRS for not having health insurance.
Confusing Special Enrollment Period conditions
Because the rules governing the time frame and type of qualifying events for a Special Enrollment Period for a Marketplace exchange like Covered California can be complicated, short term medical plans can minimize the exposure to excessive doctor and hospital bill in the case of an accident or sudden illness until credible health insurance is available. They really shouldn’t be viewed as much more than a backstop to high health care bills.
Comparing Short Term Medical Plan costs
I compared the monthly premium costs for two short term medical plan carriers: Anthem Blue Cross IHC and HCC Tokio Marine. Both have a $2 million dollar maximum benefit. The three crucial areas that really drive the premiums are the deductible, coinsurance, and additional cost sharing dollar amount. All plans have a deductible that must be met before you start sharing the cost of the health care services. The cost sharing or coinsurance is either 20% or 50%. In other words, after you have met the deductible amount of the short term medical plan you will either pay 20% or 50% of health care services. Once you have met the cost sharing dollar amount of the plan, the insurance covers 100% of the cost of any additional health care services benefits.
Sometimes the literature will list the additional cost sharing dollar amount as the Maximum-Out-Of Pocket (MOOP). But the actual MOOP is the deductible PLUS the additional cost sharing dollar amount. So a plan that has a $5,000 deductible and $5,000 cost sharing amount really has a MOOP of $10,000, not the $5,000 stated in the literature.
Comparing the cost of short term medical plans for a 40 year old woman in Northern California (zip code 95608) and Southern California (zip code 90411)
|Anthem – IHC||$5,000||50%||$5,000||$241||$284|
|HCC – Tokio||$7,500||50%||$2,500||$178||$205|
|Quote for May 19th, 2016|
Women pay more for short term medical
These plans are not gender neutral. In general, rates for a 40 year old male can be 2% to 7% lower than that of a female. You can see the cost of a standard Bronze plan with a $6,500 MOOP is not that much more, and sometimes less depending on the carrier, than some of the short term plans. Plus, a standard Bronze plan offers no cost preventive office visits, can have some built-in copayments where no coinsurance in charged, and you don’t have to file claim forms. ACA compliant health plans have no medical questions that my deny coverage. They are guarantee issue.
Typical Short Term Medical Questions
- Will you have other health insurance in force on the policy effective date or be eligible for Medicaid?
- Have/Are you:
- Been denied insurance due to any health reasons for a condition that is still present?
- Now pregnant, in process of adoption or undergoing infertility treatment?
- Over 300 pounds if male or over 250 pounds if female?
- Within the last 5 years have you been diagnosed, treated, or taken medication for any of the following: cancer or tumor, stroke, heart disease including heart attack, chest pain or had heart surgery, COPD (chronic obstructive pulmonary disease) or emphysema, Crohn’s disease, liver disorder, degenerative disc disease or herniation/bulge, rheumatoid arthritis, kidney disorder, diabetes, degenerative joint disease of the knee, alcohol abuse or chemical dependency, or any neurological disorder?
- Within the last 5 years have you been diagnosed or treated by a physician or medical practitioner for Acquired Immune Deficiency Syndrome (AIDS)?
- If you are not a US Citizen, do you expect to legally reside in the US for the duration of the policy?
Answering YES to any of these questions will usually result in a denial of a short term medical plan.
Short term medical plans are no substitute for credible ACA compliant health insurance. But they do serve a purpose for bridging the gap between health insurance plans that might result from time frames for Special Enrollment Periods in either individual and family or group plans.
Make your own cost comparisons
Anthem Blue Cross IHC Group
HCC Tokio Marine