If you’ve been following this space, you know that Open Enrollment for 2016 has officially closed. Yes, we’re only 2+ months in to 2016, but you can no longer sign up for an individual health insurance policy with an effective date anytime in 2016. The final day to enroll was January 31st. While you can still sign up in some circumstances, chances are you are out of luck. Enter short-term medical insurance
Short Term Medical, or STM insurance, is an alternative form of coverage for those who cannot get traditional medical either straight from the carrier or via a state exchange. Some of the advantages to going with a Short Term Medical plan include:
Short Term plans have no enrollment windows
STM plans will allow you to enroll year-round without regard to the traditional open enrollment windows.
Short Term plans allow (almost) immediate enrollment
Many STM plans allow enrollment as soon as the clock strikes midnight. You can complete your application at 11pm and be enrolled an hour later.
STM plans can be more flexible than traditional plans
If you have shopped for traditional coverage lately, you’ll know that the choices in deductible have narrowed since the passage of the ACA. Generally you can get a 6,000, 2,000 or no deductible program. STM plans offer additional choice in deductible level, often allowing 250, 500, 1000, 1500, 2500, 5000 and 7500 deductible programs.
STM plans can offer a discount for pre-payment
Many STM plans offer a discount of up to 20% for pre-paying for the entire coverage term rather than just paying month-to-month. Traditional coverage cannot offer any discounts.
STM plans can be less expensive than similar traditional coverage
Pulling a quick sample quote from one of our preferred STM carriers, a 50 year old in LA county would pay about $360 monthly for a 2500 deductible plan if paid monthly or $288 if paid all up front. A comparable traditional plan would cost about $450 per month. The STM will save you significantly
The savings can be more dramatic for younger members. A 25 year old also in LA county would pay about $250 for a traditional plan. The monthly STM would cost about half that at $124, while this person would save even more paying up front, with net costs around a hundred bucks a month.
Despite all of these benefits, don’t rush out to cancel your traditional policy to sign up for a Short Term Medical plan. These plans should only be used when traditional is not an option. There are some drawbacks to STM plans
STM plans are NOT ACA compliant
Short Term Medical plans do not qualify as acceptable insurance under the Affordable Care Act. This means you will not satisfy the Individual Mandate and may be required to pay a penalty tax.
STM plans are NOT guaranteed issue
Because they’re not ACA compliant, Short Term Medical plans do not have to offer Guaranteed Issue coverage. This means they can ask you health questions and potentially deny you. However, the list of questions is much shorter than the old health insurance applications you may have filled out before the ACA was enacted. They will want to know that you meet the height and weight requirements, are living in the US legally, and that you do not currently have certain pre-existing conditions.
STM plans have poor RX coverage
Short Term Medical plans will often cover your inpatient drug costs, but if you need prescription drugs filled at a pharmacy your coverage is often limited to a discount program rather than allowing you to purchase your drugs for a flat copay.
STM plans have definitive end-dates
Short Term Medical plans are usually only good for 6 or 12 months. When the plan expires, your insurance will end. If you want to sign up again, you’ll need to go through the application process again. Often you are also limited in how many STM contracts you can have in a given period.
If you want to dig a bit deeper, take a look at a sample STM program here. You can play with the inputs to see what your costs may be for different potential coverage levels. As always, you can email us here at firstname.lastname@example.org or leave a comment below- I respond personally to every message!