Every year, millions of people search for affordable health insurance options to find the right policy for their financial and medical needs. Also, many of them don’t have company-provided health benefits, making their search more difficult. That’s why we’re breaking down two cost-effective health insurance options for anyone looking for coverage on their own: high deductible health insurance and short-term health insurance.
What Is a High Deductible Health Plan?
As the name implies, high deductible health insurance plans have higher deductibles, which results in lower monthly premiums.
What does that mean? A person’s premium is their monthly health insurance payment, and their deductible is the amount they’re responsible for before their benefits kick in for covered services. Someone with a high deductible health plan (HDHP) will pay less per month than a person with a lower deductible plan, but they will pay more out of pocket until they meet their deductible.
The ACA and High Deductible Health Plans
The Affordable Care Act (ACA) provides access to ACA-compliant high deductible health plans during the yearly open enrollment period. However, if you’re experiencing a qualifying life event, like starting a new job, you, you may be able to enroll in a special enrollment period.
ACA-compliant health insurance plans have coverage for the essential health benefits, including but not limited to:
- Ambulatory patient services
- Emergency services
- Pregnancy, maternity, and newborn care
- Mental health and substance use disorder services
- Prescription drugs
- Rehabilitative and habilitative services and devices
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services, including oral and vision care
A high deductible health plan from the health insurance marketplace can be an affordable option for someone who doesn’t have health insurance through their workplace and needs coverage for the services above.
Also, keep in mind that the ACA has a premium tax credit to help lower health insurance costs for eligible individuals who purchase higher deductible plans through the marketplace.
What Does Short-Term Health Insurance Mean?
Another budget-friendly coverage option, short-term health insurance, can be an excellent choice for many different people. It includes benefits for emergency medical care, like ER visits, as well as everyday services, like doctor visits. Short-term health insurance may be a good fit for:
- People without pre-existing conditions
- People who don’t are self-employed or receive health insurance from work
- People who want to save on health insurance but don’t qualify for an ACA premium tax credit
- People who missed the open enrollment period
- People between jobs
Short-term medical insurance includes flexible coverage options to help you find a plan that best fits your budget. So, if you want a higher deductible and lower monthly premium, you have that option, or if you want to pay less out of pocket for covered medical services but more per month, you could do that, too.
However, short-term health insurance has low monthly premiums because it has more limits on the conditions it covers. Short-term health plans don’t comply with the ACA, so they do not cover all of the essential health benefits, including mental health and maternity services, and don’t cover pre-existing conditions.
If you can’t afford all of the coverage included in an ACA-compliant high deductible health plan and don’t qualify for a premium tax credit, then getting short-term medical insurance could be a wise financial decision for you.
The premium tax subsidy has an income cap of 400% of the federal poverty level. In 2020, the cap is $49,960 for an individual and $103,000 for a family. If you make more than that per year, you may not be eligible for a premium tax credit. However, if you still can’t afford comprehensive health insurance coverage and don’t all of the essential health benefits, you may save money with a short-term health plan.
Short-term health insurance can be an easy, affordable coverage solution with a quick application process. Applicants answer a set of medical questions to determine eligibility, and if they’re eligible, they can purchase coverage that can start as soon as the following day. * Also, anyone can apply at any time, because short-term health insurance doesn’t have an open enrollment period.
HDHP vs. Short-Term Health Plans
To break things down further, take a look at this side by side comparison of comprehensive high deductible health insurance and short-term medical coverage.
Comprehensive High Deductible Health Insurance
- Available for application during open enrollment unless experiencing a qualifying life event
- Covers pre-existing conditions and no annual dollar limits on covered services
- Pays for preventive services before policyholder meets deductible
- Lowest deductible option is $1,400 for an individual
- Provides coverage for all essential health benefits
- All can be paired with a Health Savings Account (HSA), which allows policyholders to contribute pre-tax dollars for covered health services
- Doesn’t include an association membership that provides non-insurance benefits
Short-term Health Insurance
- Available for application 365 days a year
- Does not cover pre-existing conditions and has maximum limits on covered services per coverage period
- Has cost-sharing benefits that apply to preventive services before deductible is met
- Lowest deductible option through Vera Health is $1,000 for an individual, depending on the state
- Does not offer benefits for all essential health benefits
- Some can be paired with a health savings account if the plan satisfies the IRS definition of HDHP
- Plans through Vera Health are available through a LIFE Association membership with additional discounts and programs
Which Health Insurance Plan Is the Best for You?
There are two essential questions to ask yourself when choosing between high deductible health insurance and short-term medical coverage, which are:
- What type of coverage do you need?
- How much do you want to pay for it?
On the one hand, if you don’t have any pre-existing conditions, don’t want coverage for mental health and maternity services, and aren’t eligible for a tax subsidy through the ACA, then short-term health insurance could be an affordable coverage option for you. On the other hand, if you need coverage for pre-existing conditions and all of the essential health benefits, you should consider checking out your HDHP options on the health insurance marketplace.
Vera Health provides access to low-cost short-term health insurance with flexible coverage options. We help you get insured on your terms, so you can pay for the coverage you want, and not the coverage you don’t. To learn more about short-term health insurance, call 888-499-1187 to chat with a Vera Health expert, or visit us online today! Even if short-term medical isn’t for you, we can help you find an affordable high deductible health plan to fit your needs, even if it’s not with us.