If you’re looking for health insurance and browsing through your options, you may notice that short-term health insurance can be a more affordable choice. But why is short-term health insurance cheaper? There are a few reasons behind the low premiums that come with a short-term medical plan. Let’s break them down to help you understand how short-term health insurance companies keep prices low – and if it’s a good fit for you!
Why Is Short-Term Health Insurance Cheaper? 4 Reasons for Lower Premiums
Bottom line: short-term health insurance is a more affordable type of health coverage. Why is short-term health insurance cheaper? Short-term medical plans have low monthly premiums because they have limits on what and who they cover. For example, short-term medical plans do not cover pre-existing conditions, nor do they include benefits for preventive care, maternity care, and pediatric care.
Therefore, short-term health insurance can be a lower-cost choice for people who do not want to pay for the coverage included in an ACA major medical plan.
Short-term health insurance doesn’t cover as much as an Affordable Care Act (“ACA”) compliant major medical insurance. However, if you don’t need all the coverage available from an ACA major medical plan, then you should know that you have a more affordable coverage option that meets your budget and lifestyle.
1. Short-term health insurance does not cover pre-existing conditions.
To start, short-term health insurance does not provide coverage for pre-existing conditions. What is a pre-existing condition? A pre-existing condition is a health problem that you have on or before the date that your health insurance plan starts. Pre-existing conditions can range from chronic illnesses, like diabetes, to more minor ailments, like acne. Examples of pre-existing conditions include but are not limited to:
- Mental health conditions
- Sleep apnea
- Severe obesity
- Cerebral palsy
- Hepatitis C
If you have a pre-existing condition, know that short-term health insurance will not cover the care for that condition. If you don’t need coverage for pre-existing conditions, then short-term health insurance could help you save money on your health care plan.
2. Short-term health insurance does not include coverage for all 10 essential benefits.
While short-term health insurance plans offer some of the same benefits as ACA major medical coverage (see: “What All Does Short-Term Health Insurance Cover?” below), they don’t provide coverage for pre-existing conditions, and are not required to comply with the ACA, which requires, among other things, major medical plans to include coverage for all 10 essential health benefits, and cover pre-existing conditions. All ACA-compliant health insurance plans must include coverage for:
- Ambulatory patient services
- Emergency services
- Hospitalization (like surgery and overnight stays)
- Pregnancy, maternity, and newborn care (before and after birth)
- Mental health and substance abuse disorder services, including behavioral health treatment (this includes counseling and psychotherapy)
- Prescription drugs
- Rehabilitative and habilitative services and devices (services and devices to help people with injuries, disabilities, or chronic conditions gain or recover mental and physical skills)
- Laboratory services
- Preventive and wellness services and chronic disease management
- Pediatric services, including oral and vision care (but adult dental and vision coverage aren’t essential health benefits)
ACA-compliant plans must also include:
- Birth control coverage
- Breastfeeding coverage
These are minimum requirements for all health insurance plans available through the health insurance marketplace. These plans could also include benefits for:
- Dental coverage
- Vision coverage
- Medical management programs (for specific needs like weight management, back pain, and diabetes)
ACA-compliant major medical plans are generally more expensive than short-term health plans since they include more extensive benefits. If you need coverage for the essential health benefits, and pre-existing conditions, it’s best to choose the health insurance that will cover all of your medical needs.
3. Short-term health insurance has health restrictions and does not accept all applicants.
Many short-term health insurance companies are transparent in the application process. They ask applicants a set of health history questions to determine their eligibility for coverage under their short-term medical plans. Therefore, depending on your medical history, you could be denied coverage. Having health coverage limitations in place is another reason that short-term health insurance companies can offer low-cost coverage.
4. Short-term health insurance does not cover pregnancy care.
If you’re pregnant or planning to have a family, know that short-term health insurance will not give you the coverage you need for maternity care. Instead, you should select a comprehensive major medical plan to ensure that you receive the pregnancy coverage that you need.
However, if you’re not planning to start a family soon, then short-term health insurance could give you the coverage you want at a lower price point.
Keep in mind that having a baby and adopting a child are two examples of Qualifying Life Events that can make you eligible for a special enrollment period through the health insurance marketplace. Health care plans through the marketplace are only available during the annual open enrollment period, but certain life events can qualify you to get coverage outside of this timeframe.
How Much Does Short-Term Health Insurance Cost?
Short-term health insurance plan prices depend on several factors – just like other types of health insurance. Here are some ways to save the most money on your short-term health insurance plan:
- Purchase a plan with a higher deductible. Your deductible is the amount you’re responsible for before your insurance starts paying for covered services. If you opt for a short-term health plan with a higher deductible, you will pay more before your plan starts paying, but you will have a lower monthly premium, or monthly cost for health insurance.
- Stay in-network. You’ll pay less seeing doctors and specialists that are in your plan’s network than for those that are out-of-network.
- Understand all aspects of your plan:
- Coinsurance: the percentage that you pay for covered medical services after meeting your deductible. For example, if your coinsurance is 80/20, your plan will cover 80% of a covered service, and you will pay the remaining 20%.
- Out-of-pocket maximum: the most that you could pay for covered health care services in a plan year.
- Copay: a fixed amount that you pay for certain covered services. For example: You could have a $40 copay for doctor visits and a $20 copay for a prescription drug that you take. Not all short-term health insurance plans have a copay option because they are state-specific.
Now that you know more about short-term health insurance costs, how do they add up? You can find short-term plans for under $100 a month.
Note that you can keep your short-term health plan for up to a year and renew it up to two additional times, depending on the state where you bought your plan. Therefore, you could have affordable coverage for up to three years, depending on your state, if you don’t need comprehensive major medical insurance.
What All Does Short-Term Health Insurance Cover?
Short-term health insurance doesn’t cover everything, but it does provide coverage for unexpected medical accidents plus common health care. A short-term health plan through Vera Health has benefits for:
- Doctor visits
- Urgent care
- Child immunizations
- Ground ambulance trips
- Emergency room care
- Diagnostic testing and interpretation of results, depending on the state in which you purchase your plan
- Inpatient/outpatient hospital care
- Emergency surgery
- Outpatient physical therapy
- Home health care
- Prescription medications, depending on the state in which you purchase your plan
As you can see, short-term health insurance can be a cheaper health insurance option for several different reasons. By limiting covered conditions, short-term health insurance keeps premiums low to help people who don’t need the coverage available from an ACA-compliant major medical coverage save money on their health care plans.
Do you think short-term health insurance could be for you? If you don’t need comprehensive major medical insurance, why should you pay for coverage you don’t want to use? We don’t think you should. To learn more about short-term health insurance and get answers to any of your questions, call 844-394-2736 to speak with a Vera Health pro, or check us out online today!
 Covered services may be subject to waiting periods, visit limitations, deductible, coinsurance, copays, and/or benefit maximums depending on the plan you purchased.
Short Term Medical coverage is not required to comply with federal market requirements for health insurance, principally those contained in the Affordable Care Act. Be sure to check your policy carefully to make sure you are aware of any exclusions or limitations regarding coverage of pre-existing conditions or health benefits (such as hospitalization, emergency service, maternity care, preventive care, prescription drugs, and mental health and substance use disorder services). If this coverage expires or you lose eligibility for this coverage, you might have to wait until an open enrollment period to get other health insurance coverage.