Short term health insurance

by Tony Novak, MBA, MT, OnlineAdviser at Freedom Benefits, last updated on 12/1/2011

Short term health insurance has become an important tool for maintaining the financial security of millions of Americans during periods of life transition. The popularity of this product has grown sharply in recent years as we become a more mobile society less dependent on employer-provided health benefits. This article highlights the most basic considerations and points to additional resources for this type of coverage.

Why is short term insurance so popular?

Short term health insurance is an inexpensive way to protect from unexpected health care expenses that could bankrupt many people. The popularity is due to the low cost; typically less than half the price of regular major medical insurance.

Who uses short term health insurance?

This coverage is most commonly used by people changing jobs, waiting for or coming off an employer health plan, not eligible for Medicare, students, recent graduates and self-employed individuals.

Where is it available?

The coverage is equally valid throughout the entire United States but policies are not issued in some states including MA, NJ, NY or VT. are residents of these states may purchase coverage while temporarily residing outside of their home state.

Who should not use it?

Anyone who has a significant "pre-existing medical condition" should not use this insurance. This includes pregnant women and even the male partner of a pregnant woman. A "pre-existing medical condition" usually defined as a diagnosis that would be found in your personal medical records prior to the start of the policy.

How much does it cost?

This coverage is usually priced at less than 1/2 of the cost of regular medical insurance. The premium price is based on age, sex and location so actual savings will vary.

Limitations

Policies end after 6 months or 12 months and a new policy must be obtained. Coverage under a regular U.S. short term medical insurance policy is not valid for medical treatment outside of the United States. For this type of coverage you need to enroll in a separate “international medical plan” (also available at Freedom Benefits under the link "International Health Insurance).

How to Get Coverage

Applying for short term health insurance is fast and easy for those with Internet access. You can enroll in a few minutes online. Policies and ID cards are available immediately for download or are usually mailed on the next business day.

Can Coverage be Extended?

Many people use short term health insurance for long term coverage simply by re-applying for subsequent policies. This makes perfect sense as long as you are healthy but individuals under medical care should consider different types of policies.

Other Resources

"Health Insurance for Special Situations"

"Health Insurance for Overweight Applicants"

"Health Insurance for Young Entrepreneurs"

"Student Medical Insurance Tips"

"Comparing Short Term Medical Policies"

Review of "Select STM" Short Term Medical Insurance

Tony Novak is a member of the Pennsylvania Institute of Certified Public Accountants, the New Jersey Society of Certified Public Accountants and an accredited member of the Better Business Bureau.

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