Home Health Steer Clear of Short-Term Health Insurance

Steer Clear of Short-Term Health Insurance

Illustration for article titled Steer Clear of Short-Term Health Insurance

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As the coronavirus outbreak continues, some companies are predicting higher health insurance premiums for 2021. Whether you have recently lost your job—or you’re already thinking about fall open enrollment—there are some types of insurance to stay away from. Short-term health insurance may seem less pricey upfront, but these plans could cost you in the future. Here’s why.

What is short-term health insurance?

Short-term, limited-duration insurance (STLDI)—which has been around for decades—was created to fill gaps in health insurance for folks like job changers and students. The Obama administration cracked down on STLDI by limiting policies to less than three months, but new rules have extended the plans to one year with the option to renew for three years.

The National Association of Insurance Commissioners says these plans may seem like regular health insurance because they cover some of the same things. Although cheaper monthly premiums may make STLDI appealing, you may not get the coverage you expect. These plans are more affordable because they don’t have to follow the Affordable Care Act (ACA) laws.

For example, STLDI doesn’t have to offer coverage for the ACA’s essential benefits like preventative care, mental health coverage, or prescription drugs. STLDI plans may also have annual dollar limits or lifetime benefit caps, and they may exclude coverage for pre-existing conditions.

According to a February 2020 report from Milliman Research, you could spend a lot more to treat a newly diagnosed condition with STLDI compared to an ACA-compliant plan. What’s worse, your STLDI doesn’t have to renew your policy after a diagnosis, so you could lose your health insurance when it’s time to enroll again.

What to do if you can’t afford health insurance 

If you’re dealing with a job layoff, you may be nervous about how to afford health insurance. Fortunately, you do have options, even if you’re struggling to pay the bills. The most expensive choice may be sticking with your former company’s insurance plan by signing up for COBRA.

You may also shop for plans through your state’s health insurance marketplace or Healthcare.gov. You may qualify for a special enrollment period due to job loss—along with cost-sharing reductions—which could make the plan a lot more affordable.

Depending on your income, your family may also qualify for Medicaid—which may offer free or low-cost health insurance. You can learn more about how to apply for Medicaid—including financial and non-financial eligibility—here.

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