Short Term Health Insurance vs. Individual Major Medical
What is Short Term Health Insurance?
Short Term health insurance, which is sometimes called "Short Term Medical," is designed to help bridge gaps in your health insurance coverage during times of transition. Short Term health insurance plans can run from 30 days to 36 months per policy, and can sometimes be bought in policy bundles of 2-3 (12 month policies) which can provide continuous coverage from 24-36 months without having to reapply for a short term plan. Short Term health plans on average cost 70% cheaper than non-subsidized individual major medical health insurance plans in Nebraska & Iowa. There is no annual enrollment window for short term plans, and coverage can usually start next day. Coverage duration's are flexible and with customized benefits.
Most Short Term health insurance plans do NOT cover pre-existing conditions and include limited preventive care coverage (wellness exams). They include additional exclusion that may apply to maternity coverage or mental health coverage. Most Short Term health plan applications include 5-10 simple health based underwriting questions to determine your eligibility to enroll.
What is Major Medical Health Insurance
When you think of health insurance, often the type of plan that comes to mind is major medical coverage. The majority of the U.S. population obtains major medical coverage through their employer, called "group health insurance". Others receive coverage through Medicaid / Medicare. Those who are left to purchase their own health insurance coverage have the option of signing up for individual major medical insurance.
Those enrolled with individual major medical coverage have insurance benefits similar to those enrolled on employer group health insurance. Major medical plans can be purchased through the health insurance marketplace on (healthcare.gov) or "off-market" with a participating health insurance company. Major medical plans include consumer protections and essential health benefits. The most popular protections and essential benefits included with major medical plans is coverage for pre-existing conditions/no waiting period, and coverage for preventive care (wellness exams) at 100% no cost to the policy holder.
The Affordable Care Act established an annual open enrollment period for individuals to enroll in major medical plans, whether that be through www.healthcare.gov or (off-market) with a health insurance company directly. The open enrollment period for 2021 health insurance coverage runs from November 1, 2020 - December 15, 2020 for plans beginning January 1, 2021.
Which Coverage is Right for Me?
This question is a hot topic of debate among insurance professionals nationwide. The opinions below are solely based off the author's experience with enrolling thousands of individual clients in Nebraska & Iowa.
We ALWAYS review major medical insurance options on the health insurance marketplace as a starting point for every client. We review household size and income to determine subsidy eligibility. About 40% of our clients qualify for sizable subsidies from the health insurance marketplace that significantly reduce the cost of major medical plans, and roughly 1/2 of those receiving a marketplace subsidy qualify for a zero cost Bronze plan. In these situations, we highly recommend enrolling in a major medical plan on the health insurance marketplace. Many others who do not qualify for a subsidy, but need coverage for pre-existing condition treatments, generally enroll (off-market) with a major medical health insurance company at full cost.
So, what if you don't qualify for a marketplace subsidy (or) don't need coverage for pre-existing conditions? This is where Short Term health insurance plans have become popular:
From a monthly premium cost approach, let us review a few examples:
Age 40 (zip: Omaha, NE 68154):
$407 per month - $7200 deductible (lowest cost major medical option)
$159 per month - $5000 deductible (average cost 12-month short term option)
How about your average early retiree - Age 60 (zip: Omaha, NE 68164)
$865 per month - $7200 deductible (lowest cost major medical option)
$428 per month - $5000 deductible (average cost 12-month short term option)
You can easily notice the significant premium difference between short term health insurance plans and major medical insurance coverage. The average consumer saves around 70% by enrolling in short term coverage.
Although short term health plans were never meant to be a long-term solution to secure your health insurance needs, they have become a viable solution to find affordable coverage for many consumers.
The team at Strategic Benefits is here to assist in reviewing both short term health plans and major medical coverage options. For a no obligation health insurance quote you may reach us at:
Phone: (402) 740-1530