Short-Term Medical Health Insurance Coverage
Short-Term Medical health insurance plans or STMs are designed to fill gaps in coverage between major medical health insurance plans although they have become popular with healthy people as their primary medical insurance due to their lower premiums. I refer to them as Major Medical Lite because although they work in a similar fashion, they do have limitations. These are sold through many different health insurance carriers by independent health insurance agents and brokers.
Pros
Cons
First Some Important Health Insurance Terminology
- Network - Short-Term Medical Plans typically use large national PPO networks.
- Network Type
- PPO or Preferred Provider Organization - A PPO network is the best option because it allows you to see doctors both in and out of network and gives you control over your own healthcare.
- Network Size - The size of the network directly affects the number of doctors you have to choose from. The bigger the network, the more providers you have access to.
- #1 United Healthcare
- Network Discount - This is an often overlooked component of health insurance but is one of the most important. Each network has it’s own discount amount. This directly affects how much you will pay out of your own pocket. The insurance carrier negotiates rates for you and this is reflected in the network discount. The bigger the network discount, the less you pay. These aren’t easy numbers to research because they aren’t readily available. We have used our claims experience to track this information. This allows us to give you real world data not just a promoted number. As you can see below, the Network Discount varies greatly between carriers.
- #1 United Healthcare: Average Network Discount ~60%.
- Aetna: Average Network Discount ~50%.
- First Health: Average Network Discount ~35-50%.
- MultiPlan: Average Network Discount ~15%.
- Deductible - The deductible is the amount you must pay out of pocket before the plan starts paying their share.
- Copays - Copays are small fixed payments for certain services. Few Short Term Medical plans have copays although some have a limited number of copays for doctors and urgent care visits.
- Coinsurance - Coinsurance is the percentage you are responsible for after the deductible is met. Common coinsurances are 80/20, 70/30, & 60/40. In the 80/20 example, the insurance company pays 80% and you are responsible for 20%.
- Maximum Out Of Pocket - The maximum out of pocket on Short Term Medical plans is the most you would have to pay for covered health care services in a plan year after the deductible is met. On Short Term Medical plans this amount typically only includes your coinsurance but can vary by plan. Your monthly premiums, deductibles, & copays are not included.
How Short-Term Medical Health Insurance Works
Example: Let’s say you are on a Short Term Medical plan with a $5,000 Deductible, 80/20 Coinsurance, and a Maximum Out Of Pocket of $5,000. How do these work? There is typically no coverage until you meet your deductible of $5,000. Once the $5,000 deductible is met, the plan starts paying 80% and you are responsible for 20%. You pay 20% until you’ve reached an additional $5,000 (your maximum out of pocket), then the plan starts paying 100% of covered services.
Recommended Short-Term Medical Health Insurance
- United Healthcare
- National General
- Pivot Health
NOT Recommended STM Health Insurance
- US Health Advisors/Freedom Life
- HII or Health Insurance Innovations
How To Purchase Short-Term Medical Plans
- Figure your budget.
- Have a list of your doctors & preferred hospitals that can be checked to see what plans are in-network.
- Your agent will find the best options available for your budget that your doctors are in network with.
- Have the agent send you plan brochures and read the plan limitations before you decide to move forward.
- Choose your plan. Since these plans typically don’t cover anything before the deductible is met, you want to purchase one with the lowest deductible possible that fits into your budget.
- Have you agent fill out the application and your coverage will be effective once your policy is approved on the specified date.
- If you want to self-quote or self-enroll, click the links below. Not every carrier allows self-enrollment.
Conclusion:
If you are between jobs, and thus between health insurance coverages, Short-Term Medical would be an ideal option for you. You can buy as many months of coverage as you need from 1 month up to 3 years. Also if you don't have major pre-existing conditions and want a traditional type of health insurance plan, Short-Term Medical could be a great option. Especially if you are healthy and find marketplace plans too expensive. If you couple a Short-Term Medical plan with a Fixed Indemnity plan the coverage can be quite comprehensive. If you have any questions, leave a comment below.