Short term health insurance is your best option if you missed open enrollment

Short term health insurance plans don’t have an open enrollment period

Short term health insurance plans may be the best option if you missed open enrollment and you don’t have a qualifying event.

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Qualifying events include marriage, divorce, birth, adoption, moving to a new area where different plans are available, and involuntary loss of other coverage that is deemed minimum essential coverage (so if you have an individual plan that was in place before the start of the year and is expiring at its renewal date this year, you’ll be able to shop on or off the exchange for a plan to replace it).

If you don’t have a qualifying event, you cannot purchase a new regular individual major medical plan (ACA qualified)  in Colorado until November.  Unfortunately, that fact might catch a lot of people by surprise.  A survey conducted by the Kaiser Family Foundation found that only 39% of uninsured Americans knew that open enrollment ends on January 15.  And even among people who were aware that open enrollment was coming to an end, there were likely quite a few who thought that plans could still be purchased off-exchange at any time..

So if you’re shopping for health insurance now, outside of open enrollment, and finding out that your options are significantly limited… you’re not alone!

If you don’t have a qualifying event, your options at this point are limited to plans that are not regulated by the ACA.  This includes discount plans, accident supplements, critical illness plans, dental insurance, some limited benefit policies, and short term health insurance.  Some of these options (like accident supplements, dental policies, and critical illness plans) are a good addition to a regular individual health insurance plan but are NOT designed to be stand-Short term health insurance is your best option if you missed open enrollmentalone insurance.  Your best option if you missed open enrollment is a short term health insurance plan.  These policies are not perfect, but they are the closest you’ll get to “real” health insurance for the rest of this year, and in many ways, they’re similar to policies that were being sold in the individual insurance market prior to the ACA.  They are certainly better than discount plans or nothing at all, if those are your options.

Here’s the good stuff about short term health insurance plans:

  • They’re a lot less expensive than regular ACA-compliant plans.  This is especially true for people who do not qualify for subsidies in the exchange and would have to pay the entire premium themselves regardless of what type of plan they buy.
  • The application process is very easy and takes only a few minutes.
  • Coverage can be effective as soon as the day after application.
  • Some short-term plans have no provider networks, allowing you to choose your own providers.
  • The coverage they provide is reasonably robust – comparable in many cases to the coverage that was offered by regular insurance plans prior to the passage of the ACA.  Although they do have lifetime benefit limits, the coverage is significantly better than that offered by “mini-meds” and discount plans.

Here’s more of what you need to know about short term health insurance:

  • Short term medical plans are not considered minimum essential coverage under the ACA.  That means that you’ll still be responsible for paying the shared responsibility penalty when you file your 2014 taxes if you were covered by short-term policies in 2014.
  • Short term health insurance plans are not regulated by the ACA.  That means that they offer the same sort of coverage they offered before the ACA was enacted.  For example, they typically do not cover most preventive care, maternity, or mental health/addition treatment.
  • They still have lifetime limits, usually in the range of $750,000 to $2 million.
  • They do not have to comply with the out-of-pocket maximums in the ACA, and short-term plans typically have deductibles that range from $250 up to $7,500 (ACA-compliant plans cannot have out-of-pocket costs that exceed $6,350 in 2014).
  • Short term health insurance plans are still medically underwritten and do not cover pre-existing conditions.  The underwriting is less all-encompassing than it was on pre-2014 regular individual plans, and typically includes just a handful of medical history questions.  But short-term plans also have blanket disclaimers stating that pre-existing conditions are not covered at all.
  • Since short term health insurance plans are not considered minimum essential coverage, their expiration does NOT count as a qualifying event.  So if your short-term policy is expiring outside of open enrollment, you will not be able to replace it with an ACA-compliant plan until open enrollment begins in November.
  • In Colorado, you can purchase a short term medical policy for up to six months, and then you can purchase one additional policy for up to another six months.  You must select the length of the term (up to six months) when you purchase the policy, and Colorado does not allow more than two short-term policies in any 12 month period .  But each policy is medically underwritten, so if you develop a condition while covered by the first plan, it would not be covered anymore once you get the second plan (assuming you’re still eligible for coverage).  And the deductible starts over when you get the second policy.
  • Short term health insurance plans do not qualify for any premium assistance.  Although the premiums for short-term are much lower than the retail rates for ACA-compliant plans, some people qualify for subsidies in the exchange that will make a regular ACA-compliant plan even less expensive than a short-term policy.  If your income is less than 400% of poverty level ($95,400 for a family of four during the 2015 open enrollment window), make sure that you apply for a new plan in November (we can help you get a subsidized policy) – you might be surprised to see how low your premiums could be.

With all of that in mind, a short term health insurance policy will provide you with better coverage than the other non-ACA-compliant options that are available outside of open enrollment.  You’ll have peace of mind knowing that at least you have health insurance coverage for the next six months.  And assuming you’re still healthy six months from now, you’ll be able to enroll in another short-term plan to cover you through the end of December.  Then you can enroll in an ACA-compliant plan starting November 15, with coverage effective January 1.  It’s important to remember that if you purchase two short-term policies in a row, you will not be able to purchase another one when the second policy expires.  If you have short-term coverage, don’t miss the 2015 open enrollment window (November 15 – February 15).  If you do, your options in 2015 would be limited to much less robust plans.

About Louise Norris

Louise Norris has been writing about health insurance and healthcare reform since 2006. In addition to the Colorado Health Insurance Insider, she also writes for healthinsurance.org, medicareresources.org, Verywell, Spark by ADP, and Boost by ADP, and Gusto. Follow on twitter and facebook.

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