There are basically 2 types of health insurance plans that are popular. One is permanent coverage and the other is a temporary insurance. Like their namesake, one can last you a longer period than the other.
One might argue however that a long-term plan seems like the better alternative. When you can go for them, sure, it does make a lot of sense. But temporary health insurance plans these days seem to be on the rise and are a viable alternative if you can’t opt for the longer-term policies.
Short-term Insurance in California
Short-term insurance was designed as a transitional coverage plan and it doesn’t compare well to a more permanent insurance product. The key to the success of the short-term insurance plan is the affordability when compared to the longer-term insurance policies.
Another important factor is that in California your income must qualify for a tax credit, failing which long-term insurance options can be a bit out of reach. Even if you did have subsidies, you’d still be losing hundreds a month for coverage.
The people who are opting for short-term insurance policies are liable for a tax penalty, but it hasn’t stopped them from signing up for these policies. The 18 to 34-year-old demographic who are young and healthy account for up to 50% of all short-term insurance policies.
There are disadvantages to this method of insurance – if you fell chronically ill during the period of coverage, there are chances that you might not be able to avail the same insurance policy after expiry.
Another is the tax penalty – if you don’t consult a financial planner regarding the penalties you’d be paying you could end up shooting yourself in the foot by opting for a short-term insurance policy.
Benefits of Short-term Health Insurance
There are several situations when short term health insurance might be more viable for you rather than the longer term. Here’s are a few real-life circumstances when short term insurance becomes a more attractive proposition:
- You’re turning 26 and you just got off health insurance from your parents
- You’re on the waitlist for your Affordable Care Act to start
- You’re between jobs and can’t afford long-term insurance now
- If you’ve not had health problems currently, and are under 65
- Recent US immigrants
If you come under any of these categories, temporary health insurance can be a viable alternative to full-time health insurance. It can act as a stopgap solution for the time being while you make up your mind about a longer insurance solution.
Here are several benefits that short time insurance offers you:
- Quick coverage – coverage starts immediately after application
- Pick your deductibles – you have several options to choose for your deductibles
- Lower premiums – the premiums you pay are generally lower than full-term plans
- No penalties – you have no penalties for dropping coverage, the unused premium is refunded
- Coverage for youth – it covers adults from the age of 18
Buying a Short-term Health Insurance in California
Short-term insurance has certain eligibility criteria like restrictions, and types of exclusions depending on the insurance provider. An experienced financial planner like FPP can give you the best choice when it comes to getting the right short-term insurance for you.
There are however a few things that you need to know about short-term insurance before you opt for one. Pre-existing conditions may not be covered regardless of the short-term insurance coverage you choose. These pre-existing conditions vary state-wise, so you need to read up on that or get a financial advisor who is well-versed with state-specific insurance policies.
Also, approval for it is not guaranteed as is policy renewal. It doesn’t come under subsidies offered by the government as well. It also doesn’t cover you when it comes to prescription drugs. Their renewal period is also restricted – you can only do so for up to 11 months.
Hopefully, this has thrown some light on the apparent benefits and faults of opting for short-term health insurance. Short-term health insurance does not meet government standards. If you absolutely have no other options available, the least you can do is consult Financial Planning Platform in California to get to know your choices before you settle. You need to remember to opt for an insurance policy that does not have penalties when you want to drop it.