Short term major medical insurance, also known as temporary insurance, is a product worth considering for people who don’t have a good group plan available to them. Short-term medical provides coverage up to one year. However, in Georgia, there is only one decent carrier that offers this type of insurance for up to one year. There are a few carriers that offer coverage up to six months.
This type of coverage is not ACA-compliant (Obamacare), which means the policyholder would be subject to the annual penalty of $95 per person (up to $295 for a family) or 1% of household income, whichever is greater. This penalty would be prorated for the number of months without compliant coverage.
The good news is that these plans are very inexpensive and the penalty might be worth taking. The plans are real major medical plans that provide coverage up to $1 million or $2 million per person. Deductibles typically range from $500 up to $5000. Plans can be structured slightly differently than long-term medical plans. For example, some carriers offer deductibles that are “per incident”, rather than per calendar year.
Short-term medical plans are medically underwritten, so they work well for folks who are in good health, generally speaking. For people with serious pre-existing conditions or taking expensive medications, they would be better off with a guaranteed-issue ACA-compliant plan. Most carriers will look back 5 years for pre-existing conditions, but there is one carrier in Georgia that will look back only one year.
In the past — before 2014 — temporary insurance was best suited for people who had a need for coverage for just a limited amount of time. This product worked well (and still does) for people between jobs or waiting for group coverage to kick-in. However, it wasn’t a smart move for people who didn’t have other coverage lined up. At the end of the coverage period — whether 3, 6 or 12 months — a new application is required. So, if a medical condition developed in the meantime, then it wouldn’t be covered or the application would be declined.
Now that Open Enrollment begins in November, and new, ACA-compliant coverage can begin January 1 (covering pre-existing conditions), the risk of having a short-term medical plan is no longer an issue. As long as the coverage period runs through the end of the year, there is no risk of being declined for a new plan starting January 1.
I have had many people consider all their options and decide on short-term medical as a way to save money. There are many plans that have sprung up this past year, but it’s important to know what you’re buying. Some plans are “limited benefit” plans and they leave some serious gaps in coverage. The short-term medical plans we recommend are the best ones available in Georgia.
Greg Sanders Peachtree Insurance Advisors 678-236-1600