Outside of the annual open enrollment period, individual clients can only enroll in an ACA-qualified plan if they have a qualifying life event. For clients who don’t qualify for a Special Enrollment Period (SEP), a short-term health plan can be a good option. But there are other times when this innovative solution may be a good fit for clients as well.

Characterized by their temporary nature, short-term plans do not offer the same comprehensive coverage mandated by the Affordable Care Act (ACA). For instance, some plans may not cover preventive care or pre-existing conditions, or may not be guaranteed issue; the client might have to answer a handful of medical questions and could be declined for coverage.

Despite these limitations, short-term health insurance plans offer distinct advantages, such as lower costs and flexible enrollment periods, making them an attractive option for specific circumstances and especially for budget-conscious consumers. This article explores scenarios where short-term health insurance plans can be a strategic choice, aligning with the unique needs of certain individuals.

Bridging Gaps in Coverage

Short-term medical plans, also known as short-term limited duration insurance, are ideally suited for individuals experiencing transitional periods in their lives where they temporarily lose coverage. Here are a few examples:

1. Between Jobs: For those who have recently left a job and lost their employer-sponsored health insurance, a short-term plan can provide a safety net until they start a new position that offers health coverage. Short-term plans are often less expensive than COBRA for these individuals.
2. Waiting for Benefits to Start: New employees often face a waiting period of up to 90 days before their health insurance benefits kick in. Short-term plans can fill this gap, ensuring they remain covered.
3. Recent Graduates: Graduates transitioning out of school health plans and into the workforce might find short-term insurance to be a good interim solution until they secure a job with health benefits. While they could also join their parents’ health plan until they turn 26 years old, the cost of dependent coverage might be higher than short-term coverage.

Affordability for the Young and Healthy

Individuals who are young, healthy, and primarily seeking insurance to protect against sudden, catastrophic health events may find the affordability of short-term plans particularly appealing. For those with minimal healthcare needs, these plans offer a cost-effective way to carry health insurance without paying for the comprehensive coverage that comes with ACA plans, which they may not fully utilize.

And, despite their name, short-term plans can actually last for up to 12 months and be renewed for up to three years (as of this writing). They’re not exclusively a short-term solution.

Flexibility in Timing

Unlike ACA plans, which require enrollees to sign up during the designated Open Enrollment Period (November 1 – January 15) or qualify for a Special Enrollment Period, short-term plans can be purchased at any time. This flexibility is beneficial for individuals who missed open enrollment, do not qualify for an SEP, and need immediate coverage. The ability to start coverage quickly, sometimes within days of application, provides an essential safety net in unexpected situations.

It is important to reiterate, though, that short-term plans do not provide coverage for pre-existing conditions, so if an individual is applying for a short-term plan due to a recent diagnosis, it may not be covered by the plan.

Considerations and Cautions

Short-term health insurance plans occupy a specific niche within the broader health insurance market, offering an alternative for individuals in transition, those seeking affordability, or people needing immediate coverage outside of open enrollment periods.

However, it's crucial for individuals to consider the trade-offs before applying. The lack of coverage for pre-existing conditions, and limitations on preventive care, and “essential health benefits” means these plans are not suitable for everyone, especially those with ongoing health issues or who require regular medical services. Additionally, since some carriers do not offer plans on a guaranteed issue basis, applicants may be denied coverage based on their health history.

AHCP can help!

Because they’re a good option for some clients, we believe every agent should have at least one short-term plan as part of their product offering, and AHCP offers several short-term solutions. Please contact us today so we can help you get appointed.