Pros and Cons of Short-Term Health Insurance Plans

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ONE OF THE BIGGEST changes that the Trump administration made to the Affordable Care Act was promoting the sale of so-called short-term health insurance plans. As the name implies, these plans are of limited duration. They can provide coverage for as little as a few months to up to 364 days.

Short-term plans are also, on average, cheaper than full coverage that complies with the ACA’s insurance policy regulations. According to a study by the Kaiser Family Foundation, of short-term policies offered on two large online private insurance marketplaces, the cheapest short-term policies were commonly priced at 20 percent or less of the premium for the lowest-cost ACA-compliant plan in the same area.

Price is the primary enticement of these plans, but as the old adage reminds us, you get what you pay for. And in the case of short-term health insurance, you don’t actually get very much. Indeed, the drawbacks of these plans outweigh the benefits far more often than the other way around.

But there is a market for short-term coverage, says Paul Rooney, vice president of carrier relations for the online insurance broker eHealth. “For those people who experience gaps in their coverage, where they need temporary coverage because they are off their parents’ plan or between jobs, these policies can help fill the gaps,” he says. They may help those who miss signing up during the open enrollment period as well. “If you miss that window, the rules (for enrolling) are tighter now, so a short-term product can carry you through to the next open enrollment period,” Rooney says. And for those who don’t qualify for enough of a government subsidy to afford an ACA-compliant plan, this product could be a “last resort.”

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