Short-Term Medical Plans:
What exactly are the disadvantages of short term health care coverage?
Well, for one, it is extremely easy to obtain with limited Underwriting (you could probably obtain approval within a day of applying with "some" carriers). Another primary advantage is the low premiums, this would be especially attractive for those who cannot afford comprehensive health insurance plans. Temporary health care insurance plans also work perfectly for people who are between jobs or freshmen out of college. The flexibility of these plans allows you to choose how long you want to be covered, and lets you determine how much you want to pay for your premium (would reflect on the extent of coverage that you receive).
Nevertheless, these plans do come with their drawbacks as well. With these health care insurance packages, renewals are not guaranteed, thus once your policy expires, you would have to re-apply and hope to obtain approval once again. This could prove to be a little troublesome, as durations of the policy are normally between 30 and 180 days only. Short term health coverage also does not include optical, dental nor medical check ups, thus you might incur extra expenditure if you need medical attention on these.
Here are the advantages and disadvantages of COBRA vs. Short-Term policies:
Advantages of COBRA:
- You can continue your current insurance
Disadvantages of COBRA:
- You have to pay the entire premium, not just the employee part (most employers pay 50% or more of the premium, so COBRA is normally double)
- It ends after 18 months
COBRA alternatives are necessary because the program costs more than most people can afford (see Short-Term Advantages below). This law exists to provide continued health coverage after an employee leaves a job. Coverage is only intended to be temporary. When a person is faced with the choice between purchasing private health insurance and continuing with group health care insurance through COBRA, they must act quickly because they have a 60 day window to enroll in the COBRA plan. COBRA is the acronym that is short for the Consolidated Omnibus Budget Reconciliation Act. This law protects people by allowing the individuals that are eligible to continue their group health care plan for up to 18 months
Advantages of Short-Term Policies:
--Minimal Underwriting and speedy approval--typically 1-2 day approval --Typically half the cost or more than traditional permanent (guaranteed renewable plans) --Great choice for people in-between jobs or in waiting periods
Disadvantages of Short-Term Policies:
--Must buy for a specific term, typically 60-90 days (most carriers offer up to 6 months, though)
--Most plans do not include prescription coverage and office visits are subject to the deductible--not a copay.
--No coverage for maternity
--Limited Underwriting, but not always an option if you have ongoing medical treatments or illness (COBRA better option)
As a conclusion, short term health insurance plans work well for those who are in a financial transition period, especially those who are in a probationary employment period with a new employer.