Individuals need to be aware that an ACA plan is not only their available option to meet their annual health insurance coverage need but they also have the option to obtain a short-term health plan too. Short-term health plans unlike traditional health insurance plans provide healthcare coverage for a limited period of time generally not longer than 12 months. Thus, this temporary health insurance plan is ideal for people who are temporarily uninsured like individuals who are in-between jobs, waiting on the employer or government-sponsored health benefits, or have missed the ACA open enrollment period due to any reason. A short-term plan may be beneficial for individuals based on their health insurance needs and employment situation.
The major differences between the short-term and major medical plans are outlined below that will help people decide which plan will be beneficial for them.
Short Term plan unlike the Major Medical Plan does not require to meet the ACA requirements. Short-term health plans unlike the major medical plans do not require to cover all the ten essential health benefits. Most of the short-term health plans are designed to protect people against sudden medical illnesses and injuries. ACA-plans are designed for a long term solution whereas short-term plans are good for temporary protection and when individuals are in transition. Major medical plans are required to cover the ten essential health benefits while short term plans don’t have to meet the guidelines set by the ACA.
Duration and Renewability
The duration of short term plans ranges from 30 days to 12 months and choosing the length of coverage depends upon the individuals. Short-term plans are quickly approved and go into effect immediately after applying. Major medical plans on the other hand can last for a complete year. According to the new rule, short term health plans are renewable for up to 36 months in states that follow federal guidelines, whereas major medical plans have no restriction on renewability if an individual likes a plan and find it to be affordable, and if the plan is available from year to year, then he/she can indefinitely have the same plan.
Healthcare Provider Networks
Short-term plans have a broader network compared to major medical health plans. However, both major medical plans and short term plans are available in different plan types, like an HMO, a PPO, and POS plan, etc. Generally, major medical plans usually restrict provider networks to small regions, thereby making finding a doctor accepting one’s plan difficult. Individuals may find a doctor who accepts their plan at one hospital but another doctor may not accept their plan at the hospital across town. Contrary to major medical plans, temporary short-term plans have larger networks spanning a greater area than a major medical plan and provide broader access to healthcare providers. Due to the larger networks, people will be able to save money by sticking with an in-network provider. Most of the health plans including both major medical plans and short-term plans don’t cover any care that individuals receive outside a network.
Individuals can apply for a major medical plan during the open enrollment period, which is a six-weeks duration starting from November and ending in the middle of December. Individuals can apply for a major medical plan outside the open enrollment only if they qualify for a special enrollment period based on a major life change like the birth of their child or loss of their job. However, with the short-term plan, individuals can sign up for the coverage at any time during the year. This is the feature that makes the short-term plan a good option if people miss out on the open enrollment period for ACA plan, or if they signed up during the open enrollment period but their plan will become effective from January and they have no other coverage in place for this period. Major medical plans don’t start right away and there is usually a period during which people need to wait for a plan to become effective, whereas short-term plans almost immediately start sometimes even the next day if people have paid their premium.
The major medical insurance plans premium is higher compared to short-term plans, though people get a lot more coverage with an ACA-plan. Individuals who are unable to afford the increasingly high cost of regular health plans in the private market, then they can opt for short-term plans that have a low premium price and even their out-of-pocket costs are lower than a traditional health plan. Individuals who are in good health could save a lot of money with a short-term plan, especially if they are buying short-term plans as stopgap medical protection for transition times in their life.