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Short Term Medical Background

What Is It?

Temporary health insurance, such as Assurant Health’s Short Term Medical plan, is designed to fill short gaps in health insurance coverage. Typically, insurers offer coverage for periods ranging from one to six months. Assurant Health’s policies typically cover periods of 30 to 365 days, for example. Exact length of coverage may vary by company and by state.

Who Needs It?

Typical customers for Short Term Medical insurance are:

• People changing jobs or making a transition to a new career.
• Graduating students no longer covered by a family plan, but not yet covered by an employer’s group plan.
• New employees facing a short waiting period before becoming eligible for an employer’s group insurance plan.
• Workers who are in a part-time or temporary position for a short period of time.
• Employees who are laid off or on strike.
• Entrepreneurs starting a new business who want time to shop around for a more permanent insurance plan.
• Early retirees who may face a short waiting period before they’re eligible for Medicare.

What Does It Cost?

Rates vary by age, sex, area of the country, whether or not a spouse and/or children are covered, and plan features such as deductibles. Generally, temporary plans are more affordable than permanent insurance plans because the insurer is taking less risk.
For example, for a 25-year-old single male, rates for an Assurant Health $500 deductible, 80/20 plan would currently range from about $29 to about $87 for 30 days of coverage.   Typically, temporary health plans are about one-third the cost of continuing coverage through government regulated extension programs such as COBRA.

How Consumers Can Cut Costs

• Choose a high-deductible plan.
• Consider a 50/50 coinsurance option rather than the more typical 80/20. With the 50/50 option, the insurance company covers 50 percent of covered expenses after the deductible; the customer pays the other 50 percent up to a cap. Customers are protected from the costs of catastrophic illness or injury by the cap on the amount of out-of-pocket expenses they need to pay.
• If a consumer knows the exact length of time coverage is needed, he or she can usually save money with a one-time premium payment.

Costs of Not Having Insurance

Here are some claims that Assurant Health has paid under its Short Term Medical plan in recent years:

• $623,000 — spinal cord injury following a fall. (The consumer paid $266.40 for this $2500 deductible, six-month policy.)
• $466,000 — climbing accident
• $129,000 — aortic aneurysm
• $75,000 — pneumonia

Some Statistics

A 1998 Census Bureau study, “Who Loses Coverage and for How Long,” found that young adults (between the ages of 18 and 24) were the most likely of any age group to lack insurance for at least one month. More than half of this group was not continuously covered during the 36-month period studied. This study also found that about half of those who lost coverage lost it for 5.3 months or less. The same study found, not surprisingly, that 56.1% of those with one or more job interruptions were not continuously covered.

A 1999 Public Opinion Strategies survey report showed that there are a significant percentage of people who shift in and out of health insurance coverage. The survey data showed that 40% of the uninsured surveyed had coverage sometime during the year. Although there are many factors causing this movement in and out of the health insurance market, temporary health insurance may provide a solution for some of those who are uninsured for short periods.

Considerations in Choosing Temporary Health Coverage

Temporary insurance covers a limited period. Consumers who think they’ll need coverage for longer than six months may want to look at a more permanent health insurance option. Most temporary policies are not renewable. Some companies do allow consumers to take out a second short-term policy under certain conditions.

Temporary policies generally do not cover pre-existing conditions. The reasons are obvious to consumers who understand that insurance is designed to protect against the unforeseen. If pre-existing conditions were covered under temporary policies, people could just wait until they were diagnosed with an illness or suffered an injury, buy a policy to cover the treatment, then drop it. The cost of such policies would be prohibitive. Because temporary policies are usually designed to cover the unexpected, most do not include coverage for preventive care, physicals, immunizations, dental or eye care.

The definition of a pre-existing condition varies by state, but most temporary policies exclude conditions that have been diagnosed or treated within the previous five years. Consumers with an existing medical condition may want to see if extending their current insurance to fill a gap in coverage is an option for them. Employer-sponsored insurance can be extended under a government-regulated option called COBRA. Consumers also have rights to extend health insurance coverage under HIPAA (the Health Insurance Portability and Accessibility Act). Temporary health insurance policies are available in most states, but a few states require all
health insurance policies to be guaranteed issue and/or guaranteed renewable. Temporary insurance is not available in those states.

Temporary policies generally include a provision to handle coverage for ongoing conditions that begin under the policy, but continue after the temporary policy expires. Exact coverage will vary and may depend on whether the condition is short-term or results in total disability.

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