Short-Term or Temporary Health Insurance Pros and Cons

Advantages and disadvantages of affordable temporary health insurance.

I've been a health insurance agent since 1985. I manage a website that helps people find affordable temporary health insurance as well as permanent medical insurance.

A short-term health insurance plan is one that is designed for people who have short-term needs. People between jobs who expect to get medical coverage at their next job fit into this category. Also recently graduated students who can no longer be covered by their parents' policies often find that a short-term policy is the answer that will cover them until they can get their career started.

Temporary plans work very similarly to permanent plans. Insurance companies that offer these plans usually offer traditional health insurance plans and/or PPO and/or HMO plans and may offer similar deductible options on their short-term health insurance plans.

The biggest difference is that the temporary plans usually cannot be renewed beyond six months or a year from the effective date. The insurance companies charge less for short-term polices because of this. If you are currently healthy enough to qualify for a policy, it is less likely that you will have a big expense in the next six months, as compared to the next ten years. Our health tends to deteriorate gradually.

Advantages of Temporary Health Insurance Plans:

Short-term medical coverage is usually much less expensive. It's often half the price of a permanent plan with a similar deductible.
Many short-term medical insurance plans will cover you as of the day after you complete their application.
If you have a pre-existing condition, you are more likely to be accepted for a short-term plan than for a permanent plan. However, although you may be covered for other expenses, treatment for the pre-existing condition will probably not be covered.

Disadvantages:

Pre-existing conditions will probably not be covered. Most policies will indicate that it will not pay for treatment for any condition that you have had treatment for in the recent past.
Short-term policies cannot be renewed beyond a certain point. Often six months is the limit. Although, some plans allow you to reapply, there is no guaranteeing that you will medically qualify for the second temporary policy.
Short-term policies may not be considered "creditable coverage." This can affect how pre-existing conditions are covered by your next policy.

Often the clients who come to me looking for these types of plans have just left their job and their former employer's COBRA option is not affordable. Since they are often unemployed or under employed, the lowest cost medical insurance option is all they can afford. However, I always make them aware of the limitations of temporary health insurance plans so that they can make an informed decision.

My biggest fear is that a client will purchase a short-term plan and develop a serious condition during shortly after their coverage goes into effect. If this is not a pre-existing condition, the policy should cover the expenses during the term of the policy. However after the policy expires (usually six months or less), the client may not medically qualify for another plan.

The top affordable temporary health insurance companies will differ from state to state. One way to find coverage is to contact your state's insurance department and ask for a list of the companies offering policies. You may find, for example that in Connecticut the premiums for the Fortis short term health insurance plans are the lowest, but find that in California a different company should be your top choice. Shop around or work with a broker that represents several companies.