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11 Essential Short Term Terms

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The Words and Phrases You Need to Know to Make Sense of Short Term Health Insurance

1. Premium

Your premium is what you pay, usually monthly, to have your Short Term health insurance for a specific period of time.

Short Term Savings Tip

Looking for a way to make your cheap health insurance even cheaper? With some carriers you can get a discount if you can pay your Short Term health insurance plan premium up front in one lump sum.

2. Affordable Care Act (ACA)

You may know it as Obamacare, but whatever you call it, it’s the law that changed the health insurance landscape to what it is today. If you are shopping for Short Term insurance, also often called Temporary health insurance or Term health insurance, the important things you need to know about the ACA are:

  • The ACA does not consider Short Term medical insurance minimum essential coverage (MEC), because Short Term insurance doesn’t cover each of the 10 essential health benefits the law outlines. The ACA requires you to have insurance that meets MEC or face tax penalties. So, if you choose a Short Term insurance plan over an ACA health insurance plan, you may have to pay those tax penalties.1
  • You cannot be turned down for an ACA health plan due to any pre-existing conditions (often defined as conditions you have been diagnosed with or treated for within the last 2 to 5 years) you might have. If you find a qualifying plan you like and you can pay the premium, you cannot be turned down for coverage based on your medical condition. However, because Short Term health insurance is not ACA qualifying coverage, it has no such requirement. To get Short Term insurance, you must answer a series of medical questions that will be reviewed, and your acceptance into the plan is not guaranteed.

Short Term Savings Tip

With many Short Term medical insurance plans, you can choose from several deductible options and save money on your premium when you pick a higher deductible.

3. Deductible

Simply put, the amount of money you pay toward your Temporary insurance plan’s covered expenses before the insurance company starts paying anything is called a deductible.

4. Per Cause/Per Term Deductible

Some carriers offering Temporary health insurance plans give you the option to specify whether the deductible you pay applies:

  • “Per term,” meaning everything you pay toward covered expenses adds up over the course of your plan’s term until you meet that deductible, when the insurance company starts paying
  • “Per cause,” meaning you pay a separate deductible for each separate illness or injury during the course of your plan’s term

5. Guaranteed Issue

Short Term insurance plans are not guaranteed issue. Health insurance plans that are guaranteed issue do not turn customers down for coverage based on their pre-existing conditions, any health issues, illnesses, and conditions they currently have or have been diagnosed with. Short Term medical insurance plans are medically underwritten, and to get on a plan, you must first apply, answer a series of medical questions, and receive approval.

6. Term

Your term is the length of time you select your Short Term insurance coverage to last. The length of term you can choose varies by insurance carrier and state. For most plans you can choose a minimum of 30 days, or 1 month. Some states and plans allow up to just under 12 months of coverage. Either way, Short Term plans can typically offer flexibility for the amount of time you may need coverage. Check plans in your state for more details.

Short Term Savings Tip

Picking the “per cause” option if it’s available means you are taking on more responsibility for paying your health care costs. In exchange, you can often get a reduction in the cost of your Short Term insurance premium.

7. Coinsurance

Say you’ve met your Temporary health insurance plan deductible. Your coinsurance is a percentage you pay of your covered medical expenses after you’ve met your deductible. So if you’ve met your deductible and you have a bill totaling $100 and a coinsurance of 20%, then you pay $20 of that $100 covered expense while the insurance company pays the other $80. You pay your coinsurance until you hit your out-of-pocket maximum.

8. Copay

Certain Short Term health insurance plans offer copay options, for example, a $40 copay for a doctor visit or a $25 copay for generic prescription drugs. Basically, a copay is fixed amount you pay for a certain service. Copays usually do not count toward your deductible. Check your plan for specific information.

Short Term Savings Tip

When it comes to covered expenses, you need to check the details of any Temporary health insurance plan carefully to make sure it covers what you need. However, if it covers more than you need, you may consider looking at a plan that costs less and has fewer benefits or covered expenses. In your situation, you may not need the benefits someone else does (maybe you don’t need prescription coverage, for example).

9. Out-of-Pocket Maximum

Your Short Term medical insurance plan’s out-of-pocket maximum is the most you will pay toward covered expenses during the course of your plan’s term. Once you hit your out-of-pocket maximum, your insurance company pays for 100% of your covered expenses. Note: If the plan you picked includes copays, you may still be responsible for those copays beyond your out-of-pocket maximum.

10. Covered Expenses

Your covered expenses are those health care services or items covered by your plan. No health insurance plan covers everything, and this is especially true of Short Term health insurance, which is not required to cover the same health benefits the ACA requires. Be sure to check your policy carefully to make sure you are aware of any exclusions or limitations regarding coverage of preexisting conditions or health benefits. Your policy might also have lifetime and/or annual dollar limits on health benefits. If this coverage expires or you lose eligibility for this coverage, you might have to wait until an open enrollment period to get other health insurance coverage.

11. Network

The carrier of the Short Term medical insurance plan you choose will likely have a list of doctors and other health care providers to use when you have health care needs. This list can be called a network or PPO. Using doctors or facilities from that list means you are choosing “in-network” care. Going to a doctor or facility that isn’t on that list means you are going “out of network” for your care.

Check your Short Term health insurance plan for details regarding any restrictions on going to doctors or facilities outside the network. But even if there aren’t any restrictions, it usually makes more sense to stay in-network when you can. In-network doctors and providers have agreed to provide care at a discounted rate for holders of that health care plan, so staying in network can save you money.

Short Term Savings Tip

Make it easy on yourself to stay in network, where you get the most savings. Before you select your Short Term insurance plan, make a list of all the doctors and other health care facilities (hospitals, pharmacies, urgent care facilities) you use regularly. Match those against what’s in network for the plans you’re considering. You may find that one plan gives you the most chances to stay in network.

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