Major Medical Vs. Short Term Insurance – What’s the Difference?

If you miss open enrollment (and the chance to sign up for Affordable Care Act plan), you may find yourself shopping around for short term health insurance. While this is common and there’s nothing wrong with some of these plans, it’s important to learn a little about the difference between major medical policies and short term insurance.

Here are the differences between major medical and short-term insurance plans:

Not Fully Covered

Most short term insurance plans do not meet the coverage requirements for Obamacare. While these plans can be fairly priced and offer a decent amount of coverage, they’ll rarely meet the coverage standards that major medical policies provide. As such, you can be open to penalties on your taxes if you rely on short-term insurance too long.

As standalone coverage, short term insurance may not be perfect. When combined with supplemental benefit plans, these policies can offer a robust alternative to traditional health insurance. Many individuals have found this combination to be superior to traditional health coverage in certain instances.

Major Medical Costs

While major medical insurance is often more expensive than short-term insurance, there’s good reason for this. You get way more benefits with a major medical plan than with short term insurance. However, due to tax credits for different income levels, major medical is often competitively priced when compared with short-term insurance.

One Time Deal

Open enrollment for Affordable Care Act plans only happens once a year. If you miss it, you may be stuck filling gaps with short-term insurance. The best course of action is to know when open enrollment is and shop around. Then sign up for the best policy for you before the period ends.

Negotiating Your Claims

One hassle stemming from short-term insurance is the claims process. With these policies, you have to submit all claims to the insurer. A major medical policy handles all billing and even negotiates better rates with providers.

No Guarantees

You have to apply for a short-term policy anytime you need coverage, and there’s no guarantee you’ll be accepted for a plan. Companies can decline your application – even if you’ve been approved for a similar policy in the past.

Doesn’t Qualify You

Just because your short term insurance policy runs out – you’re not eligible for Obamacare until the next open enrollment period. Running out of short term insurance is not a qualifying life event.

Lots of Flexibility

While short term insurance plans have their drawbacks, they do offer users a few benefits. These programs typically grant individuals a lot of freedom and flexibility, as they were created to fill voids and gaps.

Lower Costs

Short term insurance plans may not offer the best coverage, but they compensate in other ways. Many find short-term policies to be a lot cheaper than the previous major medical plans they carried.