With the increase in premiums on ACA (ObamaCare) plans and more areas of the country having little or no options for personal health insurance, many consumers are purchasing Short term medical plans. There are some things you should know about STM’s before you buy though.
No Pre-existing Conditions
First, short term medical does not cover pre-existing conditions. This means that any medical issue you have dealt with in the last 12-24 months will not be covered under your STM plan, this includes medications. So if you have expensive medications or you think you may need costly treatments for a current condition, you may want to consider another alternative.
The second thing to consider is that STM plans do not meet the individual mandate law under the ACA. This means that you will likely have to pay the penalty (Currently 2.5% of income) come tax time. Any savings that you may receive from choosing a STM plan should factor in the ACA penalty.
The third thing to keep in mind about short term medical plans is that they are short term and that plan renewals are based off of your good health. This means that if your health takes a turn for the worse your plan should cover your treatment until the end of the term. However, at the end of the term your carrier is likely to not accept you for a new term. You could be left without coverage at a time that you need it the most. For this reason I usually recommend purchasing a permanent supplement with your policy that can only be cancelled because of non-payment and not ill health.
STM plans can be a great value for healthy individuals. In Greenwood, IN where my office is located, terms plans start at about $60. But, it’s important to weigh the pro’s and con’s when deciding on the type of plan that is right for you and your family.