Are you in good health with few or no medications? Are you tired of paying hundreds of dollars for health insurance coverage you have never used and likely never will? You like hundreds of thousands of other responsible adults are stuck in the ACA financial death trap. Let me explain.
One of the major reasons the ACA (obamaCare) was enacted is that far too many individuals were declined for health insurance coverage, some that had just minor health issues. Hard working small business owners, individuals working for small business and people out of work and in between jobs. The ACA guarantees that every American, regardless of health can obtain health insurance and pay the same rate as their neighbor of the same age. When the plans were first offered premiums in most areas were somewhat affordable. Most states had between 6-10 plans to chose from with a wide range of deductibles, co-pays, networks and out of pocket maximums. However, after that first year it was discovered that far too few healthy individuals were buying these plans. This caused a rate increase that resulted in even fewer healthy individuals buying their coverage on the public exchange, causing even more rate increases. Fast forward to 2017 and most states are down to 1-3 carriers and anything but affordable pricing. This is why a large number of my customers are choosing Short term coverage.
Pros and Cons
First it’s important to know what short term coverage does not cover and the limitations. Under the ACA annual checkups are covered at no cost. With most term plans you will pay for checkups. ACA plans cover pre-existing conditions, not so with term. Finally one of the biggest considerations should be the individual mandate. Under the Affordable Care Act an individual that does not have group or ACA coverage can face a penalty of 2.5% of adjusted gross income or $695 a year, whichever is greater. So whenever comparing prices, you want to add in the potential penalty to the term plan. There are other ways to avoid the penalty as well that you should review with your agent.
The most important part of setting up a short term plan is designing it so that the term plan ends and you’re renewing it at the end of the year (in states that have 1 year terms). The reason for this is that risk is minimized by being up for re-enrollment at the same time as open enrollment for Obamacare. Say you purchase a plan on March 1st. You’d want to do a 10 month term and renew in December. I’ll give you an example of why. I’n June you have a stroke. They are going to pay your medical bills to the end of the year, but once your term is up they are no longer going to want your business. It doesn’t matter though, you signup for ObamaCare. Yes, you’re going to pay more but you’re getting your moneys worth now. That coverage is worth every penny and you saved a lot in premium dollars until you absolutely needed the ACA coverage.
In conclusion there are risk to consider, but if you’re a healthy person that rarely goes to the doctor and know you need to protect yourself from surprises but don’t want to pay hundreds or even thousands of dollars in doing it, a short term health insurance plan could be a great option.