I notice some insurers offer the option to buy two or more consecutive short-term policies with no medical underwriting required after the first application. So does that mean I’d be covered if I buy a sequence of short-term policies and then get sick?
Probably not. Each of the consecutive policies that you would buy would likely include a pre-existing condition exclusion. So, for example, if you are healthy enough to buy two consecutive short-term policies today, and then you get cancer while covered under the first policy, your cancer would be considered a pre-existing condition when the second policy starts and so would be excluded from coverage under the second policy.
By contrast, a qualified health plan sold through the Marketplace will never exclude pre-existing conditions.
I’m pretty healthy now. Does it make sense to buy a cheaper, short-term policy now, and then go back to a Marketplace policy if I do get sick?
That strategy involves some risks. First, if you do get sick while covered under a short-term policy, it might not cover benefits for the care you need. For example, many short-term policies don’t cover, or only provide limited coverage for prescription drugs.
Second, if you do get sick while covered under a short-term policy, the insurer can look back to see if your condition could be considered “pre-existing.” For example, if you are diagnosed with cancer, the insurer might decide the cancer was growing in you before you bought the policy, even though you didn’t know it, and so exclude coverage for the pre-existing condition.
Third, if you become seriously ill or injured while covered under a short-term policy, the insurer will most likely refuse to sell you new coverage once your policy term ends. At that point, you might be able to buy a comprehensive policy through the Marketplace that won’t turn you down, but these are only offered during annual Open Enrollment periods and new coverage won’t start until January 1. That means you could be uninsured for many weeks or months before new Marketplace coverage begins. Loss of coverage under a short-term policy will not make you eligible for a special enrollment period to buy Marketplace coverage mid-year.
I heard about a short-term policy that has an option to renew. Does that mean I can keep it even if I get sick after buying the policy?
Maybe. Under a new regulation issued by the Trump Administration, short-term policies can include renewal features that would enable people to continue coverage for up to three years. However, before buying the policy, it would be important to know if the policy is renewable at your option or at the option of the insurance company. If it is only renewable at the insurer’s option, you probably wouldn’t be allowed to renew after you get sick.
It would also be very important to ask about how renewal premiums will be set. Short-term policies in most states are allowed to set premiums, including renewal premiums, based on health status. So if you do get sick, even if you have the right to renew the policy, you might not be able to afford to keep it.
Yes. In general, the application for short-term policies will ask questions about your current health status and your health history. Depending on your answers, if you have or have had a pre-existing condition you might be turned down or charge more. How short-term policies treat you also depends on where you live. A few states have passed laws to prohibit short-term policies from discriminating based on health status.
No. Only polices offered through the Marketplace are eligible for premium tax credits.
I notice short-term policies are for sale outside of the Marketplace and they are cheaper than many other policies. What is a short-term policy?
As the name implies, a short-term health insurance policy offers coverage for a period of less than 12 months. Many offer coverage for just 3 to 6 months. Beyond that term, coverage generally can only be continued if the insurance company agrees. This is sometimes called a non-guaranteed-renewable policy. If you’ve made claims since you bought the short-term policy, the insurer can, and likely will refuse to continue coverage once the policy term ends.
In addition, short-term policies do not offer other protections found in Marketplace plans. For example, short-term policies can exclude coverage of pre-existing conditions. Short-term policies also typically do not cover essential health benefits such as prescription drugs, mental health care, substance abuse treatment, or maternity care.