A person wearing a white shirt with pink dots is carrying a clip board with a piece of paper that says "short term plan" and the words are crossed out in red.

Losing Medicaid or Other Insurance? Beware of Short-term Health Plans

Are you losing your health insurance and wondering about your options? You may have heard of a short-term health insurance plan. Before picking this plan option, it is important to understand how it may not cover your care. This blog explains what a short-term health insurance plan is, the risks of a short-term plan, and other options that may be available if you are losing insurance coverage.

What is a “short-term” health insurance plan?

Short-term, limited-duration health insurance plans are a type of health insurance that only provides coverage for a limited period of time. You may be able to buy a short-term plan for as little as one month, though some plans can be renewed for up to three years.

Short-term plans were intended to provide coverage for people who were between jobs or needed temporary coverage for other reasons. In 2019, it was estimated that at least three million consumers had short-term plans.

Many states have rules about short-term plans; some states limit how long you can have one and other states impose specific disclosure requirements on them. Four states (California, Massachusetts, New Jersey, and New York) forbid them altogether.

To learn more about the rules in your state, see our Chart of State Laws about Health Insurance Options.

What are the risks of a short-term plan?

Short-term plans are not required to comply with the Patient Protection & Affordable Care Act (ACA). This means that they do not have the same consumer protections that individual health insurance purchased on a state Marketplace does.

Short-term plans can deny people with pre-existing conditions, or charge them more for coverage. These plans are not required to cover essential health benefits and they are not required to have out-of-pocket maximums, which means that people with serious medical conditions like cancer will pay significantly more for their medical expenses.

Short-term plans may seem less expensive than other individual health insurance plans because they may have lower monthly premiums. While their premiums might be lower, premiums are only one part of the total cost of health insurance plans.

Short-term plans are often referred to as “junk insurance” because they may not cover many of the expenses associated with a serious medical diagnosis like cancer.

If my short-term plan ends, can I switch to Marketplace coverage?

A major problem with short-term plans is that they are not considered “creditable coverage.”  This means that when a short-term plan ends, they may choose to not renew the plan, if you now have a serious medical condition. And, if the plan ends outside of a Marketplace Open Enrollment Period, you will not be able to buy a Marketplace plan. The end of a short-term plan does not trigger a Marketplace Special Enrollment Period. So, you may be left without coverage until the next Open Enrollment Period.

Is a short-term plan an option if I lose Medicaid?

If you have Medicaid, it is important that you make sure that you are updating your information with your state Medicaid agency and that you complete any paperwork that is sent to you to renew your coverage.

Beginning April 1, states will be allowed to disenroll people from Medicaid who no longer qualify, for the first time since the beginning of the COVID-19 Public Health Emergency. This is being called the “end of the Medicaid continuous enrollment period.”

You can read our blog to learn about health insurance options if you are losing Medicaid.

One option you may want to consider is buying a plan through your state’s Health Insurance Marketplace. Depending on your household size and income, you may be eligible for financial help to buy a Marketplace plan.

According to the Centers for Medicare & Medicaid, four out of five customers should be able to find plans for $10 or less per month. A Marketplace plan comes with the consumer protections in the ACA and doesn’t leave someone open to the risks of a short-term plan.

How do I find reliable information about health insurance options?

Be careful when looking for health insurance information online. Some resources might seem like they are sharing unbiased information, but may actually be from companies or brokers trying to sell you something.

It is important that you understand all of your options so that you can pick the best plan for you. Here are some of the resources from Triage Cancer that may be helpful to you:

About Triage Cancer

Triage Cancer is a national, nonprofit providing free education to people diagnosed with cancer, caregivers, and health care professionals on cancer-related legal and practical issues. Through eventsmaterials, and resources, Triage Cancer is dedicated to helping people move beyond diagnosis.

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