Allen Health Insurance Agent: Short Term Medical Plans « Independent Income Advisors

Allen Health Insurance Agent: Short Term Medical Plans

Monday, June 13, 2016 @ 10:06 AM
Author: Peter Young

Short term medical plans offer a solution to people who for some reason lose health insurance during the year and don’t qualify for a Special Enrollment Period that would let them get back in compliance with Obamacare.

Short term medical plans have been around for quite a time.  They offer a major medical type of coverage, usually up to a million dollar maximum, for up to 11 months at a lower premium that is below the typical Obamacare plan.  The downside is that they do ask health questions and won’t cover you if you get too many wrong – and they don’t cover preexisting conditions.  And, of course, they don’t comply with Obamacare, so if you’re covered under one for more than three months, you will be subject to Obamacare penalties when you file your 2016 taxes.

They are still a good solution in certain cases, the most obvious being the person between jobs who expects to covered under another group insurance plan within three months.  (Short term medical plans being cheaper than COBRA in the majority of cases.)  Then there is the case of the woman who called a month ago who was certain that she had signed up for health insurance at her new job, only to have her human resources department or the group insurance company lose her paperwork.  She discovered the loss only after her enrollment period had passed so here she was, seven months before she could buy Obamacare coverage, and not qualified for a Special Enrollment Period.

Of course, she could complain – and I encouraged her to do so – but in the meantime she was exposed without any coverage.  A short term medical plan was the answer.  Yes, she will have to pay a penalty, but compared to what she would have to pay in medical bills if she got sick or injured, the penalty isn’t much.

According to the Wall Street Journal, however, the government wants to prohibit anyone from buying a short term medical plan that runs for more than three months.  The fear is that people would choose short term medical as either a politically correct or less expensive alternative to Obamacare.  To extent, the fear is valid – healthy people qualify for the cheaper insurance, leaving the sick to Obamacare thus driving up Obamacare premiums even further – but banning the coverage beyond three months will leave some people out in the cold.

Instead of banning useful tool, a better answer would be to make health insurance less expensive.  That can be accomplished with true healthcare reform – finding ways to make healthcare less expensive.

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