What Is Temporary Health Insurance?

Temporary or short term health insurance, is designed to provide stop gap coverage for people who do not currently have medical insurance and only need it for a short period of time. Such a policy can also be used by people who do not receive coverage under their primary policy during certain times of the year.

People who may therefore benefit from having, or who may require, short term medical coverage, could include:

• Anyone who has recently become unemployed.

• New employees who do not yet qualify for a company group plan.

• College graduates.

• People who are waiting to be accepted for a health insurance policy.

• Teenagers who are no longer covered by their parent’s policy.

• Early retirees.

• Workers on strike.

• Students on summer holidays.

As you can see from this list, anyone who is not currently insured for medical expenses would benefit from taking out a short term temporary policy, until they are able to secure a more permanent major medical policy or receive full coverage under their existing policy.

Of course, one may choose not to insure themselves at all if they know that they will be getting a permanent policy soon, but whether or not one decides to take this course of action really depends upon the length of time that they will remain uninsured against medical costs.

If one does remain uninsured for a significant duration, such as 3-6 months, then there is a very real risk of suffering from a large uninsured loss should you become ill or injured and require medical attention during that period.

As medical bills can be very expensive, many people choose not to take this risk by enrolling in a short term temporary health insurance policy instead. This provides them with the coverage that they need, whilst also giving them peace of mind knowing that their finances are not in jeopardy.

How Long Does Temporary Health Insurance Last?

Most insurance companies offer short term coverage plans in increments of 30, 60, 90, 120 and 180 days with a coverage limit of $1-5 million. In addition, there are usually options for choosing out of pocket expense limits.

What this means is that you can take out a policy to cover you during any periods in which you are not currently insured for, even if this is for a relatively short period of time such as 30 days.

This can make insuring yourself against medical expenses very cost effective, as you will be able to insure yourself only for the periods when you think that you may need it, after which, you will then be able to fall back on your regular long term policy.

If you need to remain insured for longer, then it is also possible to renew your policy by extending your coverage period. Although, it should be noted that most insurers will only allow you to do this up to a maximum of three years coverage.

Any claims made during your coverage period may also disqualify you from renewing your policy, however, you may still be able to take out another policy at a later date.

What Are You Insured For?

With a short term health insurance policy you will be insured for most of things that a standard policy would insure you for. This can include things such as:

• Any surgery that you require

• Care you receive in hospital

• Emergency services and care

• Diagnostic and lab tests

• Some prescription drugs

• Mental health care

• Doctor visits

It is important to note however, that the extent of your coverage will largely depend upon your coverage limits. The higher your limits are, the greater the coverage that you will receive against your medical expenses. Of course, this will mean that your policy will cost you more to take out and maintain, but as you are taking the policy out on a temporary basis, most people should find such policies to be quite affordable even with high coverage limits.

In general, temporary health insurance will not insure you for pre-existing medical conditions, preventative care, dental expenses or vision related expenses.

How Much Does It Cost?

Most people who take out temporary health insurance tend to be quite healthy, and only a small percentage of those within an insurance pool will ever make a claim. As a result, getting short term coverage tends to be relatively inexpensive due to the perceived low risk by your insurer.

Males of age 30 can expect to pay a premium of around $140-150 per month, and females around $130-140 per month. This of course is providing that you are not a smoker, heavy drinker or drug user, as such risk factors will increase your premium costs. Rates are higher for individuals over 30, but usually not by a significant amount.

Some companies will also allow you to pay your premiums in advance if you choose to do so. Such policies are certainly worth looking out for as there is usually a discount offered for paying up-front.

Deductibles & Co-payment ratios

Depending on what company you take out your policy with, your deductible will be paid on a per-injury or per-illness basis. Your deductible is the amount of money that you are required to pay before your insurer will start to cover the rest of your expenses. Generally, the higher your deductible limit is set at, the lower your premium rates will be.

After your deductible limit, your insurer may pay out 50-80% of the next $5000 of your medical expenses. This is known as the co-payment ratio, and it tells you how much you will have to pay out after you have paid your deductible.

So if your co-payment ratio is 20-80 for example, you will have to pay 20% of the next $5000 after your deductible, and your insurer will pay the remaining 80% of those expenses. After the $5000 limit, your insurer will then pay out 100% of the rest of the costs. This limit however, may vary depending on who your insurer is. So be sure to check with your insurer to find out exactly what their limits are.

It is also worth bearing in mind that just like with your deductible limit, you can also save money on your premium costs by having a higher co-payment ratio. This means that you agree to pay out a higher percentage of costs up to the $5000 limit after your deductible.

This is certainly something worth considering as it can save you a significant amount of money. But make sure that you are in fact receiving a worthwhile discount for doing so, as by having a higher deductible or co-payment ratio, you are taking on considerably more uninsured risk.

Advantages Of Short Term Health Insurance

One of the main advantages of having short term medical coverage is that it will cost you far less than having a regular long term policy. This is because you will only be insured for a short period of time, and you are also deemed to be of low risk in terms of making a claim during your coverage period.

Temporary coverage is also very advantageous for people who find themselves without health insurance, such as those who have recently become unemployed or teenagers who are no longer covered by their parent’s policy. It can also be very beneficial for individuals who want to cover gaps in an existing policy, such as college students whose college health insurance does not insure them during the summer months.

Furthermore, the large majority of temporary health plans can be used with any doctor or hospital. This means that your coverage is not limited to “in-network” members as it can be with traditional health plans, which can be advantageous should you need to see a specialist for example.

Finally, it is usually a lot easier to get accepted for short term medical insurance than it is for major medical coverage, which may be helpful for those who are having difficulties getting accepted into a permanent policy.

However, whilst temporary medical insurance does offer many advantages, there are also certain disadvantages that you should be aware of.

Disadvantages Of Having Temporary Medical Coverage

Temporary health insurance will cover you in the event that you need medical treatment, but it will not cover any pre-existing medical conditions. This means that if you have been treated for something before in the past, such as an illness, and it occurs again, you will not be covered for any claims you make to your insurer for expenses relating to that condition.

Another disadvantage, which can be quite a severe one, is that your coverage runs out when your period expires and you can only renew your policy up to a maximum of three years*. As a result, if you still require medical treatment, or are in the process of receiving medical treatment after the expiration of your policy, then you will have to pay for the rest of your medical costs by yourself.

* Your insurer will usually not guarantee that they will renew your policy. So your renewal request could be denied.

It is also not uncommon for temporary health insurance policies to only apply to your home country. So if you travel abroad frequently, you will not be covered for any medical expenses incurred in a foreign country.

Finally, in the event that you do need to make a claim, you may find that receiving your claim settlement takes substantially longer than it would do with a regular health insurance policy. This could therefore result in you having to pay your medical expenses until your insurer approves your claim. There will also be some expenses that you will not be insured for, such as those relating to dental or vision treatments.

Who Can’t Be Insured?

Almost anyone can take out a short term health insurance plan. Generally, if you are under 65 years of age, have never been denied medical insurance and meet the insurer’s height and weight guidelines, then you shouldn’t have a problem getting temporary health insurance.

If you do not meet these guidelines, then you will most likely be considered ineligible to receive a temporary health plan.

Should You Use Short Term Medical Insurance?

Taking out temporary health insurance is generally not recommended unless you really need it and have no other options.

For example, if you are between jobs and have no health insurance, then a temporary policy can help to protect you against uninsured losses until you find another job and secure yourself a permanent health insurance plan.

Students may also benefit from temporary medical insurance, as student health insurance tends not to provide coverage during the summer holiday period. Incidentally, this is also the time when most accidents happen to teenagers, so having temporary insurance can again be a good way to protect against uninsured losses.

So generally speaking, if you have existing medical coverage then you probably don’t need to take out temporary health insurance, because doing so will likely cause your policies to overlap and therefore will just end up wasting you money. The only exception to this, is if you have specific gaps in your policy that a short term policy could help you to fill.

When Applying For A Permanent Policy

One possible use for temporary health insurance is during the period when you are applying for permanent health insurance.

Since it takes time for your application to be processed, usually 30-60 days, having some health insurance during this period can provide you with coverage in the event that you require medical treatment before your application is approved.

There is also the very real possibility that your application may be denied, in which case, having temporary health insurance will help to provide you with limited coverage until you can find a more permanent solution.

In order to use temporary medical insurance in this manner, it is recommended to take out temporary coverage for at least a 60 day period, and at the start of that period, apply for your long term permanent health insurance policy.

On your application form you will be able to specify when you would like your long term health insurance to begin. You can therefore schedule the start of your policy to begin when your short term health care coverage period expires.

How To Buy

The best way to use and benefit from short term health insurance is by following the advice given in the previous section.

Your first step should therefore be to determine a period of time in your future where you will not be covered by your existing health insurance policy. Once you have done this, you should then have a date that you would like your temporary insurance coverage to begin and also have an idea of roughly how many days you would like to be insured for.

Bear in mind however, that you may have to round up or round down the number of days that you determine, as most companies will offer to insure you for a set number of days such as 30, 60, 90 days etc… rather than for a specific number such as 36, 63 or 91 days..

Find out what coverage you actually receive

The next step, is to speak with your insurance agent or adviser about what type of coverage you will receive from your policy and what you will not be insured for. This is important as it will help you to minimize your risk of suffering from uninsured losses by closing unnecessary coverage gaps.

It is advisable to speak with your agent about coverage first rather than cost, because your primary aim should be to get a policy that sufficiently protects you against risk. There is no point in having a low cost policy for example, if it means that you end up paying large amounts of money out of your own pocket whenever you make a claim.

How much risk are you willing to take on?

Once you are happy with the level of coverage that you are receiving, the next step is to think about the coverage limits that you want, or how much risk you are willing to take with your deductible limit and also with your co-payment ratio.

Having a good level of coverage doesn’t necessarily have to be prohibitively expensive if you are willing to take on a higher deductible and co-payment ratio. So if cost is a major concern for you, then you may want to take on this added risk by going for the highest deductible or co-payment ratio that you can afford.

Also, be sure to inquire about paying your deductible up-front, as this could further help to save you money.

Remember, you are most likely to find the best short term health insurance policy if you shop around. So be sure to look around your local area and also search online. Shopping online is probably your best bet for finding a good deal, as you will be able to compare prices and offers very quickly and easily.

Signing your policy agreement

Before you sign your policy agreement, make sure that you review it carefully so that you are getting everything you specified and at the price that was agreed. At the end of your policy, you can either let it expire if your long term medical insurance comes into effect, or renew your temporary policy if it has not.