Considering a short-term health insurance plan?

Ask yourself these questions as you make your decision.

Shopping for health insurance can be challenging. If you’re concerned about costs, the low premiums of short-term health plans, often just called short-term plans, or limited duration plans or policies, may catch your attention. But low premiums don’t always save you money.

If you’re shopping for health insurance, here are five things to think about. When looking at a short-term plan, use these points to help determine if this type of plan can work for you or leave you with unexpected medical bills.  

What is important to you?

This is the starting point, and probably the most important consideration in making decisions about health insurance. What are the things that matter to you? Is it prescriptions, services for particular health conditions or access to specific providers? Are costs a top priority, and if so, is your focus on monthly premiums or what you’ll spend at the doctor? Figuring out what is important to you will give you an idea of what you want and don’t want in a plan.

Will a short-term plan work for you?

Short-term plans may come up short in many of these areas, as they are not required to cover prescriptions, in-patient hospital stays, outpatient surgery or pre-existing conditions. In fact, if you have a pre-existing condition, a short-term plan can deny you coverage, or charge you more in premium because of that condition, or exclude that condition from coverage. The lower monthly premiums of a short-term plan may not help you save money because you may pay more out of pocket for all the things the plan doesn’t cover.  

How often do you (or your family) need care?

No one can predict the future, but your past medical visits (and bills) are a place to start. They’ll give you an idea of the medical services you’ll need going forward. Plus, if you know of anything coming up that will impact your health, throw that information into the mix. The important thing is to come up with a ballpark idea of expected needs.

Will a short-term plan work for you?

Because short-term plans typically have limits on benefits, and they typically don’t cover  pre-existing conditions and aren’t required to cover many routine benefits, they may not fit your needs. Even if you only expect a moderate amount of care in the coming year, a short-term health plan could leave you responsible for the bulk of your medical bills. Many short-term plans do not have a network of contracted providers. Although this means that you can choose any provider you want, it also means you miss out on savings you get from contracted provider discounts. And, you don’t always know how the plan will determine how much it will allow as the “allowable charge”. This means that you will be responsible for the entire difference between what the provider bills and what the plan decides is the “allowable charge”.

What are the routine benefits you’ll need in a health plan?

Routine benefits are those things that are going to come up, whether you planned for them or not. Preventive care and wellcare (think annual check-ups, lab tests and vaccinations), prescriptions and maternity and newborn care. When talking about ACA-compliant plans, these are often called essential health benefits

Will a short-term plan work for you?

While short-term plans are required to cover state mandates, such as maternity care, those mandates are specific and narrow. And maternity care is only covered if the pregnancy occurs after you are covered by the plan and only for the plan duration. A second short-term plan after the first one ends will deny maternity care as related to a pre-existing condition. Short-term plans are not required to cover benefits such as inpatient hospital stays, outpatient surgery and many other routine benefits, meaning that you won’t have coverage for many of the common healthcare services you’ll need.

Are prescriptions critical for you?

Do you take maintenance medications regularly for conditions like diabetes, asthma, high blood pressure or other chronic conditions? Do you expect to have any kind of major medical procedure in the coming year where prescription medications would likely be part of the recovery process (pain or anti-inflammatory drugs or antibiotics)? Filling prescriptions is the most common interaction people have with their health insurance, so it makes sense to understand how prescription coverage works. It’s best to look into your plan, or the plans you are considering, to understand how they categorize and cover prescriptions in general, along with knowing how your specific prescriptions are handled.

Will a short-term plan work for you?

Prescription drugs are not required to be covered by short-term plans. They also are not required to cover treatments for pre-existing conditions, which for many might include prescriptions, especially those for chronic conditions. If prescriptions are important to you or your family, a short-term plan could come up short for your coverage.

Weigh the options: Lower monthly premium with less coverage and higher costs at the doctor or hospital VS. Higher monthly premiums with more coverage and protections and lower costs at the doctor or hospital

This is the basic choice when considering different health insurance plans. Do you want a lower monthly premium that comes with higher costs when you visit the doctor or healthcare provider? Or would you be willing to pay more in premiums to have the insurance pay more when you use healthcare? It’s not always easy to predict your health needs or your health costs, but doing a little bit of work can often show you which options could be more costly than others.

Will a short-term plan work for you?

The low premiums of a short-term plan can look attractive, but will those lower premiums actually save you money in the long run? Or will the limitations of such plans leave you paying significantly more for your healthcare needs?

The DOI can help

While the Division of Insurance can’t tell you which health insurance plan is right for you, we can help guide you through the questions to ask in making your choices, as well as helping you to understand the terminology, concepts and processes. Our dedicated Consumer Services team helps people untangle the complex world of insurance, as well as investigating formal complaints about insurance companies or insurance agents. Contact us at 303-894-7490 / 1-800-930-3745 (outside of the Denver metro area) / DORA_insurance@state.co.us, or for more information, visit AskDORA.colorado.gov and click the “health insurance” tab.


 

Contact Information
Division of Insurance, Colorado Department of Regulatory Agencies
1560 Broadway, Suite 850
Denver, CO 80202