Oberman Insurance Services

Short-Term Health Insurance: Cheaper is not Always Better!

About a month ago, I received a call from a former client who was between jobs. She let her health insurance policy lapse and said “something” happened over the weekend and she needed to see a doctor right away. She wanted to purchase an individual policy and thought a short-term policy would be the answer. Here are some facts about short-term health insurance, sometimes called “junk” health insurance policies, and why we discouraged her from purchasing a short-term plan. Basically, short-term plans are exempt from many of the consumer protections of Obamacare. Among other things, the Affordable Care Act bans insurers from discriminating against applicants with preexisting conditions and requires policies to cover a comprehensive list of services. Short-term plans, in comparison, typically do not cover pre-existing conditions and may not offer coverage for important medical services such as diagnostic lab tests, prescriptions and maternity coverage. Our friend needed an MRI and blood work services many times not covered on short-term health plans. Additionally, any treatment would be considered to be for a pre-existing condition and not covered. Office visits and hospitalization are very limited – all the more reason that we typically suggest these plans only in very limited situations, and why SB 910 proposed by Senator Ed Hernandez (D-Azusa) wants to eliminate these plans entirely. On the national front, President Trump wants to make these plans more available, though not necessarily more useful for consumers, extending coverage from 90 days to 365 days because they are less expensive than full health insurance. When these plans are limited to 90 days, the damage they do to the unwitting consumer, who believes they will have the protection of a genuine insurance policy, is limited. Expanding these policies to 365 days is risky and may have unintended consequences. And, unless you qualify for an exemption from the individual ACA mandate, you may still be subject to a penalty. (The individual mandate is still in effect in 2018, although people who are uninsured in 2019 and beyond will no longer be subject to a penalty.) Last week, a group from VICA and Cal Chamber visited the state Capital to support SB 910 and a host of Job Creator bills.

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