SHORT TERM HEALTH INSURANCE - TEMPORARY
SOLUTIONS
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Short Term Health Insurance
Short term health insurance is a temporary solution for immediate
coverage for a limited time; that could
be one month or six months. With some
companies, short term health insurance
can be extended for an additional 6 months,
thus extending the option of having temporary
insurance up to one year. In most cases,
this extension only applies if no claims
were processed in the first 6 month term.
There are some serious precautions to consider if applying for
a short term / temporary insurance plan
if you have exhausted your Cobra
benefits -- Cobra meaning you continued your company-sponsored
health insurance plan/benefits after
departure from the company as an employee.
The option called "Cobra" is based on a federal law providing
guaranteed continuance of health insurance
for departing employees that have no
other guaranteed option for insurance
such as another employer plan, even if
it has lesser benefits. Here is where
the rub comes in. Everyone who applies
for short term health insurance following
exhaustion of Cobra needs to be aware
of the following: Short term insurance
application and underwriting is not at
the level of permanent coverage. This
means that someone could qualify for
short term insurance and not qualify
for permanent coverage.
The HIPAA guaranteed option,
another legislated option that allows
Cobra participants who exhaust Cobra
and still need guaranteed continuance of insurance due to pre-existing
conditions, is only available during the 63 days following the exhaustion
of their Cobra option.
If you have pre-existing conditions and you take out a short
term plan and it is issued, and you keep
that plan over 63 days, you have lost your right to (HIPAA) guaranteed
permanent coverage. Now you could find yourself uninsurable. In
the state of California the largest percentage of bankruptcy cases
is due to medical bills.
Short Term / Temporary Insurance at its Best
When should someone consider short term insurance? This product
was designed for very specific needs and has provided a great service
for all in need of immediate coverage on a short term basis. Before
we discuss who is the best prospect for short term insurance; I
would like to explain the different payment options offered by different
companies and how that can play a part in your decision deciding
which insurance company plan to buy.
Here is an example: there are
those who purchase short term coverage
and are not sure how long they may need coverage. If a student graduates
from college, he or she may decide not to go through the process
of permanent coverage, especially if their in excellent health and
25 years of age; plus, short term insurance is less expensive. The
short term plan fills the gap till an employer plan is secured.
This could be one month or 6 months. If they choose a Blue
Cross short term plan, he or she has to pay for the term chosen. If he
buys a 6 month plan to be safe, he must pay the 6 months in advance
and there isn't any return of premium if they end up only needing coverage for 3 months. Blue Cross has excellent plans but they work best if you know exactly the term needed for coverage.
Say a company hires you and has a 90 day probation period before
you're entitled to company benefits.
Blue Cross is a great choice in this
situation. On the other hand, if you
lose your job and can't afford Cobra
and you have no idea just exactly how
long you'll need coverage, Health Net
has a plan that you can pay monthly.
With this plan you're in control
and can stop the coverage on any given
month. Keep in mind that the longest
initial term is 6 months. Yes! You can
extend it for another 6 month term but
only if no claims have been filed under
the previous term.
Who buys short term insurance 99% of the time? Occasionally
we have people that buy short term coverage
from various companies and use them like
they're permanent plans. They may do
this just because the application process
is brief or they may have medical conditions
that will only surface during the comprehensive
underwriting review required to obtain
permanent coverage. The risk of doing
this for whatever reason is this: if
you develop a new medical condition while
on a temporary plan, not only will you
not be able to extend or apply for another
short term plan, you may not qualify
for a permanent plan either. It's very
important to understand this.
Here is a list of who buys short term insurance: graduating students,
job seekers, short term coverage as an alternative to Cobra's
high cost, moving out of state, coverage during the probationary
period for new employees, and yes, even those too lazy to fill out
a permanent insurance application. I just had to add that.
Overview of Short Term Insurance Benefits
When you move from a company sponsored plan to
a short term plan, it is important to know that the benefits differ.
Short term insurance is designed for unexpected illness or accidental
injury. Preventive care such as well baby care and basic exams are
not a covered benefit. Another factor to consider, maternity isn’t
covered. Also basic benefits like office visits are not covered
till your deductible is met; the one exception to that is the 750
deductible plan sponsored by Health Net. Prescriptions may or may
not be covered till you meet your deductible. Make sure you understand
what your plan will cover and what it doesn’t. We all know
that having expectations of something that doesn’t exist is
a fast track to unhappiness. Your greatest resource of knowing exactly
what your buying is to work with a broker.
Easy Enrollment and Immediate Coverage
The great thing about short term insurance is that the application process takes about 5 minutes. Most plans provide online enrollment and the medical questionnaire is brief. Unlike permanent coverage, the application process for most short term plans simply ask a few Yes & NO qualifying medical questions; if answered (No) they will issue the coverage. Most short term plans have immediate coverage available. I would also like to touch on what I really like about short term plans. If you're in good health, most of our concerns are unexpected accidents, this is because in most cases it is the negligence of other people that bring this to our table. Now for the good news, if the medical condition is caused by an accident (not an illness), the deductible is waived. Yes! No deductible is applied. Is that fantastic or what? I hope this article helps you to understand the Pros and Cons of Short Term Insurance.
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