If you look for coverage somewhere other than www.healthcare.gov – you might get pitches for so-called “short-term” health plans.

While short-term plans may have attractive prices, these plans have shortcomings, leaving you at risk for costs down the road. They also don’t provide the minimum coverage needed to avoid a tax penalty under the Affordable Care Act for failing to have health coverage.

That means if you have a short-term policy, you could pay unexpected medical costs from a pre-existing condition and still get hit with the tax penalty. Also, renewal of short-term plans is not guaranteed, meaning that even after paying premiums and penalties, you could be left without coverage at all as the medical bills keep coming.

All plans offered through www.healthcare.gov are classified as “major medical” insurance and meet the requirements of the ACA. Major medical plans are also offered through some insurance agents outside of www.healthcare.gov. However, those plans must meet the federal definition of “minimum essential coverage.”

Major Medical Plans offering minimum essential coverage

  • Cover preventative care, such as check-ups and screenings for diseases such as cancer with $0 cost sharing;
  • Have no annual or lifetime caps on how much the policy will pay;
  • Cannot be canceled based on the health of the insured, or on the cost of claims;
  • Cannot deny coverage of pre-existing health conditions.

Short-term Plans:

  • May exclude coverage of routine and preventative care;
  • May have specific additional exclusions – providing no coverage for injuries incurred during competitive sports, for example;
  • May have annual or lifetime caps on benefits;
  • Are not guaranteed renewable;
  • Do not cover care of pre-existing health conditions.

Short-term plans may fit the needs of some consumers – such as those seeking coverage between open-enrollment periods – consumers considering these plans should examine the policies closely and should enroll in major medical coverage during the next open enrollment period.

If consumers are considering plans sold outside of www.healthcare.gov they should ask the following questions of the agent or broker.

Ask these questions:

• Is renewal of the insurance plan guaranteed?
• Are the lifetime and annual payouts on the plan unlimited?
• Does the plan cover pre-existing conditions?
• Does the plan meet the minimum essential coverage requirements of the ACA?
If the answer to any of these questions is “no,” the plan does not meet the minimum threshold of coverage needed to avoid a personal income tax penalty under the Affordable Care Act.”]
In addition to Short Term Insurance, there are other types of “medical” coverage that does not meet the requirements of minimum essential coverage. These are known as limited benefit policies and include such things as accident only, hospital indemnity, and specified disease (such as cancer). Often these policies offer fixed dollar payouts, but some of these limited benefit policies are “fee for service.”

If you are unsure about what type of coverage is being offered to you, call us at (800) 332-6148. The website for the federal health marketplace, www.healthcare.gov, is the only site that can connect consumers with the tax credits and subsidies to offset premium costs. You can also enroll in these plans through a local professional trained by our office.

To enroll in a plan that meets the minimum requirements under the ACA, go to www.healthcare.gov. Those who seek one-on-one assistance to enroll can find a list of people trained to help navigate the website here.

The next open enrollment period will be November 1, 2017 – December 15, 2017. There are also special enrollment opportunities that you can read about here. Individual major medical coverage is only offered during an open enrollment period or when a special enrollment opportunity is triggered by a life changing event, such as loss of employer coverage or the birth of a child.