If you are without health coverage for whatever reason – because you are unemployed for example, or newly graduated and looking for work – short term medical insurance is the ideal solution for you to have some form of coverage until you can get full time coverage. Depending on your particular health and financial situation, there are three alternatives for short term coverage – COBRA benefits, catastrophic health insurance and limited term health insurance.
COBRA (Consolidated Omnibus Budget Reconciliation Act) is a federal law that allows workers who have lost their jobs to continue their employer’s group health coverage for 18 months as long as they pay the full amount of the premiums plus a small administrative fee. Dependents such as your spouse (even if you are divorced) and your children are also eligible under COBRA even if you personally elect not to avail of these benefits; they can be covered for as long as 36 months. However, COBRA is not cheap; premiums alone can eat up over 80 of average nationwide monthly unemployment benefits. Employers, however, may give you the option of dropping certain benefits under COBRA to reduce premiums. And you can cancel COBRA coverage at any time; you don’t have to use up your full eligibility period.
A second alternative is catastrophic health insurance, which is also called a major medical health plan. While major medical health plans have low monthly premiums, they also have high deductibles (the share of the health bill the insured is required to pay). The policy usually pays only for major medical and hospitalization expenses (such as surgery, lab tests and diagnostic X rays) above the deductible, while you pay out of pocket for preventive health care (such as routine check ups) and prescription medicines; however, this type of plan may be sold in combination with a comprehensive plan that includes coverage for preventive care. This type of short term insurance also has a lifetime benefits cap; once your medical expenses reach that cap, the insurance company will not cover any further expenses and will terminate your policy.
The most affordable type of short term medical insurance is limited term health insurance. This type of insurance offers coverage for as short as 30 days and as long as a year, although it is renewable for as long as three years. Premiums are low and the application process is easy; you can get coverage the day after your application is approved. Depending on the type of policy you take out, you can enjoy as much as $5 million in individual coverage benefits. You can also see any health provider that you want.
However, limited term insurance does not cover pre existing conditions or health problems that you were already diagnosed with prior to your applying for the policy. Also, it usually does not cover the cost of preventive health care, only major health care expenses such as emergency room services, surgery, and hospitalization. You can also get coverage for your spouse and dependent children under a limited term plan. This type of health care policy is probably the most affordable alternative for you to get coverage until you can find employment that will provide you with health insurance.
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