In­sur­ance for the short term

What to con­sider when pur­chas­ing a health pol­icy for tem­po­rary cov­er­age.

Los Angeles Times - - NEWS - By Lisa Zamosky healthcare@latimes.com Twit­ter: @lisazamosky Zamosky is the au­thor of “Healthcare, In­sur­ance, and You: The Savvy Con­sumer’s Guide.”

Af­ter leav­ing a full-time job in North­ern Cal­i­for­nia ear­lier this year, Chris­tine Mor­ri­son is with­out work­based health in­sur­ance for the first time since the age of 18.

Now 26 years old, the Glen­dora res­i­dent is work­ing at a temp job as a hu­man re­sources re­cruiter. She ex­pects to soon have another full-time job that of­fers health ben­e­fits.

To fill the gap in her in­sur­ance cov­er­age un­til she set­tles into a new po­si­tion, Mor­ri­son chose to buy a short­term health in­sur­ance pol­icy.

“I fig­ure within six months I’ll be in an ac­tual ca­reer where I would have ben­e­fits again, so I wasn’t look­ing for any­thing longterm,” she says.

Short-term health in­sur­ance poli­cies are just what their name im­plies. They are de­signed to pro­vide tem­po­rary cov­er­age pri­mar­ily to peo­ple like Mor­ri­son who have a gap in em­ployer in­sur­ance or who missed open en­roll­ment un­der the Af­ford­able Care Act.

The poli­cies have be­come more pop­u­lar since the health law took ef­fect, ac­cord­ing to a re­cent anal­y­sis of in­sur­ance pur­chases by eHealth, the coun­try’s largest online health in­sur­ance bro­ker. It found that ap­pli­ca­tions for short-term poli­cies more than dou­bled be­tween 2013 and 2014.

These plans are ap­peal­ing for a few rea­sons.

They’re less ex­pen­sive than ma­jor med­i­cal health plans, par­tic­u­larly for peo­ple who earn too much to qual­ify for fi­nan­cial help from the gov­ern­ment.

“The price is sig­nif­i­cantly bet­ter than vir­tu­ally any­thing you can get un­der the ACA — un­less you’re fully sub­si­dized,” says Pa­trick Burns, pres­i­dent of the Cali- for­nia Assn. of Health Un­der­writ­ers.

The na­tional av­er­age monthly pre­mium for short­term plans sold by eHealth was $110 in 2014 for in­di­vid­u­als and $262 for fam­i­lies. By con­trast, un­sub­si­dized ma­jor med­i­cal plans av­er­aged $286 a month for in­di­vid­u­als and $727 for fam­i­lies.

You can buy a short-term pol­icy at any time dur­ing the year, mak­ing it one of very few cov­er­age op­tions for peo­ple out­side of open en­roll­ment.

“There are a fair amount of peo­ple who didn’t un­der­stand that af­ter March 31st, they couldn’t get a health plan,” says Nate Pur­pura, vice pres­i­dent of con­sumer af­fairs at eHealth.com.

“Short-term is the prod­uct of choice” when peo­ple aren’t el­i­gi­ble to buy in­sur­ance af­ter open en­roll­ment closes, he says.

Ex­perts out­line some im­por­tant de­tails about short­term health in­sur­ance poli­cies, how they dif­fer from ma­jor med­i­cal plans, and what to con­sider when buy­ing one.

Com­ply­ing with the health law. Short-term poli­cies don’t meet fed­eral stan­dards in the Af­ford­able Care Act and won’t help you avoid a fed­eral fine for go­ing unin­sured. For 2015 the penalty is the greater of 2% of your an­nual tax­able in­come or $325 a per­son.

That’s a crit­i­cal de­tail Mor­ri­son didn’t un­der­stand when she bought her pol­icy.

“The only rea­son I have health in­sur­ance now is so I don’t get in trou­ble by the gov­ern­ment,” she says. “Now that I know I might get fined any­way, it kind of seems worth­less.”

Mor­ri­son’s sit­u­a­tion il­lus­trates the need for on­go­ing ed­u­ca­tion on the part of the state’s health in­sur­ance ex­change, Cov­ered Cal­i­for­nia, says Gerald Komin­ski, di­rec­tor of UCLA’s Cen­ter for Health Pol­icy Re­search.

“It shouldn’t take a PhD to fig­ure out the mar­ket­place. We have to make sure peo­ple un­der­stand what the mar­ket is of­fer­ing,” he says.

Un­der­stand­ing all your op­tions. Mor­ri­son could have con­tin­ued her work­based in­sur­ance plan for up to 36 months af­ter she left her job early this year.

But the cost to con­tinue her plan through COBRA (the Con­sol­i­dated Om­nibus Bud­get Rec­on­cil­i­a­tion Act), she says, was “atro­ciously ex­pen­sive.”

Another op­tion she had was to shop for a ma­jor med­i­cal plan that does com­ply with the law, ei­ther through Cov­ered Cal­i­for­nia or a pri­vate bro­ker.

The health law gives you 60 days from the ter­mi­na­tion of your job-based plan to en­roll in a self-pur­chased in­di­vid­ual or fam­ily health in­sur­ance plan out­side of the an­nual open en­roll­ment pe­riod.

If Mor­ri­son had ex­er­cised this op­tion, she could have avoided the tax penalty.

And be­cause she isn’t earn­ing much money right now, she likely would have qual­i­fied for a sub­sidy al­low­ing her to buy a ma­jor med­i­cal plan for about what she’s pay­ing now for her short­term pol­icy.

Pre­ex­ist­ing med­i­cal con­di­tions. The Af­ford­able Care Act pro­hibits ma­jor med­i­cal plans from deny­ing peo­ple cov­er­age on the ba­sis of their health or charg­ing higher premi­ums for those with pre­ex­ist­ing con­di­tions. Short­term in­sur­ance, poli­cies, how­ever, aren’t re­quired to com­ply with this part of the law The most im­por­tant thing you need to know is they don’t cover pre­ex­ist­ing con­di­tions. In fact, if you have a pre­ex­ist­ing con­di­tion, your ap­pli­ca­tion may be de­clined,” says Pur­pura of eHealth.

In ad­di­tion, these poli­cies don’t gen­er­ally cover ma­ter­nity or men­tal health treat­ment, or pre­ven­tive health ser­vices such as an­nual check-ups, colono­scopies or mam­mo­grams at no cost.

Pay and cov­er­age lim­its. The health re­form law also for­bids most health plans to im­pose life­time lim­its on what they pay to­ward care. Not so with short-term poli­cies.

Ac­cord­ing to Burns, spend­ing lim­its vary widely among short-term poli­cies, com­monly rang­ing from $100,000 to $1 mil­lion.

Time lim­its. Short-term poli­cies are good for up to 11 months. Af­ter that, you gen­er­ally can’t re­new the plan, though you can switch from one com­pany to another if it turns out you need more time.

When you ap­ply, you can choose to make a lump-sum pay­ment up­front if you know ex­actly how long you’ll need the pol­icy. You can also pay month-to-month and can­cel the plan at any time up to the max­i­mum term limit.

Ir­fan Khan Los An­ge­les Times

CHRIS­TINE MOR­RI­SON bought a short-term health in­sur­ance pol­icy while look­ing for a new job.

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