When one has recently been given the pink slip, COBRA insurance usually steps in to continue coverage. However, its price tag could be very steep, and a better alternative might be short term insurance. These days, this cost distinction becomes even more important.
You might have heard the term COBRA insurance being bandied about at your workplace. It is essentially coverage that commences after a person loses his/her employment, so that coverage is continuous. But then, you might not be aware that COBRA coverage is often more expensive, and that you may not automatically qualify for it. In this scenario, temporary insurance provides a viable alternative.
Your short term insurance plan is also called temporary insurance, and offers typical short term benefits: primarily unexpected medical illnesses. A range of benefits including physician consults, hospitalization, prescriptions, diagnostic exams, ambulance services, and emergency care are usually part of the short term health insurance plan. As short term benefits usually go, you will not be covered for previously existing conditions and pregnancy.
Generally, temporary insurance plans are available for a month to a year, with easy renewal options. The “renewal” itself may be considered a new policy, so that the insured is once again evaluated for eligibility and new premium rates.
It is important to remember that short term insurance cannot be an adequate long-term health insurance plan. It is primarily meant as coverage for temporary periods. Long term health insurance plans offer several critical benefits not often available to the short term health insurance customer: scheduled physician visits and maternity, for instance.
When getting back on a regular long-term health plan, short-term medical insurance can often be counted toward creditable coverage for group plans. Labeling an insurance plan as creditable coverage means that the plan counts as equivalent coverage when determining pre-existing conditions and effective continuous period of coverage. Short-term medical insurance plans are usually not considered creditable coverage for individual plans.
One other factor that tilts the balance in favor of short-term medical insurance is the ease of signing up for a plan. Being a temporary plan, there are usually no lengthy underwriting procedures, and the plan can typically be purchased online.
If you are considering short term medical insurance, ensure that you want it as temporary insurance. It’s best if you are looking at purchasing short term medical insurance for six months or less. It also works well as an alternative to COBRA insurance, and can help you tide over uncertain periods in life.
Dan Miller often writes about short term insurance.