Avoid Short-Term Health Insurance
As the coronavirus outbreak continues, some companies are forecasting higher health insurance premiums in 2021. If you have recently lost your job or are already thinking about opening an enrollment suddenly, there are some types of insurance to stay away from. Short term health insurance may seem like a less expensive upfront, but these plans may cost you in the future. That’s why.
What is short term health insurance?
Short Term Limited Term Insurance (STLDI), which has been around for decades, was created to fill gaps in health insurance for people like job changeers and students. The Obama administration opposed the STLDI, limiting the policy to less than three months , but the new rules expanded the plans to one year, with the option to extend it for three years.
The National Association of Insurance Commissioners states that these plans may seem ordinary health insurance, because they cover the same things. While cheaper monthly fees may make STLDI attractive, you may not get the coverage you expect. These plans are more affordable because they do not have to comply with the Affordable Care Act (ACA) laws.
For example, STLDI must not offer coverage for basic ACA benefits such as preventive care, mental health insurance, or prescription drugs. STLDI plans may also have annual dollar caps or lifetime benefit caps, and they may exclude coverage for pre-existing conditions.
According to a February 2020 report from Milliman Research, you can spend a lot more on treating a newly diagnosed condition with STLDI compared to an ACA-compliant plan. To make matters worse, your STLDI doesn’t need to renew your policy after diagnosis, so you could lose your health insurance when it’s time to enroll again.
What to do if you can’t afford health insurance
If you are facing a layoff from your job, you may be worried about how to afford health insurance. Luckily, you have options, even if you’re struggling to pay the bills. The most expensive option may be to keep your former company’s insurance plan by signing up for COBRA .
You can also buy plans from your state health insurance market or Healthcare.gov . You may qualify for a special enrollment period due to job loss – along with reduced equity participation – which can make the plan a lot more affordable.
Your household may also be eligible for Medicaid, which may offer free or low-cost health insurance, depending on your income. You can learn more about how to apply for Medicaid, including financial and non-financial rights, here .