Permanent Health Insurance vs Short-Term Health Insurance

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Permanent Plans for Continuous Security

Most people want long-term health insurance, which provides continuous coverage and is renewable for multiple years (typically to age 65, when people become eligible for Medicare). Long-term or permanent plans typically insure both major medical expenses (e.g., hospitalization and surgeries) and routine medical expenses (e.g., office visits and prescriptions), subject to deductibles, co-payments and co-insurance.

Short-Term Plans for Temporary Situations

Inexpensive short-term health insurance is temporary (usually from 1 to 6 months) and should not be used as a substitute for long-term health insurance.

Short-term health insurance may be right for you if you are:
  • Between jobs
  • Waiting for coverage from another health plan to start
  • Laid off
  • On strike
  • A recent college graduate
  • A seasonal employee

Why Buy a Short-Term Health Plan?

Short-term health insurance has its advantages:
  • Cheap
    It is relatively inexpensive, sometimes a lot less expensive than permanent insurance.
  • Fast
    It can usually go into effect as soon as the day following submission of the application.
  • Easy
    Compared to a lengthy application for permanent health insurance, the short-term application is child's play. Short-term applications typically contain only a few yes/no medical history questions and take only minutes to complete.

Short-Term Plan Limitations

The scariest thing about being insured under a short-term health plan is that you could come down with a serious medical condition and then your policy terminates -- as scheduled. You could then be in a position in which you cannot qualify for private permanent coverage, and that is not a good thing.
  • Gap Coverage Only
    Short-term medical plans are intended as interim or "gap" coverage. They are for people who know, with some certainty, that they will be replacing the short-term coverage with long-term health insurance. such as an employer-sponsored plan,
  • No Preventive Care Coverage
    Short-term plans are designed to provide protection from unforeseen illness or injury; they usually do not cover routine exams, preventive care, or immunizations.
  • No Coverage for Pre-Existing Conditions
    Short-term plans are exempt from HIPAA legislation. So short-term health insurance companies do not guarantee renewal or waive the pre-existing condition limitation for federally eligible individuals.

Play it Safe

If you are unsure about your long-term health insurance situation, you should purchase permanent health insurance and you should do it right away.

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