01 Mar 2019

Is Short Term Medical Insurance Creditable Coverage?

Is Short Term Medical Insurance Creditable Coverage?

Short Term Medical Insurance Plans are a type of Major Medical insurance giving individuals the health coverage they need for a specific period, usually up to 364 days. It is unlike regular health insurance and does not have time limits. Under the Health Insurance Portability and Accountability Act (HIPAA), Short Term health insurance is considered creditable coverage.

When it comes to health insurance, creditable coverage means you had a prior health insurance policy in place and will get credit for it when applying for a new plan. Having a creditable health insurance policy in place could mean the difference between coverage for pre-existing conditions or no coverage.

Should You Consider a Short Term Medical Plan?

In the past, Short Term medical coverage was not a creditable option because of the Affordable Care Act or ACA. Considered to be “catastrophic policies,” Short Term health insurance plans do not cover the Ten Essential Health Benefits that ACA individual policies are mandated to cover. Those Ten Essential Health Benefits include:

  • Emergency services
  • Ambulatory patient services
  • Hospitalization
  • Mental health and substance use disorder
  • Maternity and newborn care
  • Prescription drugs
  • Rehabilitation services
  • Laboratory services
  • Preventive and wellness services
  • Pediatric services, including oral and vision care

Short Term coverage is not intended for everyone. It is an affordable option for those who are in overall good health, no other chronic conditions, or complex medical needs. If you have requirements such as mental health care, maternity coverage or different complex medical situations, ACA Plans may better serve you. Short Term Medical Insurance works for those who:

  • Are in between major medical plans.
  • Missed the Open Enrollment for ACA Plans.
  • Looking for a less expensive option than COBRA.
  • Aged out of a parent’s health plan, are a student or recent graduate.
  • Recently retired, but too young for Medicare.
  • Can’t afford coverage under the ACA.

It is important to keep in mind if you are considering Short Term Medical Insurance that you understand you must reapply after each term. Plus, you could be denied for pre-existing conditions. Insurers may review up to five years of your medical history.

Short Term Medical Insurance Will No Longer Incur a Tax Penalty

Before 2019, those who held Short Term medical coverage were subject to a tax penalty for not having an ACA policy. After a new Executive Order was signed in 2017 by President Trump to roll back restrictions on Short Term plans, not only were Short Term plans extended to 364 days from 90 days, but those who carried them would no longer be penalized in 2019.

While you may no longer face a tax penalty for carrying a Short Term plan, it’s important to keep in mind that Short Term policies are not comprehensive. You still may find coverage gaps, like coverage for pre-existing conditions. However, if you are a healthy individual and looking for immediate protection, you can benefit from Short Term coverage. For example, many plans provide drug discount cards, but no prescription coverage. While maternity complications may be covered, Prenatal Care and Newborn Care may not be. In addition, most plans do not cover Preventive Care, but some may cover selected benefits through cost sharing.

Understanding Your Options

Life happens, plans change, and maybe Short Term medical coverage is the best solution for your current situation. After all, some coverage is better than no coverage.

Before you buy, here are some things to consider:

  • Read the plans fine print, know what it covers and doesn’t cover.
  • Understand what you will pay out of pocket.
  • Know what the dollar cap on coverage or the lifetime benefit maximum is.
  • Make sure doctors, and the preferred hospital is in the network.
  • Choosing Short Term medical coverage over COBRA will mean you will not be eligible for COBRA after the plan expires.

If you are ready to learn more about the protection Short Term Medical Insurance can provide, contact the professionals with HealthQuoteInfo.com at 1-855-614-5057. Our licensed insurance experts will be happy to answer any questions you have.


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