For a lot of people, health insurance is a complicated subject. With Obamacare added into the mix, it gets even more confusing. In today’s post, we will take a closer look at the differences between short-term medical and major medical insurance so you’ll know which option is best for your needs.
- Major Medical Insurance Plan – This insurance covers all the benefits required by the Patient Protection and Affordable Care Act (Obamacare) such as outpatient care, emergency services and hospitalization. You can find a complete list of the essential health benefits here.
- Short-Term Medical Insurance Plan – Also known as bridge health insurance, these plans provide coverage for a short amount of time when you are transitioning into a new job or moving to a new location.
Coverage for Each Plan
Major Medical Insurance Plans
These insurance plans cover group health insurance and insurance for individuals and families. The former is offered by employers to their workers, while the latter is purchased by an individual or family on a non-government website.
Major medical plans also include subsidy-eligible qualified health plans, which may be offered to those whose income is up to four times the Federal Poverty Level. Other considerations are the cost of insurance in your location as well as the size of your family.
Those with low income can also qualify for Medicaid (which can be availed by low-income earners of every age) or Medicare (for individuals who are over 65, dialysis patients and disabled people of any age).
Short-Term Medical Plans
These plans are not designed as an adjunct to major medical plans. Instead, they provide coverage for a short period to people who can’t afford or do not qualify for major medical insurance plans. If you’re waiting for your employer-sponsored insurance plan to begin, then this option is recommended so that you and your family won’t be without medical coverage within that time period. This type of insurance offers coverage for as long as 1 year.
Short-Term Medical: Frequently Asked Questions and Answers
1. Will short-term medical insurance make you pay the tax penalties for the ACA?
Short-term plans don’t meet the major medical benefit requirements of the ACA so you’re not protected from tax penalties if you’re without major medical for more than 2 months within one calendar year.
2. How long can I keep this insurance plan?
The Affordable Care Act allows you to be without a major medical plan for two months (consecutive) before you’ll be required to pay a tax penalty, which needs to be paid at the end of the year.
3. Can I buy short-term insurance after the enrollment period?
If you miss the open enrollment period and are now without major medical coverage, you will need to purchase short-term medical unless you have a “qualifying life event.” The next open enrollment will begin on November 1st 2016 until January 31, 2017.