Short-term health insurance is an affordable and flexible alternative to staying uninsured, especially in a world that sees an increase in the rate of diseases and the outbreak of pandemics like never before.
Sedentary lifestyles due to increased urbanization, the effects of pollution, climate change, and increased human-animal conflict are some of the many important reasons that contribute to an increase in the disease burden across the world.
With people becoming more health-conscious than before, frequenting hospitals for regular check-ups has become a common phenomenon in the modern world. Subsequently, there is immense pressure on the health infrastructure to deliver quality health care to the people, driving up the cost of treatments by manifold.
This is exactly where health insurance comes to the rescue of the citizens. Without medical insurance, the spendings on healthcare can burn a hole in the pockets of the citizens. With insurance, one can stay worry-free about the expenditure made for sound health.
Broadly, health insurances are of two types- long term and short term. While long-term health insurance is for people who need more health coverage, short-term health insurance is for relatively young healthy people who do not want to risk medical expenses, as illnesses and health emergencies do not come with prior notice.
This write-up is to make you aware of all the details of short-term health insurance.
TABLE OF CONTENTS:
1. What is short-term health insurance?
2. Who is it for?
3. What are the services covered?
4. How much does it cost?
5. Benefits of short-term health insurance
6. Drawbacks of short-term health insurance
7. What to consider while shopping for short-term health insurance?
What is short-term health insurance?
As the name suggests, it is temporary health insurance with validity equal to or less than a year. The validity can range from anywhere between 30 days to 365 days. After the end of the policy period, one has to renew to be able to continue with the policy. Renewability is for a maximum of 3 years with short-term health insurance.
Generally, the premium with short-term insurance is less than what you need to pay for long-term insurance, which makes it an affordable option. Also, in most cases, the coverage starts within a day of approval of your application process, which is pretty quick in case there is an urgent need.
Who is it for?
This is for those who are in need of temporary medical insurance to bridge the gap between long-term plans. People in the following situations can opt for a short term health insurance plan:
- Transitioning from one job to the other. If you are dependent entirely on your employer's health insurance plan and you decide to switch employers, you are not covered under it during the transition period. Hence, this can be a good option.
- When switching from one insurance company to the other?
- Young adults who are not covered anymore under their parents’ health insurance can go for it until they obtain a more permanent solution.
Usually, in the above circumstances, a young healthy person is tempted to go uninsured. But, an unforeseen health need during this period could result in the person paying 100 percent out of the pocket. In such a situation, a short-term plan can come handy and limit the person’s out of the pocket spending.
Having said that, short-term health insurance is not for everyone. It does not typically cover preventive care like immunizations, pre-existing conditions, maternity expenses, etc. which means it is partly based on the health and the age of a person.
What are the services covered?
Although short-term health insurance offers lesser health coverage, it provides some help from unexpected medical bills.
Services broadly covered include:
Hospitalization: expenses like bed charge, doctor visit, room rent, cost of surgeries. Operation theatre charge etc.
Health check-ups: regular visits to the doctor can help to detect ailments in the early stage for a better outcome of the treatment.
Pre and post hospitalization charges: Some treatments require the patient to join in advance and also stay in the hospital for a longer duration after the treatment and short-term insurance typically covers such expenses.
It is to be noted that these are the broad services offered by short-term health insurance in general. The health services offered do vary between countries and also the insurance providers or states in the same country. So always look for the services offered in your location.
How much does it cost?
Generally, the premium paid for short-term health insurance is less than what is paid for long-term plans. Premium is the monthly amount a policyholder pays to get covered under the plan.
This is because one, the coverage (health benefits) provided by a short-term plan is not as extensive as a long-term plan, two, because there are more limitations. A person’s application for short-term health insurance can be declined based on health concerns, like pre-existing health conditions.
The premium one pays also depends on the deductibles. A deductible is an amount a policyholder has to pay by himself for a covered health service before the coverage for it by the insurer starts. The higher the deductible, the lesser the coverage, the lesser the deductible, higher the coverage.
Further, if a person does not claim the insurance during the policy period, he/she can claim a bonus which is the No Claim Bonus (NCB). It is basically a discount on the premium one gets for the following year if the insurance is renewed.
Benefits of short term health insurance:
Low premium - this makes it an affordable option. Without health insurance you could end up paying the entire amount out of your pocket, should you encounter unexpected spending.
Flexibility to enroll and drop whenever you want- in many cases, coverage starts right from the next day of the approval of your application, so you can quickly get covered when you think there is a need. It allows the policyholder to switch seamlessly between insurance providers in case the required coverage is not satisfactory or when better insurance products are available or for any other reason. The policyholder does not have to wait until the plan expires.
No Claim Bonus - it is a reward that the policyholder gets for maintaining good health and not claiming the insurance during the policy period. It is either in the form of bonus money added to the sum insured or a discount on the premium.
Tax benefit - this is an added bonus. Policyholders can claim a deduction in the tax for the premiums paid.
Drawbacks of short term health insurance:
Frequent renewals: since the validity of this type of insurance is less than a year, one has to go for the renewal process every few months or every year which can be tedious for the policyholder.
Limitations: It only covers new medical problems. Not everyone is eligible, people with pre-existing conditions, i.e, health conditions diagnosed 2-5 years prior to the application process are declined. Pregnant women cannot apply for it as well.
Overall premium is more: On choosing a long-term policy, the providers usually give a discount on the premium.
Health coverage: it offers lesser health services than a long-term plan.
What to consider while shopping for short-term health insurance?
Policy period: check for the length of the policy coverage i.e, how long you will be needing it. If it is not automatically renewed, you may want to reapply.
Benefits: short term health insurance provides limited benefit coverage. You may be paying a lesser premium for a short-term plan, but it may not provide you the level or type of benefits you actually need. It is important to weigh your individual health care needs and obtain the right coverage both for your health and budget.
Networks: if you want to keep your preferred doctor, hospital, or health care provider choose a plan that does not include network restrictions. Some plans offer discounts if you are flexible and are okay to go with the participating providers.
The uncertainties in health these days make medical insurance a nonnegotiable want. Given the expenses for medical treatment, it is always better to stay covered. It can fill the gap and keep you stress-free while you look for a long-term health insurance policy.
Frequently asked questions(FAQs):
1. What is short-term health insurance and what does it cover?
It is a temporary health insurance plan and can fill the gap between long-term plans. Consider it if you are shifting employers, a young adult, newly married with no young children.
2. Is short-term health insurance cheaper?
Yes, the premiums paid are lesser than the standard health insurance making it an affordable option. But remember that the health services provided are limited, if you are generally a healthy person not requiring frequent appointments with the doctor, this is a good option that can save you money.
3. What are the disadvantages of short-term health insurance?
It does not cover pre-existing conditions, maternity expenses, or preventive care. The health services offered by it are not as extensive as conventional health insurance.