Categories
All Articles Money & Finance

Short-Term Health Insurance

I’m a healthy 40-year-old male with a BMI of 23 who doesn’t smoke. I have no heart disease in the family and don’t do any drugs. I don’t have any pre-existing medical conditions and eat a 99% whole plant-based diet.

I would say that such an individual is unlikely to develop a chronic medical condition. But the health insurance marketplace quotes me at least $296/month (2018 prices) for the cheapest monthly premiumĀ  – with the highest deductible.

Catastrophic Coverage

As a healthcare consumer, I’m less worried about cancer since I am not a fan of chemotherapy or radiation. But what if I get hit by a car? What if I get an anaphylactic reaction? Or a skin and soft tissue infection needing inpatient management?

In this post, I will discuss short-term health insurance as an option for healthier individuals who don’t want to pay the higher traditional health insurance premiums.

Short-term health insurance is also referred to as Short-term limited-duration health plans or sometimes just STLDI.

Traditional Health Insurance

If I am a good driver with nothing on my record, then I can get stupidly cheap auto insurance. But if I have a couple of DUIs, at-fault accidents, and traffic violations, I would have to pay a very high monthly insurance premium.

Health insurance companies don’t risk stratify you the same way as other insurance companies do because of recent legislation in the health insurance marketplace.

The same insurance for a 60-year-old healthy male would cost $651/month (more like $1,000 in 2023 dollars), which is only twice as much as my potential premiums, even though the insurance spending on that person would be drastically higher.

With the health insurance mandate repealed for 2019, I am no longer forced to carry health insurance. Unfortunately, the insurance premium costs haven’t shifted – I am still stuck with a very expensive monthly premium if I choose to purchase health insurance through the exchange.

Looking back at this 5 years later, at least in hindsight, it was a good idea. Fortunately, now there are other options like cost-sharing plans such as Sedera or CrowdHealth.

Health Insurance Exchange

If you buy health insurance outside of the health insurance exchange, then the details of the contract don’t have to comply with the Affordable Care Act.

Common ACA guidelines include mandatory free preventative care, obstetric care, predictable out-of-pocket expenses, etc. But, ever since the ACA was enacted in 2010, premiums have increased by ~105% on average.

And, now, as of 2023, premiums are so high that this can hardly be called an insurance product.

This brings me to one health insurance option which can be purchased outside of the health insurance exchange: short-term health insurance.

Short-Term Health Insurance

Let me grab your attention by showing you how much short-term health insurance can cost for a healthy 40-year-old:

The most important things I can say about short-term health insurance are:

  • they are legitimate alternatives to traditional health insurance
  • the devil is in the details of the contract
  • they are short-term but can be extended
  • there is no contract, you can pay month-to-month
  • it becomes active immediately

Several companies are competing in this space and there is quite a bit of variability from one insurer to the next.

It would seem wise to hire an insurance broker who is familiar with these products. The good news is that you won’t pay the broker any money – they make their commission from selling the product.

$35/month

For $35/month, for example, EverestĀ would provide me with a short-term medical (STM) contract with a $5,000 deductible and $9,000 out of pocket of maximum expense.

The maximum benefit for the policy is capped at $250,000. If you are struck by a truck and need multiple surgeries and weeks of ICU stays followed by rehab, you’ll burn through that $250,000 very quickly.

There is a long list of exclusions as well which you’ll find on any standard health insurance contract. However, this one, for example, includes cataracts and kidney disease, chronic fatigue syndrome, etc.

Telemedicine option

For an extra $9.95/month you can add on Teladoc which will allow you to have access to a physician 24/7. Lots of other health insurance plans use Teladoc as an add-on service. I expect that we’ll see a lot more telemedicine options over the next few years.

Pre-existing conditions

For those of us who were sentient before the ACA, we know all about pre-existing conditions. It’s how most life insurance and disability policies work. In fact, it’s how your car insurance works, right? You can’t get car insurance after you’ve already gotten into a crash.

Short-term health insurance will exclude many of your pre-existing conditions. Should you decide not to disclose them, you’ll still get likely denied because your insurer will do a thorough search on your before approving any care.

Skipping Health Insurance

I have decided to self-insure my health which is a bold move. I have considered the extent of interventions I’m willing to undergo for a particular health issue.

I also don’t have anyone depending on me financially which is a big factor in making this decision. If I get terminal cancer, I am comfortable enjoying my last few months/years without any intervention.

The chance of major trauma is lower at my age though still possible. I am a full DNR for the more severe traumas, but I would fall into the gray zone for less severe ones.

I am also comfortable flying to another country and obtaining my health care somewhere else. Some refer to this as medical tourism, and there are whole industries designed around this.

Finally, as an added layer, I have health insurance in Spain because I have a second temporary residency there. I pay $70/month into their public and private plans, which is mandatory for my non-lucrative visa.

Obviously, my case is very different from yours, so make your decision with the guidance of your financial advisor. But at least consider the short-term health insurance option if you are a good candidate for it.

Health Cost Sharing Plans

Sedera and CrowdHealth are examples of health cost sharing programs, which represent a non-traditional approach to managing healthcare costs. These types of programs are often referred to as health sharing ministries or health sharing plans, although they are not insurance in the traditional sense.

Members of these organizations typically pay a monthly “share” or “membership fee” similar to a premium in traditional insurance. This money goes into a communal pool. When a member has a healthcare expense that meets the criteria outlined by the organization, they submit a need or request, and money from the communal pool is used to pay their medical expenses.

These health sharing plans operate based on guidelines set by the organization, which can include restrictions on pre-existing conditions, requirements for healthy behaviors, or limits on certain types of care.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.