If you suddenly become uninsured, you probably want to find and enroll in new health insurance immediately. After all, life keeps happening.
Fortunately, there are three ways to get covered as soon as possible:
Short-term health insurance — also known as short-term medical insurance, STM, and short term limited duration insurance.
Individual major medical insurance — also known as ACA plans, Obamacare plans, or permanent health insurance.
Medicaid — may be known simply as Medicaid or something else in your state (e.g. Medical in California).
The best coverage for you will depend on your individual situation. As you learn about each type, factors to consider include:
Eligibility — Do you qualify for coverage?
Cost — How much can you afford to pay for a monthly premium and for out-of-pocket expenses if you need healthcare? Are ACA subsidies available for this coverage, and do you qualify for them?
Coverage length — Will you need coverage for one month, one year, or somewhere in between?
Benefits — Are you looking for the full range of benefits that a permanent health insurance plan must include? Do you need coverage for pre-existing health conditions?
Availability — How quickly do you need health insurance? Are you eligible for a special enrollment period outside of the Obamacare open enrollment period? Do you qualify for Medicaid in your state?
Whether you are without health insurance due to job loss, aging off a parent’s plan, early retirement, or other circumstances, there’s an option available to you.
Need health insurance now? Short-term health insurance provides temporary benefits quickly, if you qualify. If your application is approved, your policy can begin as soon as the next day. These plans also last as few as 30 days, which can be useful when you start a new job and need coverage during your employer’s waiting period, or have a brief gap between major medical plans.
Benefits: Short-term plans are designed to help pay for health care expenses related to injuries and unexpected illnesses, so benefits typically include doctor office visits, hospitalization, and emergency room care. Plan designs vary, though, which means you may find some will cover other types of medical expenses, like physical therapy or a couple of common preventive screenings. Additionally, some plans may include non-insurance extras such as prescription drug- or vision-care discounts.
An important note: Short-term health insurance does not meet the Affordable Care Act’s requirements for minimum essential coverage. Unlike major medical insurance, it doesn’t include all of the ACA’s essential health benefits such as maternity care or the full range of no-cost preventive services. If you need more comprehensive coverage, an ACA plan could better suit your needs.
Cost: Short-term plans tend to come with lower monthly premiums than unsubsidized ACA plans because the plans’ benefits are limited.
That said, short-term health insurance premiums may not be lower than subsidized ACA plans. If you qualify for an ACA subsidy (premium tax credits and cost-sharing reductions), you will probably want to enroll in an Obamacare plan through a state or federal health insurance exchange. Short-term plans are not subsidy-eligible.
Coverage length: Your short-term health insurance could last anywhere from 30 to 364 days, depending on how long you need coverage and what the policy limits are in your state. State laws vary when it comes to maximum policy length. After all, short-term coverage is designed to be just that: short term. These plans come in handy for people who are looking for benefits that cover unexpected medical care, while also trying to keep premium costs low.
Availability: You can apply for short-term coverage any time of year. There are no open or special enrollment periods. If you need coverage immediately, you can get it as soon as the next day if your application is approved.
As with an ACA plan, you can buy short-term plans online. They are only available in the private market, though, so you likely won’t find short-term health insurance on the state and federal health insurance exchanges. Short-term plans are also not available in every state.
Eligibility: Short-term policies are not guaranteed issue, which means not everyone qualifies for coverage. When you apply for short-term coverage, you’ll need to answer a few health-related questions to determine your eligibility.
Your application could be denied based upon your health history. If you have pre-existing conditions, you may need to explore other options.
Additional considerations: There are two common types of short-term plans: open network and PPO. An open network plan allows you to visit any health care provider without network restrictions. A PPO plan will require you to visit an in-network health care provider. And depending on the policy, your claim may not be paid if you go out of network, or it may be covered at a lesser amount.
Not sure how long you’ll need coverage? In search of benefits that will help with everything from preventive care to pre-existing medical conditions? An Obamacare plan can provide you with permanent health insurance that meets the ACA’s minimum benefit requirements.
However, timing is important. The annual open enrollment for individual major medical insurance, in the private market and through the state and federal exchanges, typically runs from Nov. 1 through Dec. 15. (some states that run their own exchanges have expanded their enrollment dates for 2020 plans). When you enroll during the open enrollment period, your policy begins Jan. 1 of the new year.
If you need health insurance outside of open enrollment, you’ll need to qualify for a special enrollment period for like events like having a baby, getting married, changes in state residence, or losing other ACA health insurance coverage. You have to apply for a special enrollment period and may need documentation to verify your qualifying life event.
Typically, if you enroll by the 15th, your effective date will be the first of the following month. If you enroll after the 15th, your effective date will be the first of the next month.
These plans are designed to provide the broadest coverage, so their premiums will usually be higher than short-term plan premiums unless you qualify for a premium tax credit.
Benefits: A major medical plan must include all of the ACA’s essential health benefits and no-cost preventive health services. That means you will have coverage for things like pregnancy and ongoing mental health treatment, which are not included with short-term policies. These benefits are required for ACA plans whether they are sold in the private market or through the state and federal exchanges.
If you have health conditions that require ongoing medical care or need benefits for pregnancy and childbirth, then an ACA plan may best suit your needs.
Eligibility: Under the ACA, major medical policies are guaranteed issue. You cannot be denied coverage or charged more based upon your health history.
Cost: ACA plan premiums may be subsidized or unsubsidized. The two ACA subsidies include premium tax credits, which lessen what you pay for coverage, and cost-sharing reductions, which lessen what you pay out of pocket for covered medical expenses.
Subsidy eligibility is based on income. Premium tax credits are generally available to those with a household income up to 400% of the federal poverty level. Cost-sharing reductions are generally available to those with a household income of 100 to 250% of the federal poverty level.
You’ll probably want to enroll in an ACA plan if you qualify for a subsidy.
Coverage length: Your ACA policy will last the entire calendar year, unless you cancel it or stop paying your premiums. And your coverage is guaranteed to be renewed the following year.
Availability: You can apply for a major medical insurance plan during the annual open enrollment period or, if you qualify, during a special enrollment period. Major medical policies are available both in the private market as well as through state and federal exchanges. They are available in every state, but insurers and plans will vary by state and county.
Additional considerations: Many major medical policies require you to see in-network providers. Some may cover out-of-network care at a lesser percentage or not at all.
Many plans have "narrow networks," which are more restrictive in terms of participating providers. There are no hard and fast rules for what constitutes a narrow network plan, but the various definitions generally reflect the definition in a recent study by the Leonard Davis Institute of Health Economics: Narrow networks are those that include fewer than 25% of eligible physicians in a rating area.
This may be an important consideration if you live in a rural area and need to travel farther to seek in-network care. A narrow network reflects the range of providers you have access to, but doesn’t reflect quality of care.
Do you earn too little to qualify for an Obamacare subsidy? You may qualify for Medicaid, which is a joint federal and state program that helps with medical costs for certain populations including low-income adults, children, pregnant women, elderly adults and people with disabilities.
Those who qualify for their state’s Medicaid program may receive low-cost (in states with waivers) or no-cost health care coverage. Benefits are defined by each state, but they must meet federal guidelines.
Eligibility criteria vary by state.
Benefits: Medicaid fulfills the ACA minimum essential coverage requirements, but each state decides what benefits it provides. Some benefits are mandatory under federal law —hospital services, home health services, physician services, and laboratory services, to name a few. Optional benefits that states may choose to cover include prescription drugs, dental services, hospice, and physical therapy, among others.
Eligibility: You must meet your state’s Medicaid eligibility criteria to qualify for this coverage. You’ll have to apply and may be required to provide supporting documentation.
Under the Affordable Care Act, as of September 2019, a total of 37 states, including the District of Columbia, had expanded Medicaid coverage to those with a household income below 133% of the federal poverty level.
In all states, eligibility is based on income, household size, disability, family status, and other factors.
Cost: Medicaid may cost you little to nothing. States have the option to charge premiums and include cost-sharing for out-of-pocket spending such as deductibles, coinsurance, and copayments.
Coverage length: Your coverage will last as long as you are eligible. You may need to verify your eligibility. Coverage typically ends at the end of the month when you no longer qualify for Medicaid.
Availability: Medicaid is available year-round to those who qualify. Your coverage could begin right away on the day you apply or the first day of the month of application. Your benefits may even be retroactive up to three months prior to your application, if you’re qualified then as well.
Additional considerations: You can learn more about your state’s Medicaid program, including eligibility criteria, at Medicaid.gov.
While there is no longer a federal tax penalty for going without minimum essential coverage starting with the 2019 coverage year, you’d be wise to consider enrolling in a health insurance policy (some states like California still have penalties for not having coverage).
Health insurance benefits help with covered medical expenses, potentially reducing what you pay out of pocket. Otherwise, you may find yourself paying for health care 100% out of pocket.
Whether you expect a gap in coverage soon or need health insurance now, it’s time to take a closer look at your options.
You can get quotes, compare plans, and apply and enroll online, but you don’t have to go it alone. If you need guidance deciding which route to take, a licensed health insurance agent can help you navigate your options.