Short-Term Health Insurance: An Alternative To ACA Plans

Fox News reports that a short-term alternative to ACA plans “that allows customers to get cheap, one-year policies could put the government-subsidized plan into a death spiral.”

The plans typically cost less than half of what similar ACA policies cost, and are growing in popularity as uninsured Americans face the health law’s insurance mandate. Enrollment Specialist Carrie McLean told that applications for the short policies “rose 30 percent compared to last year.”

Theoretically, a large migration of young and healthy people to the short-term plans “could cause a ‘death spiral’ for ObamaCare plans where prices soar and healthy customers look elsewhere.”

Short-Term health plans are considered “Excepted Benefits”. As such, having a short-term health plan does not get you out of paying a penalty if you used that as your health insurance for a whole year.

Yes, the premiums are less expensive for the benefits received for new conditions that are not considered “Pre-Existing” by the insurance company. When calculating total cost vs an ACA plan, you need to add the annual penalty (if they are not exempt from one) to the annual cost of a short-term medical plan. Penalties are double now from 2014.

These short-term plans are attractive to healthy, young people as they look at their Monthly cost going into a health plan but this premium does not always tell the whole story. Their income may provide them with a subsidy from the Gov’t, pay no penalty and have an ACA Quality Health Plan.


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