About Temporary Health Insurance
People who are between jobs or recently graduated from college have an opportunity to buy short-term temporary health insurance for coverage until they get a new job. They can also choose a temporary policy while self-employed until they are able to afford a regular policy. This type of insurance comes with both advantages and disadvantages.
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Function
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Temporary health insurance policies are similar to permanent policies, with personal provider organization or health maintenance organization options and similar deductibles. Some short-term policies allow the client to go to any doctor or clinic, with no difference in coverage. Often the policies are offered by insurance companies which provide more traditional coverage as well, the only difference being the cost and the temporary nature of the short-term policy. Temporary plans are set up for 6 or 12 months and usually cannot be renewed. Some companies also offer 1-month options.
Benefits
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The main advantage is the temporary policy is very inexpensive compared to a traditional policy, usually only half as much for the same deductible. Risk assessment professionals know that if a person is healthy enough to qualify for the short-term policy, odds are high they will be just as healthy 6 months or 1 year later and will not be making any large claims.
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Significance
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With traditional health insurance coverage costing nearly $200 a month for an individual plan with deductibles at $5,000 or even higher, a temporary policy may be the best bet for someone who is expecting to become employed in the near future. Even if you wish to continue health coverage from a previous job under the Consolidated Omnibus Budget Reconciliation Act of 1985, known to most people as COBRA, you may find this option cost-prohibitive, because you now have to pay not only the amount you were contributing but the amount the company provided as well. COBRA premiums can run up to $600 a month, depending on the type of coverage.
Features
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Temporary health insurance policies usually provide coverage the day after a person completes the application. Also, even with a pre-existing condition, the person is likely to be approved for temporary insurance, only with an exclusion for the particular condition.
Warning
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The biggest disadvantage of temporary health insurance policies is a certain level of risk for the consumer. If he is diagnosed with a severe or chronic disease while on short-term insurance, it will be classified as a pre-existing condition for any future insurance applications. This can be the most important consideration when deciding whether to pay extra for a traditional policy or COBRA. Also, the policies usually do not cover expenses related to pregnancy or childbirth.
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