Health Insurance and Pre-Existing ConditionsBefore the ACA was passed, health insurance companies could deny coverage to people with pre-existing conditions. There are a few exemptions that are important to understand when shopping for health insurance.
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A decade ago, the United States Congress passed the Affordable Care Act, also known as Obamacare. This legislation made huge changes to the healthcare industry, many of which benefited the insurance consumer. One of the biggest alterations was to pre-existing condition coverage.
Before the ACA, insurance companies could deny coverage to people with pre-existing conditions. People with diabetes might not be granted a policy at all, or if they were, treatment for that condition would be excluded. In addition, health insurance companies could charge you a much more expensive premium. This meant that people with chronic conditions often found it difficult to pay for the regular care that they needed.
The ACA made it illegal for health insurance companies to refuse coverage or charge more for people with pre-existing conditions in most instances. This provision has recently been under attack in the courts, and there are a few policy types that are excluded from the law. In most instances, however, you are protected if you have a pre-existing condition.
There are a few exceptions to this coverage protection. Plans that were grandfathered into the system were allowed to keep the pre-existing exclusions in the policy. If you already had a policy that you liked that wouldn't cover these conditions, you could keep it.
Short-term health insurance policies, or catastrophic policies, were also excluded. At the time, the coverage period maxed out at six months. These policies usually have low premiums and high deductibles. They work best for people on a tight budget who want some protection in case of a major illness or injury. These policies have recently made a comeback because the current administration relaxed regulations, allowing these policies to be in effect for longer periods.
These policies are not sold on the Healthcare Marketplace and are not considered ACA policies since they do not follow the ACA rules and regulations. The companies selling these plans must reveal that they do not cover pre-existing conditions so that consumers are fully informed before purchasing a plan.
During the last decade, a number of legal challenges have been launched against the ACA and its provisions, including the pre-existing condition policy. Currently, several cases are before various courts, including the Supreme Court.
Short-term Policy Advantages
Short-term policies have a bad rap, often because purchasers do not understand what they are getting. These policies offer limited coverage but are quite affordable. .
This type of insurance plan is best suited to those people who do not qualify for Medicaid but don't feel they can afford the premiums on an ACA-approved policy. Although the ACA provides subsidies for lower and middle-class earners, individuals and families still often pay hundreds of dollars a month in premiums. A short-term policy may cost well under a hundred dollars per month and will protect you against major medical expenses. The deductible is high, but if you are hospitalized, this policy type may save you tens of thousands of dollars.
These policies are so inexpensive in part because they do not have to cover pre-existing conditions, preventative care or other ACA-mandated provisions. Before you buy one, you do need to understand what they include and exclude. They can be an appropriate choice for young, healthy people who rarely seek medical attention. If you do choose this type of policy, you should put some of your savings away in case you do need medical treatment.
Short-term Policy Disadvantages
These policies are not a good choice for someone with a chronic medical condition or who often seeks medical attention. If you have asthma, for instance, you may need frequent office visits and occasional trips to the emergency room. Since asthma would be a pre-existing condition, none of this treatment would be covered or go toward meeting your deductible or other out-of-pocket expenses. The same goes for conditions such as diabetes, glaucoma and cancer. If you have a serious health issue, you won't get the coverage you need. You'll also want to consider your family's medical history before buying. If they are a hearty group, a short-term policy may work for you.
Preventative care, such as yearly mammograms, are covered under ACA provisions but are not under short-term policies. In fact, you are deliberately paying for limited coverage when you buy these policies, so you need to know exactly what you are and are not getting. Question your agent until you have all the information you need. Tally your medical bills from the last few years and compare them to the policy's coverage to get an idea of what your yearly bill will be.
Most seniors not yet on Medicare should not be investing in these policies as they usually have several pre-existing conditions. Healthy people can consider them, although no one knows what health challenges the coming year will bring. The nickname says it all - they are meant to cover you in case of a catastrophic event, such as a car accident.
To Buy or Not to Buy
If you are searching for a "full-coverage" policy, then short-term insurance is not for you. It is meant to cover very specific medical needs under certain conditions. If you understand your options and limitations, you may be quite happy with your purchase. Going without any insurance is certainly not a good idea. Just one serious illness can place you in long-term financial difficulty. After all, over half a million American families declare bankruptcy each year due to medical bills. A high deductible can be paid off eventually, but a $200,000 medical bill is another matter for most people.
The biggest complaint about these policies comes from people who did not understand what they were buying. By law, insurance companies must disclose whether or not their policy covers pre-existing conditions. And most do, but sometimes buyers are swayed by the low premiums and don't really understand what the term means. These policies are not appropriate for everyone, but young, healthy people may find they are a way to cover their insurance "gap" until they feel able to buy a better policy.