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Winter 2017  Volume 10, Number 8        

long term care

Is Short-Term Medical Insurance a Good Fit for Your Situation?

If you missed open enrollment or have certain “life events” short-term insurance can keep you covered.

The 2018 Open Enrollment period to purchase health insurance on the individual Marketplace Exchange runs Nov. 1 through Dec. 15, 2017. If you miss it or can’t afford coverage right now, you have options. You can purchase coverage later if you have a special circumstance or if you qualify for short-term medical insurance (STM).

Certain kinds of “life events” — such as losing health coverage, getting married or having a baby — qualify you for a Special Enrollment Period. During the special term, you can enroll in a Marketplace plan for the rest of the year. If you don’t qualify you’ll have to wait until the next Open Enrollment Period in late 2018.

You also might qualify to purchase a short-term medical plan. STMs were designed as temporary plans and don’t qualify as an Affordable Care Act (ACA) plan. Not everyone can qualify for coverage because unlike an ACA plan, an STM doesn’t cover pre-existing conditions or offer coverage for specified medical services.

STM plans were created to assist recent college graduates, people who were between jobs or people waiting for their employer-sponsored coverage to begin.

STM plans became more popular when the ACA took effect in 2014. Some individuals discovered that even though they qualified for a tax credit on the Exchange, those plans were still very expensive. STM plans were less expensive even if individuals skipped having coverage on an Exchange and paid the tax penalty for not being properly insured.

What is the reason for the cost difference? An ACA-qualified plan features minimum essential coverage and is more comprehensive, while an STM plan is similar to only having a catastrophic plan.

New for 2017 is President Donald Trump’s order to the Internal Revenue Service to forgo requiring individuals to designate on tax forms whether they have qualified health insurance. Even without that requirement, the IRS maintains that taxpayers still are legally required to have health insurance or pay a penalty. The agency also maintains that it still has discretion to follow up on tax filers who have not indicated their health-insurance coverage status. Experts are unsure whether the IRS will be able to collect tax penalties because they will not have all the information needed to make a determination. This makes an STM plan even more appealing, because the penalty may become a thing of the past.

If you decide that an STM plan could be a good fit for you, here are some things you should consider:


  • You can buy STM plans anytime during the year.
  • The plan goes into effect quickly — the same day or the next.
  • Premiums generally are lower than major medical insurance plans.
  • You can get the exact type of coverage you need. For example, an older person probably does not need maternity care or newborn coverage.
  • It covers basic visits to the doctor, emergency room and hospital.
  • Plans can be purchased for periods ranging from 30 days to almost 12 months.
  • STM plans often have a broader network of doctors and hospitals than exchange medical insurance.
  • Some plans have drug or discount plans.


  • Not the same as major medical coverage.
  • You can’t get coverage if you have a pre-existing condition.
  • STM plans usually don’t cover maternity care, preventive services or prescription drugs.
  • They typically have high deductibles.
  • STM plans include a cap on how much an insurer will pay in claims, whereas there are no caps on ACA plans.
  • If you have to reapply, there’s no guarantee you’ll be accepted again.
  • There are no STM plans available for Medicare-eligible adults.

Could Be a Good Fit. Many of the original reasons for purchasing an STM plan still hold — it is temporary coverage until you can afford or have access to a full-fledged plan.

Could Be a Poor Fit. Keep in mind that there’s certain types of coverage that are not available. STM may not be the best plan for you if you are planning to get pregnant since STM plans typically do not cover maternity care. If you take brand name drugs, they may not be covered.

You probably will face rejection for coverage if you have a pre-existing condition. Pre-existing conditions include diabetes, heart disease, chronic back pain, high blood pressure or Crohn’s disease.

For more information on short-term medical insurance, please contact us.


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In this issue:

This Just In...

Financially Sound Ways to Give to Minors

Is Short-Term Medical Insurance a Good Fit for Your Situation?

Take Steps to Improve Your Financial Retirement

Will Your Health Insurance Cover Your Trip Overseas?


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