What is Supplemental Insurance? Short-Term vs. Supplemental Health Insurance

Between jobs and worried about going without health insurance coverage? You may be considering short-term health insurance. If so, take the time to understand what you’re buying and how that differs from a supplemental health insurance policy. Short-term health insurance is an option meant to provide coverage in between other insurance coverage – when you’re switching jobs, for instance. These plans are different than supplemental insurance. What is supplemental insurance?

That’s insurance intended to fill the gaps in your primary health insurance plan and provide you with extra financings for specific medical issues, such as helping pay for your kid’s braces.

As opposed to supplemental insurance policies, short-term health insurance policies typical cover expenses related to accidents or major illnesses. People don’t generally think about these types of policies to cover preventive medical care, such as check-ups, as the expectation is they’ll soon have a permanent insurance plan in hand.

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Short-term policies generally have lower premiums than other health insurance policies. That’s a reason that these plans attract not only those between jobs but people who can’t afford a more comprehensive plan.

However, short-term plans come with hard limits in exchange for those low charges. For instance, they are exempt from most provisions of federal health care law, are limited to 90 days in length and won’t cover chronic illnesses or medical conditions that developed before you sign up.

Your application can be rejected for coverage if you take prescription medications regularly or have a certain health conditions.

In addition, short-term policies rarely cover maternity care, will cap payments and should a policyholder reapply, the insurer may exclude coverage for medical conditions that arose during the original policy term.

Short-term insurance may be for you if you’re:

• Unable to apply for Affordable Care Act coverage because you missed Open Enrollment and you don’t qualify for Special Enrollment.
• Waiting for your ACA coverage to start.
• Looking for coverage to bridge you to Medicare.
• Turning 26 and coming off your parent’s insurance.
• Between jobs.
• Aren’t old enough for Medicare.

For these situations and many others, short-term health might be right for you. It can fill that gap in coverage until you can choose a longer-term solution.

So here is what you need to know:

Advantages

• Immediacy – healthy applicants can get covered quickly.
• Costs – typically offered with different premium levels, deductibles and benefit maximums.
• Flexibility – The policies also cover a range of medical services. In addition, policyholders can often choose their own doctor and hospital without restrictions, though there may be financial incentives for using in-network providers.
• Enrollment/eligibility – The enrollment process often includes just a handful of yes/no questions regarding your health.

A few caveats

• No coverage for pre-existing conditions.
• It’s not comprehensive coverage.
• You could still pay a penalty.
• You could still end up facing a gap in coverage. When your short-term plan ends, you will not be eligible to purchase a regular plan in the individual market if it’s outside of open enrollment.

What is supplemental insurance?

Supplemental Health Insurance is another matter altogether. It is slightly different from primary plans, but works in coordination with your benefits. Often, people purchase a supplemental policy to cover healthcare services or conditions that were left out of their primary plan, such as dental and vision care.

Generally, this type of coverage helps to pay for the deductibles, copayments, and/or coinsurance of a medical claim. Just like secondary insurance, it does not replace your primary insurance or double your benefits. Rather, it helps cover costs that might otherwise be left for you to pay.

One of the greatest advantages to having more than one plan is extended coverage. If you submit a medical claim to your primary care insurance and only a portion of it is covered, you can then submit the claim to your supplemental insurance plan. The first may not cover certain tests at a hospital or doctor’s office that your second plan might cover. Coordinated coverage between two plans may save you money overall.

Supplemental plans may cost as low as $12 per month for an individual or $30 for a family. However, it is an added cost that you need to consider. To determine if one of these backup policies is right for your budget, think of a medical scenario and then add up the potential costs. Add up your deductible and anything else you might spend after a long stay in the hospital. Then figure out how much a supplemental insurance plan might help with those costs and the overall costs of keeping this additional healthcare plan.

If coverage for your primary and secondary plans are nearly identical, then you are paying twice to have the same benefits. Especially if both plans have deductibles, then your out-of-pocket costs for having more than one plan may not be worth it.

Did we answer your questions about supplemental and short-term insurance, and the differences between the two? If we missed something, let us know in the comments below.