I’m between jobs. Is short-term health insurance a good idea?
Theresa Condon, JD, MPH-HMP, responds
You can buy a short-term health insurance policy from an insurance company, but, generally speaking, these plans are not good for people with diabetes. Although they tend to have lower premiums than COBRA coverage—offered through your former employer—or a policy purchased through your state’s marketplace (at healthcare.gov), they also provide less coverage.
What to Know
Originally intended for people experiencing a temporary gap in health insurance coverage, short-term insurance plans can be renewed for up to three years. Unlike plans in your state’s marketplace, short-term plans are not required to comply with the Affordable Care Act (ACA). For instance, insurers can deny coverage to people with preexisting conditions (such as diabetes) and aren’t required to cover essential health benefits (such as prescription drugs). People with diabetes are often denied coverage under these plans, but even if they aren’t, they may find that many of the services they need—such as doctor visits or insulin prescriptions—aren’t covered. As a result, they end up paying a significant amount out of pocket.
Find Out More
Last year, the federal government allowed health insurers to expand the duration of short-term plans—they previously lasted for three months; now they can be sold for up to a year—claiming this would create more affordable, alternative options for health care. Unfortunately, if young and healthy people enroll in short-term insurance plans instead of those in the state insurance marketplace, the cost of plans in the marketplace will jump. As a result, people who need robust health care plans (such as people with diabetes) pay higher premiums for them.
In response to the federal rule, states are taking the initiative to help consumers by regulating short-term insurance plans. Many states have limited the duration of coverage to three or six months and eliminated the option to renew coverage, so plans can be purchased only once in a 12-month period. Some states have also blocked insurers from selling short-term plans alongside state marketplace plans during the open enrollment period. Such state regulations will help reduce the chances of a dual marketplace and will keep premiums more affordable for those who need robust health care coverage.
If you experience a gap in coverage due to certain life events (such as losing health insurance or moving), you have 60 days to enroll in a state marketplace policy; this is known as a special enrollment period. To find the best coverage for you and your family, visit healthcare.gov or call 800-318-2596.
Short-term insurance plans are not always the best option for people with diabetes because they don’t provide essential coverage or consumer protections. Plans sold through the state marketplace offer financial support for certain people, based on income, and cannot deny coverage, charge more, or refuse to cover treatments because you or someone in your family has diabetes.
Theresa Condon, JD, MPH-HMP, is the director of public policy for the American Diabetes Association and specializes in health insurance law and policy.