Freelancers are a great way to balance work with a healthy lifestyle. In 2018, there were 56.7 million freelancers in the US, of whom 28% were freelance employees. Although there are many benefits for freelancers, one disadvantage is the lack of access to an employer-sponsored health plan. If you work freelance or are self-employed, there are several health insurance options. A popular health insurance for many freelancers is the short-term health insurance.
How does short-term health insurance work?
Short-term health insurance, also known as “temporary” insurance, is a form of insurance to insure people for a limited period of time. It is a temporary and very basic health insurance intended for medical emergencies and not for daily medical care or prevention. Short-term health insurance is not ACA compliant. In the past, this coverage was used to close a gap in coverage if you were in between jobs or needed health insurance only for a short time.
With legislative changes from 2019, more people can turn to short-term health insurance than traditional insurance contracts. Forecasts for 2019 assume that enrollment in short-term short-term insurance will increase by 600,000. The type of coverage provided by these plans can also evolve with this increased demand. Take a look at what options you have before committing yourself to a specific policy.
Why freelancers opt for short-term health?
Here are some reasons why freelancers opt out of other options for short-term health care:
If you make too much money to qualify for Medicaid but can not afford to spend a lot of money on health insurance, short-term health insurance is a cheaper option for health care and better than if you are uninsured.
If you want to have health insurance but have missed the open enrollment phase and did not have a qualifying life event where you can purchase outside the open enrollment phase.
As an alternative to ACA insurance options. Although freelancers can qualify for health insurance in the market, the cost of ACA-compliant market insurance is more expensive; Prior to 2019, penalties were imposed for the selection of non-ACA-compliant health plans. From 2019 there will be no federal health insurance if you insure yourself with a short-term health insurance.
Average price of a short-term health plan
Short-term health insurance costs 1/3 to 1/5 of the price of ACA plans. The price difference depends on whether you qualify for a subsidy. The Kaiser Family Foundation (KFF) estimates that the coverage costs for short-term health insurance are 20% lower than the bronze coverage offered by the ACA.
For example, in a KFF report, the average cost of health insurance for an ACA marketplace (Bronze Form) was between $ 264 and $ 469 per month, depending on the state, compared to the cost of a short-term health plan that was already $ 25 – $ 141 a month.
Age also plays a role in premiums for short-term health plans. For example, eHealth reported that 18- to 24-year-olds paid $ 63 a month on average, while 45-54 year-olds paid $ 170 on average.
Short-term health insurance bases
Unlike ACA marketplace’s health insurance plans, which must cover 10 essential health care benefits, short-term health plans do not provide minimal coverage. Short-term health plans are not available in all states. Where offered, many do not provide coverage for:
- Prescription drugs and vaccinations
- Preventive care
- Mental health and substance abuse
- Pregnancy or pregnancy and pregnancy prevention
- Short-term health insurance vs. market coverage
In addition to the reduced coverage, you must consider other issues before choosing a plan:
If you already have an existing illness, unlike market coverage, you will not be covered by a short-term health insurance.
You may need to go through a medical exam if your existing plan expires. You may be denied coverage for any medical issues that may arise.
These plans can cause higher deductibles and expenses that you have to pay
If you have a plan that lasts less than a year, the deductible may be reset each time you expand or change your plan. This is a disadvantage compared to an annual marketplace plan.
Short-term plans have annual or lifetime policy limits and coverage caps
An advantage of short-term health insurance is the price. These savings are only possible if you are not in unexpected medical situations or if you are generally healthy and do not use prescriptions on a regular basis. Medical debt is a major problem and a bankruptcy cause, be sure and choose your health insurance carefully.
How to find the best short-term health insurance
As a freelancer, saving money is important, but if you know what you are paying for, you can make the right choice. In addition to comparing the covers offered, here are some tips to help you find the best short-term health policies.
- Get quotes from multiple short-term health plan providers so you can compare different options. If possible, talk to an approved insurance agent or assistant, who can give you an insight into the options you will receive.
- Ask for a registration fee
- Find out how extensions work, or whether a cancellation fee is due before a deadline.
- Is there a wait before the coverage starts?
- Inquire about the term and / or maximum value of the policy, deductibles, copays, coinsurance, and dollar limits.
- Ask for the conditions of access to the service. Do you need to use your network? Where do you get service from?
- Check the financial stability of the insurance company