Two weeks into the opening of the Obamacare exchanges, some prospective customers are finding that the premiums they are being asked to pay are more than they’d anticipated or hoped for. A recent article in the San Jose Mercury News titled ‘Obamacare’s winners and losers in the Bay Area,’ featured several California residents commenting on the exchanges and the premiums.
Cindy Vinson and Tom Waschura are big believers in the Affordable Care Act. They vote independent and are proud to say they helped elect and re-elect President Barack Obama.
Yet, like many other Bay Area residents who pay for their own medical insurance, they were floored last week when they opened their bills: Their policies were being replaced with pricier plans that conform to all the requirements of the new health care law.
Vinson, of San Jose, will pay $1,800 more a year for an individual policy, while Waschura, of Portola Valley, will cough up almost $10,000 more for insurance for his family of four…
Others of course are much more pleased, such as one 64-year old breast cancer survivor featured in the story who will see her monthly premiums decline from about $1,300 to just under $800.
While Obamacare is likely to help many, the fact is that younger, healthier people are seeing their premiums rise, in many cases becoming completely unaffordable. Those who find the new premiums beyond reach will hopefully look for alternative coverage types. I’ve discussed several here in the past, such as health sharing ministries and critical illness, accident, and fixed benefit insurance.
There’s another alternative that I want to share, short-term health insurance. Unlike traditional health insurance, which typically runs for a 1-year term (or at least is intended to), short-term insurance has typically been used to bridge what are expected to be relatively short gaps in insurance coverage, such as when waiting for job-based coverage to begin. Policies can be for as short as 1 month to as long as 11 months, and can usually be renewed.
The prices for short-term policies are typically much less than what can be found on Obamacare’s exchanges. For example, on the ehealthinsurance.com web site I found a policy in Virginia (where I live) for a 42-year old male (that’s me too) with a $2,500 deductible and 20% co-insurance for $69 a month and a 6-month term, offered by the IHC Group under the ‘Secure Lite’ name. That compares to premiums of more than $250 a month for policies with similar deductible and co-pay levels available on the Obamacare exchanges.
Needless to say, for that lower price you get fewer benefits and applicants can still be denied for pre-existing conditions. For example, the maximum amount payable for each night of a hospital stay is $1,000, which might be only half or even less for a hospital stay. In addition, once the policy expires it can be renewed, but rates might be higher or pre-existing conditions that were discovered or occurred during the previous short-term policy won’t be covered in the new policy. The specific policy I mentioned here has a $750,000 benefit maximum, which should be sufficient for almost everyone but a few might still break through even that high limit.
Other plans are available at different price points that offer richer or poorer benefits, or at least a different mix. The United Health One Medical Value plan would have a monthly premium of only $58, but a higher deductible ($10,000) and co-insurance rate (30%), as well as a lower maximum benefit ($250,000). But it also appears to cover more of the hospital stay (after the deductible) than the IHC policy, and offer better benefits in other areas as well.
In the end, short-term health insurance can help to fill a need for people who just can’t afford premiums under Obamacare. It’s not a perfect product by any means, but the same is true of the insurance policies being sold on the exchanges. For people looking for an alternative to standard health insurance policies and for whom other choices like health sharing ministries or fixed-benefit insurance aren’t an option, short-term coverage that can be renewed regularly might be an option worth considering.