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Covering Yourself Short-Term Health Insurance Can Help Fill the Gap

Posted on: Wednesday, 8 March 2006, 00:00 CST

By TOM RAITHEL, Courier & Press staff writer 464-7595 or raithel@evansville.net

For the worker between jobs, the soon-to-be-employed college graduate, the early retiree or anyone else who needs a bridge to carry them from one health-insurance plan to another, short-term health insurance may be the answer.

The policies can close a temporary gap in coverage for many people, and often at a lower cost than COBRA insurance, or other kinds of health coverage, experts say.

But they are temporary. And they don't cover many pre-existing health conditions, making them unsuitable for some.

"The primary candidate for (a short-term health policy) is someone who is between coverage," said Roger Garrett, president of Insurance and Business Planning. "It's much safer to use these if you're sure you're going to start (more permanent insurance) at a certain date," he said.

The policies are also much cheaper than permanent insurance policies. Still, they aren't for everyone. "The main thing you've got to understand is that all temporary policies don't cover any pre- existing conditions," said Jeff Stoll, sales agent for Heston Insurance.

Tom Goergen, insurance agent for Schultheis Insurance, adds: "It's not for people who want to buy health insurance for a long period of time."

Short-term, or temporary, health insurance provides coverage for periods of one to six months. People cannot renew these polices, but they can apply a second time for the same policy after the first one expires. People who re-apply, however, will, once again, not receive coverage for any pre-existing conditions, including those that may have come up while they were covered by the first short-term policy. Short-term policies cannot be held for more than 12 consecutive months with the same company.

Pre-existing conditions that may disqualify a person from a short- term policy include diabetes, high-blood pressure, cancer, liver disorders, HIV infection, alcohol or drug abuse, pregnancy and employment-related injuries.

The insurance is ideal for people who are "between point A and point B" as far as health coverage, Goergen said. This group includes young people who become too old to be covered by their parents' insurance, which usually ends coverage when the child reaches ages of between 23 and 25, and who expect to have coverage soon through an employer, Goergen said. Also, there is often a wait, perhaps of 90 days, before insurance kicks in when a person begins a job.

Garrett said short-term insurance works best when the buyer knows the date when the insurance kicks in and can buy a term long enough to cover them until that date. Those buyers who don't know when permanent coverage will begin can buy a six-month policy and pay in monthly installments. Although they will pay more over six months than if they bought the policy up-front, they can cancel the policy once they have permanent coverage and perhaps save themselves money that way, Garrett said.

Short-term temporary insurance has one big attraction over permanent policies, said Stoll. "It's a lot cheaper."

For example, for an 18 to 24 year-old a policy that pays 80 percent of cost above a $250 deductible will cost a man $56 a month, or a woman $82 a month. For those aged 60 to 65, a man might pay $254 a month or a woman $222 a month, Stoll said. Covering a dependent will add another $49 a month to the policy.

Although the policies cost more for older people they are still less expensive than permanent insurance, Stoll said.

Goergen said short-term policies can be less expensive the COBRA, the health insurance coverage that workers sometimes receive from employers when they lose their jobs.

Source: Evansville Courier & Press

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