By Cathy Miller, Business Writer
With no magic bullet for the health care crisis, insurance agents still need solutions for their clients. Clients are losing jobs, premium rates keep going up and agents are tap dancing to keep clients happy. One possible solution is short-term medical insurance.
Through short-term medical insurance, insureds receive coverage for a short period of time for catastrophic illnesses or accidents. Depending on the state, policies range from 30 days to 12 months. This type of insurance is a temporary answer for life events where clients are without health insurance. It can also provide an additional prospect resource for agents.
Tapping Into Another Market
So, who are good candidates for short-term medical insurance? Here are a few examples:
- Students coming off their parents’ health insurance
- Recent college graduates looking for employment
- Individuals between jobs
- Unemployed workers who cannot afford COBRA premiums
- Employees in a waiting period for their new employer’s plan
- Part-time or seasonal employees without benefits
Premiums for short-term medical insurance can be 30 to 40 percent less expensive than individual insurance premiums. Savings may be even greater when comparing premiums to COBRA rates. Typically, there is also much less paperwork and review time for short-term medical insurance.
As noted in a previous post, young adults (age 25 to 34), are the most likely to be uninsured. Recent graduates coming off their parents’ health insurance may be a good market for the short-term medical insurance policy. So, too, are COBRA participants exploring a less expensive alternative.
Advantages and Disadvantages
This insurance product fills an immediate need. It is not a permanent solution to health care. Here are some of the advantages and disadvantages of short-term medical insurance.
- Lower cost than more comprehensive health insurance
- Usually effective within 24 hours of submission of application
- Provides safety net for catastrophic illnesses/accidents
- Depending on policy, may be able to renew, usually up to 36 months
- Pre-existing conditions are not covered
*Note: renewing the policy is viewed as a new policy so conditions incurred during the first policy will be considered pre-existing conditions.
- Short-term medical policies are exempt from HIPAA. This means insurance carriers do not have to guarantee renewability, guarantee issue or waive the pre-existing condition limitation federally eligible individuals.
Note: Short-term medical insurance coverage does qualify as creditable coverage
- Typically does not cover maternity, preventive care, physicals or immunizations
Short-term medical insurance is not a permanent solution, but it may be a viable alternative for clients and an untapped market for insurance agents.
Cathy Miller, Business Writer/Consultant has over 30 years of professional writing with a specialty in health care, employee benefits and wellness. Cathy also has an active Life/Accident/Health insurance license. Visit Cathy at her business writing blog, Simply stated business to Keep it simple, clear & uniquely yours.
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