Short-term insurance popular

May 15, 2009

Individual, or short-term insurance is on the rise as more Americans face transitions due to difficult economic times.

As more and more individuals are facing transitions from the difficult economic times, including unemployment or early retirement, individual short-term or temporary insurance is on the rise.

“With short-term insurance, individuals can choose the length of their policy, the coinsurance level, the deductible, and the payment method and frequency,” says Tamara Quiram, director, HumanaOne. HumanaOne recently offered short-term medical health insurance to the general buying public. “Short-term insurance is an affordable alternative. With the recent increase in job loss, we felt it was important to give customers this product option. Maintaining health insurance is an important step in protecting yourself and/or your family from the unforeseen or unexpected. It may also be cheaper than COBRA.”

According to Quiram, the difference between individual short-term insurance and other individual health insurance is that short-term is not guaranteed renewable, and short-term insurance is purchased for a finite period of time, typically 30 days up to a year, although some states limit the coverage period to six months.

“In addition, short-term insurance does not cover pre-existing conditions,” she says. “There are state variations regarding short-term insurance and creditable coverage.”

Short-term insurance isn’t for everyone, Quiram points out. The company’s guaranteed renewable plans would be a better fit.

The short-term Humana product applies to a narrow but important niche in the marketplace, according to Kip Piper, president, Health Results Group LLC, and senior counselor, Fleishman-Hillard.

“The statistics about the uninsured are highly politicized these days, but the uninsured are far from a homogeneous group. At any snapshot in time, many uninsured are in transition between coverage. These include new hires waiting for their new employer's benefits to kick in, new college graduates, and early retirees waiting for the start of Medicare coverage,” Piper says.

Short-term policies from reputable insurers may be appropriate for healthy consumers who are confident their transition is indeed short-term and who can’t otherwise afford or access other coverage such as COBRA or individual policy, according to Piper.

Consumers must be smart and carefully identify and weigh all their options, he adds.

“State insurance rules vary across the country and the short-term medical policies themselves are fairly limited, with moderate to high deductibles and cost sharing, limited duration, and exclusion of pre-existing conditions. By design, these are stop-gap policies and not suitable for everyone,” Piper says.

Federal health reform may also dramatically change the marketplace and availability of options in the next year or two, he continues. State-level health reforms, which now often include subsidies to make premiums more affordable, are giving consumers new options as well.