ACA Health Insurance Vs Short-Term Health Insurance

Whether your client is looking into purchasing health insurance for the first time or switching policies, navigating the landscape with all the changes in the last 10 years can be confusing. Two options they may have come across are short-term health insurance and ACA health insurance options, but what are the differences between the two and which is right for them?

Short Term Health Insurance

Looking at short term health insurance plans can be attractive considering how low their premium payments are, but short-term health insurance plans have some major drawbacks. Among these are very high deductibles which lead to large out of pocket payments and limited coverage on essential services your client may need.

The Affordable Care Act laid out 10 essential health benefits that are required for minimum health coverage, but short-term health insurance plans do not fall under the ACA regulations, so many of them do not meet these requirements. Another consequence of not falling under ACA regulations is that your client may be denied health coverage in the case of preexisting conditions or must pay a higher premium as a penalty.

There are some benefits, however, for a short-term health insurance plan. The plans are quick to sign up for and quick to start coverage. They are available to sign up for 365 days a year. Because of these benefits, short-term insurance is useful for clients bridging gaps in coverage such as being between jobs or searching for a new permanent coverage option.

ACA Health Insurance Plans

Affordable Care Act plans are required to cover the 10 essential health benefits and must provide coverage to people with preexisting conditions. These plans are permanent health insurance options that can last much longer than the 1-12 months of most short-term health plans.

The drawback of the ACA health plans is that the sign up is limited to open enrollment periods or if you qualify for a special enrollment period usually through a qualifying event. There is also a delay of several weeks between signing up for an ACA plan and receiving coverage through it.

Which Plan Should Your Client Choose?

ACA plans are considered “comprehensive coverage” and should be chosen for permanent health insurance. However, in cases when someone needs temporary health insurance to cover catastrophes until they can find a permanent provider short-term plans can work as well.