Why am I considering short-term health insurance for 2019?
Health insurance is a big headache for early retirees in US. It’s one of the reasons many people choose not to retire until the age of 65.
2019 is not far away, and the health insurance enrollment is to start very soon.
For 2019, I’m considering the short-term health insurance. The rate for 12-month coverage became available starting October 1, 2018.
The ObamaCare rate for 2019 won’t be available until usually one week ahead of Nov 1, when the enrollment starts. It’s said that, on average the ObamaCare rate for 2019 goes up by 3%, which is not too bad. I’ll make the final decision by the end of October.
Today, I’d like to share my thoughts why I’m considering the short-term health insurance for 2019.
Just to clarify, I support ObamaCare. It’s a great start, and has helped many people like me to retire early, and get covered. I’m very grateful for that. Is it perfect? No. No policy is perfect at the beginning, not mentioning this huge policy. The right approach for the government is to tweak it, and make it better, instead of sabotage it. That’s the ugly politics.
For comparison purpose, I’m using the XXX plan (12 Months Short Term plan, with annual deductible of $5000) as an example. XXX is an insurance company, and I won’t disclose its name here. If you want to know the real name of the company, go to the Contact tab, and send me a message. I’ll let you know in email. It’s abbreviated as XXX-Short Term in the following table. My current ObamaCare is Bronze plan. It’s abbreviated as ObamaCare-Bronze.
Disclosure: the information is what I collected for my case, at my best knowledge. The listed XXX plan is the one I’m interested in (they have other plans with different deductible, out of pocket, coinsurance and cap). The information may not be very accurate, and may not be applicable to your situation. Treat it as a reference only. I suggest you do your own research, and figure out what is the best for you.
A quick comparison:
|Monthly premium||$230||$442 – for 2018|
|Coverage period||12 months||12 months|
|Plan type||PPO (with bigger network)||HMO (with very limited network)|
|Out of pocket Limit||none after meeting the deductible||none after meeting the deductible|
|Cover out-of-network?||Yes. But it’s much more expensive for non-emergency||Only for real emergency|
|Cover existing condition?||No||Yes|
|Cap for annual expense?||Yes, $2 million||No cap|
|Free preventive care?||No||Yes|
|Prescription drugs Coverage||Only covers $3,000 annually||No limit|
|Cover mental health?||No||Yes|
|Overall coverage||Not good||Good|
- No penalty anymore:
Starting Jan 1, 2019, the ObamaCare penalty will be gone. It means that, you don’t have to buy any health insurance, and are not required to pay any penalty. You can choose to have no coverage, or buy any type of insurance you like, including short-term insurance.
- Short-term insurance coverage period has been changed:
Short-term insurance used to cover 3 months only. After 3 months, you have to apply again, and go through the underwriting and approval again. Now the insurance companies offer the coverage for 3 months, 6 months and 12 months. 3-month policy is cheaper, and 12-month policy is more expensive.
I’m considering the 12-month coverage. Why? Though it’s more expensive, I don’t want to go through the application and approval process during the year, as there is chance of being denied. For the 12-month policy, once approved, I don’t need to worry about it the whole year (I hope). Higher premium, less worries, I feel it’s okay with me.
- Pre-existing condition and annual cap:
If you have pre-existing conditions, the short-term insurance might not work for you. Luckily I’m healthy, and have no pre-existing conditions, and it might not be too bad.
Also watch the annual cap. Short-term insurance has the cap, that’s the maximum amount insurance company will cover you during the policy term.
- What I like about the short-term insurance:
It’s mainly about the lower premium. It’s at least $200 lower (monthly) than my current ObamaCare Bronze plan. That will save me $2,400 a year. I could use that money to travel.
Only a minor thing: the short-term plan (I’m interested in) is PPO. It means a bigger network. While my ObamaCare plan is HMO, with a much smaller network.
Another minor thing: the short-term plan (I’m interested in) has lower deductible, $2350 lower than my ObamaCare plan.
The two minor items are not very important to me, as I’m very healthy.
- What I don’t like about the short-term insurance:
The first and the most is the exclusion of pre-existing conditions. The 2nd is the cap. The 3rd is the long list of exclusions, which not many people will read and understand. When you really need medical care, there might be surprises about the coverage.
Life will be more complicated with the short-term insurance, when really needed. Be prepared for more of the claim hassles and denials.
- My backup plan:
As long as I’m healthy, the short-term insurance should be okay for 2019. In case my health status changes, my backup plan is to switch back to ObamaCare during the annual enrollment period.
Since the short-term insurance (I’ll choose) has 12-month coverage, hopefully I won’t be kicked out by the insurance company during the 12-month period, even if I’m seriously sick. On Nov 1, I’ll be able to enroll back to ObamaCare for the following year. That will not leave me any coverage gap, I hope.
Overall, the short-term health insurance is cheaper, covers less, and is more for healthy people.
I’ll let you know in early November which plan I decide to go for 2019.
Dear readers, what do you think about the short-term health insurance? Is it better, or worse than the ObamaCare? None of them is as good as the employer-sponsored insurance, right?