Are Short-Term Health Insurance Plans A Good Fit For Your Clients?

Here are two examples where this might work well.

Healthy Dependent Wants Catastrophic Coverage

Let’s say your client is a divorced father with a 24-year-old son working as a graphic designer making $55,000 per year. The son doesn’t qualify for subsidies on the Affordable Care Act and would pay around $500 per month for individual coverage that includes comprehensive benefits like mental health, preventive care and more. But the son is healthy and doesn’t anticipate needing healthcare services throughout the year.

If the son is dropped from your client’s workplace plan, the father could drop down to employee-only coverage, saving significantly in premium costs. But your client doesn’t want to leave his son uninsured.

Largely, this scenario is trying to limit financial exposure for unanticipated injuries or emergencies. If the son’s appendix ruptured and he needed an appendectomy, he wants to have insurance to help cover the $10,000 hospital bill.

For this scenario, it may make sense to purchase a short-term plan for 364 days and average $117 per month versus $500 per month for an ACA plan. With this kind of insurance, the appendectomy would still probably cost around $4,000, but that is still $6,000 less than having no coverage at all.

Your client is not concerned about paying out-of-pocket in the event his son needs a flu shot or strep test, so this may be a good solution for this family.

Early Retirees

As mentioned above, let’s say you have a 65-year-old client who wants to retire this month and sign up for Medicare coverage, but his wife won’t be eligible for Medicare for another six months. While the wife does have some health-care needs due to age, she is generally healthy and does not anticipate needing regular office visits or chronic care treatment during this time.

If your client keeps his workplace plan in order to cover his wife, he may be spending thousands of dollars unnecessarily. Having this client move to Medicare and insuring the wife through a short-term plan could be the most cost-effective solution.