Health Sharing Plans vs. Short-Term Limited Duration Insurance: Which Is a Better Deal?

When it comes to obtaining health insurance coverage outside of the Affordable Care Act (ACA) open enrollment period, many people turn to one of two options: health sharing plans and short-term, limited duration health insurance policies.

Short-Term Limited Duration Insurance vs Healthsharing

Each of these options has advantages and disadvantages. And they can be extremely useful – especially for people who don’t qualify for a special enrollment period under the Affordable Care Act.

In this article, we’ll discuss short-term limited purpose health insurance, in detail.

We’ll look at its advantages and disadvantages, suitability, coverage limitations, industry criticisms, and the benefits of health sharing as an alternative to short-term health insurance.

As we wrap up, we’ll discuss what you can do if  you need to put a health plan in place but you’re outside of the open enrollment period.

What is Short-term, Limited Duration Health Insurance?

Short-term, limited-duration insurance is a type of health insurance coverage that was primarily designed to fill temporary gaps in coverage that may occur when you transition from one plan or coverage to another plan or coverage.

Policies generally do not last for longer than one year, and unlike other health insurance plans, are typically not renewed by the insurance company.

These plans aren’t designed to provide a permanent health insurance solution.

They’re designed to help you to “plug the gaps” in your coverage while you’re between jobs, or to tide you over until New Year’s Day, when you can get a new Affordable Care Act-qualified health insurance policy that you purchased during Open Enrollment in place.

Unlike other “excepted benefit” policies like cancer-only insurance or hospital indemnity plans, which only provide coverage in a very narrow range of circumstances, short-term limited duration health insurance is technically considered “major medical” coverage.

Also,  unlike other major medical plans, they only provide coverage for a limited period –  usually less than 365 days. Under current law, short-term health insurance policies can be renewed, but cannot be in place longer than 36 months.

Short-term health insurance plans also have significant coverage limitations, including dollar caps.

Short-term health insurance plans offer temporary coverage for specific situations. But they don’t match the comprehensive benefits of longer-term health insurance or healthsharing options.

Historically, some consumers started purchasing short-term health insurance and trying to use them as permanent health insurance solutions – a purpose for which these plans were never intended.

Instead of getting replacement coverage, many of these people stayed on short-term health insurance policies until they expired – often leaving individuals and families with big gaps in coverage, waiting for Open Enrollment and January 1st to come around again.

Learn more about Short-term Limited Duration Insurance.

We Believe in Healthcare Freedom

Short-term health insurance isn’t available in every state. Some states prohibit them outright, or have all but regulated them out of existence (see the section below).

This is a mistake, in our view, and an example of intrusive government meddling, as well as a good  example of regulatory capture.

In general, we believe that consumers deserve a free market for health insurance. Americans should have a wide range of options when choosing a health plan. These short-term health insurance policies are much better than nothing – and they are much more affordable than traditional unsubsidized health insurance policies –– where Americans are allowed to buy them.

Not everyone gets an Obamacare subsidy. And not everyone wants or needs a bloated, overpriced traditional health insurance plan with all ten “essential coverages.”

When regulators distort the free market by prohibiting entire product lines –– sometimes at the behest of rent-seeking interests practicing regulatory capture and limiting competition –– they do a disservice to American consumers.

Is Short-Term Limited Duration Insurance in My State?

As of July 2023, short-term health insurance plans are not available in these states:

Other states place different restrictions on plan duration and renewal. We’ve provided more state-specific information at the bottom of this page.

In most situations, we recommend looking into health sharing or getting an individual/family Affordable Care Act Policy in place, and only using short-term insurance as a last resort, or as a temporary measure during short-term unemployment.

To discuss options or sign up for a plan, contact a Personal Benefits Manager.

Obtaining Health Insurance Coverage Outside of the ACA Open Enrollment Period

Under the Affordable Care Act, the open enrollment for health insurance comes around just once per year, from November 1st through January 15th, in most states.

Outside of the open enrollment period, one may qualify for a special enrollment period in specific situations, such as losing employer-sponsored coverage or experiencing a life event.

However, if you do not qualify for a special enrollment period, exploring healthcare alternatives becomes crucial.

Understanding Short-Term Limited Duration Health Insurance

Short-term limited duration health insurance, also referred to as short-term health coverage or short-term medical insurance, is a type of health insurance policy that provides temporary coverage for a limited period. These policies are designed to bridge gaps in coverage and are not subject to ACA regulations.

Before considering short-term limited duration health insurance, it is important to weigh the pros and cons:

Advantages:

Disadvantages

Note: Short-term health insurance plans may not be suitable for:

Compare Pricing on the Best Insurance Plans Available

Coverage Limitations of Short-Term Limited Duration Medical Insurance

It’s important to understand that short-term limited duration health insurance typically does not cover pre-existing conditions, preventive care, maternity care, mental health services, or other essential health benefits mandated by the ACA.

Additionally, specific policy exclusions may vary, and it’s essential to carefully review the terms and conditions of any short-term plan.

Health sharing Versus Short-Term Limited Duration Health Insurance

Health sharing, also known as healthcare sharing ministries, is a viable and popular  alternative to traditional health insurance and short-term limited duration health insurance.

Health sharing plans are not insurance. Instead, health sharing ministries are non-profit associations of like-minded individuals who agree to help share the healthcare costs of fellow plan members.

Advantages of Health Sharing Plans

Advantages of health sharing include:

Shared Responsibility: Members contribute to a shared pool to cover each other’s medical expenses.
Flexibility: Healthsharing plans often have broader coverage, including pre-existing conditions and certain preventive care services.
Spiritual or Ethical Alignment: Health sharing ministries often align with specific religious or ethical beliefs, providing a sense of community and shared values.

Health share plans are typically available at just a fraction of the cost of an unsubsidized traditional health insurance policy. Moreover, healthshare plans don’t have limited enrollment periods. You can enroll in a health sharing plan at any time during the year.

However, health sharing plans may impose a  waiting period if you have pre-existing conditions. They may limit sharing of costs related to treating your pre-existing conditions and related complications for a period of time.

Nevertheless, if you missed open enrollment period and you need to get something in place now to protect you against the high cost of unexpected medical bills, health sharing plans will still help pay for qualified medical expenses that are not related to your pre-existing condition.

That can help you reduce your risk substantially while you wait for Open Enrollment and for your new plan to be effective on January 1st.

If you don’t have pre-existing conditions, health sharing plans can be a much more affordable permanent solution than traditional health insurance. And if you do have pre-existing conditions that require ongoing treatment, health sharing can be a great “bridge” to tide you over until you can get a traditional health insurance policy in place that will provide coverage of your pre-existing conditions from Day One, with no waiting period.

What to Do If You Need Health Insurance Outside of the Open Enrollment Period

Missed Open Enrollment? Need a health plan right away? Here are your options:

Explore Short-Term Limited Duration Health Insurance: Assess if short-term coverage aligns with your needs and limitations.
Investigate Health sharing Plans: Research health sharing options to determine if they align with your values and provide suitable coverage.
Seek Professional Guidance: Consult with a health insurance professional who can evaluate your specific situation and provide personalized recommendations.

It’s possible you qualify for a special enrollment period under the Affordable Care Act and you don’t even know it!

For a free, no-obligation personal analysis and quote, click here to speak with an experienced Personal Benefits Manager.

Why Act Now?  

Unlike traditional health insurance, both short-term health insurance plans and healthsharing plans employ medical underwriting.

That means you could be denied coverage based on your medical history at the time of application.

By acting now, while you are still in good health, you can lock in protection. If you wait, and your health changes, these doors may be closed to you.

This is another reason why we typically recommend healthsharing over short-term health insurance policies: If you enroll in a short-term plan, that policy will eventually expire and not be renewable.

If your health situation changes, you could have difficulty finding a healthsharing plan to take you on, or you could face a waiting period.

By acting now and electing a healthsharing plan, you keep your options open.

Compare Pricing on the Best HealthShare Plans Available

Conclusion

Short-term limited duration health insurance can serve as a temporary solution for individuals seeking health coverage outside of the ACA open enrollment period.

While it offers advantages such as flexibility and affordability, it also has limitations, including restricted coverage and potential coverage gaps.

Furthermore, short-term limited duration health insurance can never be more than a stopgap measure. A temporary solution. Healthsharing plans can be a permanent solution, at a much lower cost compared to an unsubsidized traditional health insurance plan.

Healthsharing can provide a broader coverage scope and a community-driven approach to healthcare expenses. If you need assistance in navigating your health insurance options, I encourage you to click this link to make an appointment with a Personal Benefits Manager.

Consultations are always free, and there’s no obligation.

Here are some additional blogs on the topic: Medical Cost-Sharing: A Viable and Attractive Alternative to Traditional Health Insurance | How Much Money Can Healthsharing Save?

Here are some additional pages related to this article: Healthshare Plans | Short Term Health Insurance

Frequently Asked Questions About Short-Term Limited Duration Insurance, Health Sharing, and Getting Coverage Outside Open Enrollment

What is short-term health insurance?

Short-term health insurance is temporary coverage that provides limited benefits for a defined period.

It’s designed to bridge gaps in coverage, typically lasting from a few months to a year.

Can I get short-term health insurance outside of the ACA open enrollment period? 

Yes, short-term health insurance is available outside of the ACA open enrollment period.

It offers a viable option for individuals who missed the enrollment window or do not qualify for a special enrollment period.

How does short-term health insurance differ from ACA-compliant plans? 

Short-term health insurance differs from ACA-compliant plans in several ways.

Most significantly, it has a built-in expiration date and does not have guaranteed renewal privileges beyond.

It provides limited benefits, may exclude pre-existing conditions, and does not have to adhere to ACA regulations, such as coverage for essential health benefits.

When is short-term health insurance suitable?

Short-term health insurance may be suitable for individuals in transition periods, such as recent graduates, those between jobs, or individuals awaiting their ACA coverage to begin, and who don’t qualify for a Special Enrollment Period.

It provides temporary coverage during these transitional phases. It is not a suitable solution for longer-term needs.

When is short-term health insurance not suitable?

Short-term health insurance may not be suitable for individuals with ongoing health conditions, those requiring comprehensive coverage, or individuals seeking long-term, uninterrupted coverage. It is designed for temporary needs.

What are the advantages of short-term health insurance?

The advantages of short-term health insurance include affordability, quick enrollment, and flexibility. It offers lower premiums, rapid coverage, and can serve as a temporary solution during coverage gaps.

What are the disadvantages of short-term health insurance? 

The disadvantages of short-term health insurance include limited coverage, exclusions for pre-existing conditions, and lack of coverage for essential health benefits. It may not provide comprehensive protection.

What does short-term health insurance not cover that traditional health insurance does?

Short-term health insurance typically does not cover pre-existing conditions, preventive care, maternity care, mental health services, or other essential health benefits mandated by the ACA.

What is health sharing?

Healthsharing, also known as medical cost sharing or health sharing,  is an alternative to traditional health insurance. They are non-profit organizations based on a community of like minded  individuals who share medical expenses and adhere to shared guidelines.

How does healthsharing differ from traditional health insurance?

Healthsharing differs from traditional health insurance as it operates based on shared responsibility, with members contributing to a shared pool to cover medical expenses. It often aligns with specific religious or ethical beliefs. However, there are many completely secular or non-denominational healthsharing plans available as well.

What are the advantages of healthsharing?

The advantages of healthsharing include shared responsibility, cost savings, flexibility in choosing healthcare providers, and alignment with personal values or beliefs.

Are pre-existing conditions covered under healthsharing?

Some healthsharing plans cover pre-existing conditions after a waiting period, while others may have specific limitations or exclusions. It’s important to review the guidelines of each healthsharing ministry.

How do I obtain a health plan outside of the open enrollment period?

If you need health insurance outside of the open enrollment period, consider options such as short-term health insurance, healthsharing, or exploring if you qualify for a special enrollment period due to life events or other circumstances.

Why is short-term health insurance prohibited in some states?

Some states have imposed regulations that prohibit or limit the sale and duration of short-term health insurance due to concerns about inadequate coverage, potential consumer harm, or inconsistencies with state healthcare policies.

What should I do if I need health insurance but am outside the open enrollment period and don’t qualify for a special enrollment period?

If you find yourself in this situation, your best move is to speak with a Personal Benefits Manager  who can assess your specific circumstances and guide you through available options such as short-term health insurance, healthsharing, or other alternatives suitable for your needs.

It’s free, and there’s no obligation. Click here to make an appointment.

Short-Term Limited Duration Insurance Restrictions

These states restrict Short-Term Health Insurance terms to six months or less. 

States That Allow Plans for Up to a Year, But Restrict Renewals

Some states have a 364-day cap on short-term insurance policies, but have stricter caps on renewals.

States That Ban Short-Term, Limited Duration Insurance

These states either ban short-term limited duration health insurance policies outright, or have enacted regulations that make them practically impossible to sell, and have therefore forced insurance companies to stop offering them.