Short-Term Health Insurance in Texas

Short-term health insurance is an alternative to ACA-compliant health plans (group, marketplace, off-marketplace) that provides flexible, affordable, and quick health care coverage, especially when a policyholder’s main health insurance coverage is interrupted. This insurance package is especially beneficial to Texans who are of good health, do not require frequent visits to the physician, do not qualify for marketplace subsidies, want to save money, or just do not have the funds to get a long-term policy.

Whatever has pros, has its cons and short-term health coverages are not left out. While this insurance is affordable and can offer a handy solution when you need health insurance the most, it is not available to everyone. Texans with pre-existing conditions may not be eligible to purchase most short-term health insurance plans. Even then, some multi-year plans in Texas cover selected pre-existing conditions after a year or more of coverage. To get short-term health coverage in Texas, you can purchase it along with an indemnity plan (to help cover the high deductibles and emergency expenses).

Read on to understand how short-term health insurance differs from a standard plan and whether it is right for you.

What is Considered Short Term Health Insurance?

Health insurance that provides temporary coverage in between health plans and outside of enrollment periods is considered short-term insurance. This is different from short-term catastrophic health insurance that covers you in the case of an emergency in Texas.

Short-term health plans are intended to serve as a bridge between traditional insurance plans and are not meant to be a long-term replacement. Short-term health plans in Texas are appropriate for people who are generally healthy and want to buy more reliable insurance as soon as possible. If you've recently lost your job and need coverage while looking for work, or if you do not qualify for premium tax credits, a short-term plan might be right for you.

What is the Purpose of Short-Term Health insurance?

As its name implies, the main purpose of short-term health insurance is to provide “short-term” coverage options for individuals who have a coverage gap and need insurance coverage that would last long enough for them to get a standard health insurance. It is a good choice for You can utilize it when you are between jobs or have another reason to go without health insurance.

What is Short-Term Health Insurance for?

Short-term health insurance in Texas is ideal for individuals who are not eligible for open enrollment in ACA-compliant coverage and must wait until the next open enrollment season. Also, it is beneficial to the following people:

• People who lost their jobs and are no longer covered by insurance plans
• Young adults who have just been weaned off their parent’s health insurance plan
• Seniors who will soon be 65 and eligible for Medicare benefits
• Individuals who are no longer eligible for group health insurance coverage
• Healthy adults without pre-existing conditions

In fact, short-term health insurance is for everyone who needs to bridge an insurance protection gap caused by any dynamic changes of life.

What are the Types of Short-Term Health Insurance?

Short-term health insurance in Texas is usually distinguished by 2 main types:

1. Length of coverage - which can be a minimum of 1 month, and maximum of 1 year (in some cases renewable up to 3 years)
2. Tiers of coverage (coinsurance and deductible) - similar to ACA’s metal plans. The more expensive plans usually have lower deductibles and higher percentage of medical expenses gets covered by the insurer.

The duration of the policy depends on the policy agreements. In Texas, you can renew your short-term health insurance coverage for up to three years (Texas Insurance Code §1509.001).

Under Texas Insurance Code §3.3602(c), a short-term health insurance policy/certificate must cover benefits consistent with the minimum requirements for short-term policies.

Do You Need Short-Term Health Insurance?

It depends. Whether you need short-term health insurance or not depends on your specific needs. Short-term health insurance is right for you if you need temporary insurance coverage pending the time when you can get a guaranteed renewable policy.

You do not need temporary health insurance if you are eligible and can afford the individual ACA plan, have group health insurance, or other long-term health insurance policies.

Why Do You Need Short-Term Health Insurance?

You may need short-term medical insurance if you are in between plans and do not have any health insurance coverage. Although temporary, short-term insurance will cover preventive care, doctor visits, urgent care, and emergency treatments.

Alternatively, you may need short-term health insurance due to it’s affordable cost.

(Note: If you decide to use short-term health insurance as a way to save money, make sure to consult with a knowledgeable health insurance agent - who can explain how short-term health coverage may affect you.

How Much Short-Term Health Insurance Do You Need?

The amount of coverage you need for short-term insurance depends on your medical needs and your ability to pay for enough coverage to meet those needs. Short-term health insurance is usually purchased along with a supplemental accidental or hospital indemnity plan, which helps cover the gaps in coverage.

When making the decision about the amount of short-term health insurance coverage, always speak to a Texas-licensed health insurance agent, who is versed in both short-term and ACA-compliant side of insurance, and can explain how your decision will affect you when you actually need to use the coverage:

When speaking to the agent, keep in mind the following 7 variables that can help you decide how much short term health insurance you need and can afford:

1. Term Deductible is usually as low as $2,500 and as high as $15,000 or more. The deductible must be paid by you (out-of-pocket) before the plan starts its coverage and begins paying a portion of your health bills.
2. Coinsurance is the percentage portion of the bills that the short-term health insured is required to pay, after they have already paid the term deductible. The split on payment liability for short-term health plans can be as high as 100/0 - where the insurer covers the amount in full, and as low as 70/30, where the insured pays 30% of the bill, until the Coinsurance maximum out-of-pocket is reached.
3. Coinsurance Maximum Out-Of-Pocket (C-MOOP) in Texas short-term health insurance is usually in the range of $0 to $10,000.
4. Total risk exposure in case of an emergency = Monthly Premium + Deductible + C-MOOP
5. Lifetime maximum coverage amount defines the maximum benefit amount per person, per term.
6. Emergency room fee coverage may differ, depending on the reason for the visit and whether you get admitted or not. An additional deductible may be added to the ER visits.
7. Preventive care benefits may or may not be covered - check with your agent for the details of the considered plan.

What Short-Term Health Insurance Coverage Do You Need?

Choosing the type of short-term health insurance coverage you need depends on your specific needs as well as how long you need the insurance. For instance, eligible seniors in need of health coverage until they become eligible for the Medicare enrollment period can get a short term health insurance for a short period - of up to 12 months. Texans who need longer coverage can renew their coverage when the term lapses. Even then, the policy is not guaranteed renewable and expires 36 months from the date of first application in the state.

Multi-year short-term health insurance usually offers additional benefits:

• Lower prices
• Inclusion of some essential health benefits (that are standard in ACA-compliant plants)
• Coverage of some pre-existing conditions after a year or more of active coverage.

Seek a consultation with a Texas-licensed health insurance agent to determine the short-term health insurance coverage fitting you

Is Short Term Health Insurance Required by Law in Texas?

No. It is not a requirement for Texans to purchase short-term health insurance.

How Does Texas Short Term Health Insurance Work?

Short-term health insurance in Texas works by dividing the several medical treatments found on traditional health plans into individual packages. These distinct insurance packages are marketed and sold by insurance companies. To buy, interested Texans will then customize the policy that best fits their needs and budgets.

Enrollees are required to pay a monthly premium to sustain their policy. Also, before a covered claim can be paid, the insured may be required to meet a deductible. In some plans, if you pay 100% of the applicable deductible, the company will provide full cover at 0% co-insurance. On the other hand, paying no deductible may mean that you may have to pay 20 or more percent of your health costs out-of-pocket.

A waiting period usually applies to short-term health insurance plans. A waiting period is the amount of time it takes for a covered claim to take effect. The waiting period varies and can be from five days to six months. In fact, some plans covering pre-existing conditions have a waiting period of 12 months.

Texans can purchase and add supplemental dental or hospital and surgery insurance to their short-term insurance plans.

What is Covered by Short-Term Health Insurance in Texas?

In Texas, different short-term health insurance providers offer different coverage plans. Before buying a plan, it is important to study the disclosure form and contract agreement thoroughly. If the terms are not good for you, you can be refunded, provided you are still within the free-look period.

What is Short-Term Health Insurance Good for?

Short term health insurance is good for providing affordable limited financial protection from health related medical expenses.

To make an informed decision, speak to an agent to examine the options available to you based on your needs and the availability of coverage in your area.

What Does a Typical Short-Term Health Insurance Include?

Typical short-term health insurance includes coverage for doctor visits, emergency care, and urgent care after the deductible has been met. Some policies may also cover some preventive care and select pre-existing conditions.

Insurance companies offering short-term health insurance provide several types of packages in varying price ranges. Some short term health plans have broader coverage than others. While considering cost is crucial, it is not always better to settle for the cheapest plan. Inquire about supplemental add-ons and get quotes from different health insurance providers. It is important to discuss your options with a Texas-licensed insurance agent.

What Types of Items Does Short-Term Health Insurance Cover?

In Texas, short term health plans cover:

• Physician’s visits
• Prescription drugs during inpatient hospitalization
• Emergency care
• Lab tests
• X-rays
• Preventive and intensive care
• Outpatient care
• Inpatient care.

Does Short-Term Health Insurance Cover Pregnancy?

No, short-term health insurance plans in Texas do not cover pregnancy and/or maternity care.

Does Short-Term Health Insurance Cover Abortion?

No, Texas short-term health insurance does not cover abortions.

If you have questions about specific coverages for short-term health plans, speak to a Texas-licensed insurance agent, who can go over the options available to you locally and explain what each one covers.

What is Not Covered by Short-Term Health Insurance?

Short-term health insurance in Texas does not include primary or routine care, such as:

• Maternity care
• Substance abuse
• Mental health care
• In-prescription drugs
• Pre-existing conditions such as Diabetes
• Wellness visits

Some short-term health insurance providers offer some form of coverage for the above-listed exclusions. Check with a state-licensed health insurance agent.

What Does Short-term Health Insurance Typically Exclude?

Texas short-term insurance typically excludes maternity care. Because of competition, other exclusions may be covered to an extent by some insurance providers. However, NO insurance company offering short-term health insurance in Texas provides maternity care coverage.

What is an Example of Short-term Health Insurance?

Short-term health insurance is usually purchased by healthy individuals who do not have coverage through an employer and/or do not qualify for ACA individual marketplace subsidies.

Most short-term health plans are purchased for “in case of an emergency”, usually with an accompanying accident indemnity plan, which helps cover the deductible and coinsurance cost if the ER visit is required.

Short-term health insurance in Texas is most commonly purchased by:

• Recently unemployed and
• Self-employed looking for savings.

What is the Difference Between Short-Term and Long Term Insurance?

Short-term insurance differs from other long-term insurance like ACA insurance (Obamacare) in many ways. Short-term health insurance is an alternative to ACA health insurance and should be considered for ‘short-term’ situations. The maximum amount of time you can get short-term coverage is three years. ACA plans, on the other hand, have both temporary and long-lasting packages depending on your needs. Other differences include:

1. Availability: In terms of availability, ACA is only available during open enrollment, usually from November through January. Those that qualify, can also apply during the special enrollment period. Short-term health insurance is available at any time of the year.
2. Minimum Essential Coverage: ACA coverage must meet the Minimum Essential Coverage while short-term plans are not legally required to do so.
3. Cost: Short-term coverages are usually cheaper than ACA plans.
4. Coverage Limits: ACA plans cover maternity/newborn care, mental health, substance abuse, wellness visits, prescription drugs, rehabilitative services, pre-existing conditions, while most of them are not covered or only partly covered by short-term health insurance coverages.
5. Renewability: ACA plans are guaranteed renewable plans while short-term health coverages cannot be renewed when their 3-year life span lapses.
6. Tax Subsidy: Short-term plans are not subsidized. On the other hand, ACA plans can be subsidized for Texas households that meet the federal poverty level guidelines.

Just like comparing apples to oranges, both short-term health insurance and ACA plans have their advantages and disadvantages. Speak to a Texas-licensed agent for a professional analysis tailored to your specific needs.

Do I Need Short-term Health Insurance if I Have ACA Insurance?

No, you do not need short-term health insurance if you have active ACA insurance. Short-term health is an alternative to ACA plans. Therefore, if you want to cancel your ACA coverage for any reason, getting short-term insurance can be a stop-gap until you can get a standard health insurance.

No matter your choice - ACA or short-term insurance, it is critical to understand the policy terms. Contact a professional insurance agent before purchase to assist you in selecting the best short-term health plan.

Do I Need Hospital Indemnity Insurance if I Have Short Term Insurance?

You do not necessarily need a hospital indemnity plan if you have short-term health insurance, but you should get it, to help you cover the gaps in coverage, high deductibles, and coinsurance, usually associated with short-term plans.

Some short-term health plans may have deductibles of over $15,000 and coinsurance of 70/30, where the insured is responsible for 30% of the costs, after paying the full deductible. Coinsurance maximum-out-of-pocket (C-MOOP) of $10,000 is not unheard of in Texas short-term health plans - which means that you could owe over $25,000 out-of-pocket before the short-term insurer starts covering 100% of what is outlined in the plan.

Most buyers of short-term health insurance usually get this coverage to save money and to be used in case of an emergency. Hospital indemnity and/or accident indemnity plans are usually purchased as a supplement to short-term coverage - to cover the extra out-of-pocket costs of the insured, in case of a rare ER emergency or hospitalization.

If you are considering getting short-term health insurance, make sure to ask your agent about the recommended supplemental plans, that are usually affordable and provide important coverage.

Who Can Get Short-Term Health Insurance in Texas?

Anyone without a pre-existing condition can get short-term health insurance coverage in the state of Texas. Typically, this insurance is available to apparently healthy Texans (aged 65 or less) who need temporary insurance coverage. Speak to your insurance agent (the representative on record) or to a Texas-licensed agent to help evaluate your medical needs and see if short-term insurance coverage is a fitting solution.

Who Qualifies for Short-Term Health Insurance?

In Texas, you qualify for short-term health insurance if you are healthy, under 65 years old, and have no pre-existing medical conditions. Such pre-existing conditions include:

• Cancer or tumor
• Stroke
• Crohn’s disease
• Liver disorder
• Degenerative disc disease
• Rheumatoid arthritis
• Heart disease and heart attack
• Chest pain or had heart surgery
• COPD or emphysema
• Kidney disorders
• Pregnancy
• Diabetes
• The degenerative joint disease of the knee
• Any neurological condition, such as alcoholism or chemical dependency
• HIV or AIDS.

Who Needs Short-Term Health Insurance?

Individuals who need temporary health insurance include those who are:

• College Students: College graduates are weaned off their parent’s traditional health plans once they turn 26 years old.

• Unemployed or have been laid off: Short-term insurance is beneficial to unemployed Texans as well as those who are no longer eligible for group HMO coverage. Typically, Texans who lost their jobs get continued coverage from their former employer for a period of 18 months. This is in keeping with the federal Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985. If your COBRA coverage lapses or you are not eligible for COBRA, the Texas Insurance Code provides continued coverage for a period of nine months. However, those that are not eligible for COBRA get an additional 6 months coverage. If you use up these benefits and are yet to be employed, it is recommended to get short-term health insurance until you can enter the ACA marketplace.

• Waiting for another coverage to kick in: If you are still within the waiting period of a traditional health plan, you can purchase a limited short-term health insurance to cover any medical situations that may arise during that period. This is especially beneficial to eligible seniors in the state.

• No longer dependent on your parent’s health insurance: When you are not covered by your parent’s health plan, short-term insurance may be a better option until you are financially buoyant to purchase and maintain a traditional health insurance, or get coverage through an employer.

• Looking for a less expensive COBRA replacement: COBRA is costly because the insured (someone who lost their job) is required to pay the full premium without any contribution from their ex—employer. In addition to the premium, they pay administrative fees, which can add as much as 2 percent to the cost. If you cannot afford health insurance through COBRA, you can opt for short-term health insurance or ACA insurance.

• People who have just started a new job but are unable to enroll in an employer-sponsored health plan due to a waiting period at their new place of employment.

• People who were unable to enroll in a long-term health insurance plan during the open enrollment period.

Who Should Get Short-term Health Insurance?

Short-term health plans are attractive to people who don't qualify for premium subsidies in the health insurance marketplace, or who missed open enrollment and are otherwise facing a gap in coverage. This includes people who are between jobs, retiring prior to Medicare eligibility, or those who have already enrolled in other insurance coverage (an employer's plan or an ACA-compliant individual market plan, for example) and are waiting for it to take effect.

A short-term health plan can also be used to bridge a gap in coverage if you're newly employed and have a waiting period of up to three months before you gain eligibility for your employer's health benefits plan.

If you want to understand more about short-term insurance in Texas and when it is right for you, speak to a state-licensed health insurance agent.

What are the Benefits of Short-Term Insurance?

The core benefit of short-term insurance is that it provides fast and flexible coverage for certain life situations such as change of job. Short-term health insurance plans are cheaper than ACA-compliant plans but you get what you paid for.

This insurance policy may be a good option for Texans who are in between coverages or for the healthy young population who expect and hope to remain in good health during the coverage period and will not have many issues of medical concern.

In case of an emergency, an accidental indemnity plan can help take care of the ER fees by covering the (most likely) high deductible and coinsurance.

Discuss your options with an insurance agent to understand the different short-term health insurance plans and whether any is a good fit for you.

Why is Short-term Insurance Good?

Short-term insurance has the following advantages:

• Fast coverage: Short-term health insurance coverage takes effect fast. In Texas, you can get coverage for injury starting the following day (midnight), and for illness - as soon as five days after application.
• Deductible: The insurance plan allows you to choose your deductible amount from various options.
• Duration of coverage: In Texas, you can purchase and utilize a short-term insurance package for less than 6 months. Also, there is no penalty if you decide to drop the coverage and get a traditional health plan.
• Cost effective: Short-term health policies are cost-effective, if you do not suffer from a serious illness during the period of coverage.
• Premiums: Premiums are lower than ACA health plans.
• Choice of Physician: Short-term health plan subscribers can choose to see in-network physicians or out-of-network physicians.

Why is Short-term Health Insurance Bad?

• Guaranteed Issue: Short-term health plans are not “guaranteed issue”. As such, you may be denied coverage if you have a pre-existing condition. In fact, your policy can be dropped if you develop a serious health condition during your policy period.
• Guaranteed Renewable: Short-term health insurance is not guaranteed renewable. This means that the plan lapses after a period of time, usually one, two, or three years.
• Minimum Required Coverage: Short-term health plans are not governed by the Affordable Care Act. As such, insurance companies are not mandated to cover the “essential health benefits” applicable to ACA-compliant insurance packages. Short term health insurance does not cover pregnancy.
• Coverage limits: Most short-term plans in Texas have pay-out limits per insurance period such as limits on doctor’s visits, limits on covered amount in dollars, and limits on prescription drug coverage.

Is Short-Term Health Insurance Worth it?

The short answer to this question is: it depends. Short-term health insurance may be worthwhile if you are stuck without any insurance coverage and have no other viable insurance options for your situation. It provides temporary coverage until you can get a traditional health plan.

While short-term insurance may be a good option for young people who do not require frequent visits to the hospital, it may not be worthwhile in the long run. Even then, short-term health insurance is temporary and serves its major purpose of providing insurance coverage for a limited amount of time. While the policy is not exactly perfect, it offers a great insurance solution in situations where the insured is left with no other options at all. You may want to speak to a Texas-licensed agent to find out if short-term health insurance will benefit your current situation.

What Happens if You Do Not Have Short-Term Health Care Insurance?

If you do not have short-term health insurance or any other health insurance coverage, you will be one hundred percent responsible for your medical treatments. Paying these fees out-of-pocket may cause a huge financial burden with a resultant poor credit or even bankruptcy. If you are not eligible for traditional health insurance, group health insurance, or government-funded health plans, you may need to purchase short-term insurance until you can get a standard health plan.

Texans who already have a health insurance plan do not have to purchase short-term health care insurance. If you think your current policy is expensive or not sufficient for your medical needs, do not decide without professional advice. You should speak to your policy representative to determine which is best — switching to another policy or adding supplemental insurance to your current policy.

Why is Short-Term Health Insurance Important?

In Texas, short-term health insurance is important because it provides a flexible, low-cost, and temporary insurance coverage to people who are stuck between better health insurance options, waiting for enrollment period, or need some form of coverage in case of any medical emergency. Customized to fit your budget, the short-term health plan covers in-patient hospitalization, pre-hospitalization, and post-hospitalization medical expense coverage, daycare therapy, and ambulance services.

What Happens When Your Short-Term Health Insurance Lapses?

When your short-term health insurance lapses, you can purchase another short-term plan or switch to a traditional (ACA-compliant) health plan. A short-term insurance lapse is the period of time when you do not have insurance coverage. A lapse can be because you are behind on premium payment, your policy was dropped by the insurer, or simply because your coverage has expired.

In Texas, short-term health policies expire after 12 months. These policies can be renewed for up to 36 months after which renewal is impossible. When this happens, the insured should speak to a state-licensed agent or their policy rep to weigh available options and know if purchasing another short-term insurance is a good idea.

It is important to note that if your policy was dropped because you were diagnosed with a pre-existing condition during the policy period, it may be difficult to purchase another short-term health insurance policy. Short-term insurance plans that cover some pre-existing conditions come with very high premiums and deductibles. Therefore, if you fall into this category, it may be best to get a standard ACA health plan, best fitted for your current situation. Speak to a licensed insurance professional prior to making the decision.