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Comparing short term medical insurance policies

by Tony Novak, CPA, MBA, MT
, revised 5/9/2012

Update: In June 2012 the nation's low cost short term medical insurance leader Celtic Insurance Company will no longer offer short term medical insurance. We are referring customers to the nearest alternative with UnitedHealthOne.

"Which policy is best for me?" This is a  common question from OnlineAdviser users comparing rates and coverage. Actually there are far more similarities in policies than differences. This article lists the similarities and differences between the four major U.S. brands listed side by side at Freedom Benefits, one of the nation' s oldest and largest online health insurance enrollment service that specializes in low cost plans. UnitedHealthOne, Celtic, Standard Security Life, and HPA Freedom / FlexTerm.

All short term medical polices use the same basic definition of what is covered, referred to as "ordinary and necessary medical expenses". All major brands provide reputable and reliable policyholder service. All policies allow you to choose your own doctor and hospital. All policies provide national coverage regardless of where you may travel or move. All policies allow you to start coverage on the date you choose and renew or re-apply to continue coverage for as long as you want. All policies restrict coverage outside of the U.S. (A separate international policy is recommended for international coverage). All short term medical policies exclude coverage for pre-existing medical conditions which makes them unsuitable for those already receiving medical treatment.

All policies use the same basic eligibility guidelines although HPA is known to be a bit more liberal in admitting those with medical history. Those with heart conditions, ongoing prescriptions, therapy or medical treatment, chronic disease or scheduled surgery are not eligible. All policies come with free OnlineAdviser^TM support and all are treated equally under Freedom Benefits Association plan or customer appreciation program. All of the policies control price by allowing you to choose the policy deductible. A high deductible policy might be priced at only a third of the cost of the lowest available deductible.

Now for the differences. American Health Shield is available only to U.S. citizens while other policies are available to permanent residents. Fortis offers a discount for paying several months in advance whereas other plans use a month-to-month billing. Beware that pre-paid premiums are not refundable if you cancel early.  

HPA policies can extend for up to 36 months, where some require a re-enrollment every six months. The advantage of avoiding re-enrollment, besides the obvious savings in time, is that the pre-existing condition exclusion is not triggered by the need to re-enroll after completion of the first policy term.

HPA treats prescription drugs differently than the other plans. Rx is not covered under the basic insurance plan, but a separate Rx discount card is provided with the policy. The advantage of this approach is that all prescription drugs are covered, including pre-existing and "not medically necessary" medicines like birth control pills. There is no deductible so the card can be used immediately with your first purchase. The downside of the HPA approach is that drug expenses will not ever be covered 100%.

A little-known feature is that the Fortis policy alone allows policyholders to utilize its national PHCS preferred provider network (PPO). PHCS was named by Consumer Reports as the highest rated national commercial PPO network the last time the magazine reviewed health plans. The advantages of using a PPO provider network are; 1) finding a medical provider is easy (online at phcs.com or by toll-free telephone), 2) bills below the deductible are reduced to the network price so you save money, 3) billing is submitted to the network before cash is required by the patient so you do not need to worry about paying at the time of treatment.

The largest difference in many buyers' minds is price. There is no way to accurately predict which policy is priced most attractively for the plan you want unless you price them side-by-side.

Celtic Insurance tends to be priced lower for those over age 40 and UnitedHealthOne is priced lower for people in their 20s. The other plans are priced more attractively in scattered locations throughout the country. Fortunately the online pricing engine at www.FreedomBenefits.net makes this an easy task. It is possible to price a handful of different polices and apply for coverage online in less than five minutes.

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