Short term health insurance in New York

by Tony Novak, CPA, MBA, MT, last updated on 10/25/2012

OnlineNavigator frequently receives inquiries about short-term health insurance in New York State. New York is one of a few states that take a “one size fits all” approach to health insurance that limits the availability of most types of inexpensive health insurance and short-term health insurance coverage. While the intent of this law is admirable (meant to ensure all residents receive the same level of benefits), it backfires for many New York Residents by making affordable coverage unavailable. Fortunately the impact on New York residents seeking only short-term health insurance is not as severe as other types of health insurance. This problem may be ultimately resolved in the next U.S. congressional session with a bill under consideration that is intended to level the playing field for health insurance consumers across the nation.

At this time the only immediate issue insurance alternatives in New York are accident medical insurance plans like "Smart Accident Insurance" or "Consumers Direct Accident Medical Insurance".

Short term medical insurance

The product issued by about twelve insurance companies in other states called "short term medical insurance" is not available in New York state. This means that New York residents who need coverage for a short time need to consider other options.

Nationwide coverage is the norm

Commercial health insurance policies issued in every state provide medical coverage in New York and everywhere else in the country. It does not matter where you live, work or travel. It does not matter where you may vacation or go to school. It does not matter where your doctors and medical providers are located. A policy issued in the United States will provide coverage anywhere in the United States.

Keep in mind that some managed care policies that use provider networks (mostly HMOs and Blue Cross/Blue Shield plans) provide a lower level of benefits for coverage outside of the provider network. This is not a significant problem because insurers and providers usually limit the out-of-pocket penalty to about a thousand dollars.

Why regular medical plans do not work

Slow application processing - The first and most obvious solution is to simply enroll in regular permanent insurance plan and then cancel the coverage after the short time coverage need is passed. This is not as easy as it sounds. First, coverage can only be issued on the first of the month following the date your application is processed. Application processing usually takes a few weeks. This is useless to people who need only a short period of coverage.

Price of coverage- This type of regular health insurance coverage in New York is more expensive than comparable coverage in other states.

Managed care plans - The policies available in New York tend to be managed care plans rather than traditional indemnity insurance that is preferred by many health care consumers. This may not be attractive for short term coverage.

Transient coverage

Transient New York residents might be concerned that the health insurance policy they obtained in another state may not be applicable when they return home to New York. That is simply not the case since all policies issued in the U.S. offer coverage in New York. If, however, you cancel a policy issued in another state and then try to reapply for the same policy after moving to New York there will be a problem since there is no "overlap" of availability of new policies. For this reason, it is usually best to solidify health insurance before moving to New York State.

Other states that have similar problems with health insurance are New Jersey, Vermont, and Washington. This means that while affordable coverage is not available in these states, any health insurance policy issued in another state will provide protection to transient residents who travel into or out of the state.

Legal issues

Legal control of individual health insurance policies is based on the residential address of the policyholder. In contrast, other types of insurance policies may be based on the location the contract. For example, if an insurance application was signed in Connecticut, then it is normally guided by Connecticut laws that may be more favorable to the policy owner than the laws in her own state. Attempts to change this law restricting health insurance are now underway. In the future, consumers may be able to buy insurance online under the laws of any state they choose. For now, we have to live with existing restrictive laws.

These residency laws are not as prohibitive for short-term health insurance. Short-term health insurance is usually issued during periods of transition. This could be a job change, recent graduation, relocation, starting a business, etc. For this reason there is no requirement that the address be a permanent legal address. Many short-term health insurance policyholders do not have a stable residential address. Any current residential address where the policy may be mailed will work. This could be a summer home, a school address, temporary housing, etc.

Of course, this flexibility creates a conflict in public policy between our general desires to make affordable health insurance available to as many people as possible and insurance regulators efforts to restrict insurance that does not meet a state’s political agenda of providing universal or comparable coverage for all insured citizens. (We believe that eventually the former will prevail, but it is important to abide by all state insurance laws in the meanwhile).

Why are the least expensive policies not available in New York?

FreedomBenefits.net provides a listing of low cost health insurance on a state-by-state basis. Short-term health insurance policies are normally included in the list, along with core health insurance ( www.corehealthinsurance.net ) and Health Savings Account plans ( www.FreedomBenefits.net and www.CelticEnrollment.com ). While there may be dozens of these low cost plans available in other states, there are none listed on the New York page.

If I have an address outside of New York, what are the best short-term health insurance options?

Among the plans listed at Freedom Benefits, Celtic Insurance is the most popular plan for adults under 35 because of its price. The "Secure STM" plans issued by www.FreedomBenefits.net are the most popular for older adults. The highest quality plans are offered by HPA and are listed as “Select STM”. Whenever special situations exist – like a previous decline, high blood pressure, diet-controlled diabetes, etc., the choice is more severely limited. See the article “Health Insurance for Special Situations” at the bottom of the home page at FreedomBenefits.net for a chart listing the possibilities.

What about other options?

There is a current craze of promotion of “health plans” that are not insurance plans at all but actually PPO discount plans. These plans are marketed to New York residents and should appear to be "too good to be true".  Problems occur when consumers misunderstand the aggressive advertising and exaggerated claims of benefits like “Save 60% on your health bills for only 89 per month for the family. Everyone accepted, pre-existing conditions covered”. These discount plans actually become a liability for people who misunderstand the benefits they have purchased. A separate article titled “Comparing Health Discount Plans” at http://www.tonynovak.com/article/comparing-health-discount-plans.htm offers suggestions on evaluating the quality of these alternatives. The New York discount plans for medical, prescription drug and dental expenses offered at www.Ehealthdiscountplan.com are probably the least expensive and involve little risk because the reputable provider offers a money-back 30-day evaluation period.

If you elect a non-insured health discount plan instead of an insurance plan, be realistic about the benefits. They do reduce out-of-pocket costs significantly – maybe 20% or more. But expecting that any of these plans will cover the majority of your health care bills is simply naïve.

Coverage purchased outside of New York

The best option for many in temporary transitional situations is to purchase coverage while living outside of New York state. Temporary coverage may be required, for example, if you enroll at an out-of-state vacation adventure program or during career training. The coverage legally purchased from any online insurance exchange will be valid in New York upon your return. 

Opinions expressed are the solely those of the author and do not represent the position of any other person, company or entity mentioned in the article. Information is from sources believed to be reliable but cannot be guaranteed. Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues or a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties. Tony Novak operates as an independent adviser under the trademarks "Freedom Benefits", "OnlineAdviser" and "OnlineNavigator" but is not a representative, agent, broker, producer or navigator for any securities broker dealer firm, federal or state health insurance marketplace or qualified health plan carrier. He has no financial position in any stocks mentioned. Novak does work as an accountant, agent, adviser, writer, consultant, marketer, reviewer, endorser, producer, lead generator or referrer to other companies including the companies listed in the articles on this web site.

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