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Which short term medical insurance is best for me?

by Tony Novak, CPA, MBA, MT
, revised 11/16/11

"Which policy is best for me?" This is the most common question from OnlineAdviser users comparing short term insurance policies.  The nation' s most popular short term medical insurance policies are issued by Celtic Insurance, Freedom Benefits, and HPA. There are far more similarities than differences between the policies. This article lists both the similarities and differences between the four major U.S. insurance policies at Freedom Benefits. Freedom Benefits is one of the nation' s oldest and largest online health insurance enrollment service that specializes in low cost plans with more than 600,000 users since its launch in 1997.

What is covered?

All short term medical insurance polices use the same basic definition of what is covered, referred to as "ordinary and necessary medical expenses". This basically means treatment that is diagnosed and prescribed by a doctor during the course of the policy. Most policies lump all types medical expenses together and treat them the same: doctors visits, hospitals, lab test, prescription drugs.  HPA segregates prescription drugs from the basic medical policy and covers them under a separate discount plan.

What else do the policies have in common?

All policies include a "deductible" that is chosen by the policyholder. The deductible is the amount of a covered person' s accumulated charges that are not paid by the insurance policy.

All of the major brands provide reputable and reliable policyholder service. All issue policies and ID cards quickly, usually within one business day of an online enrollment.

Where is coverage provided?

All policies allow you to choose your own doctor and hospital anywhere in the United States. All short term medical insurance policies provide national coverage regardless of where you may travel or move within the United States.  Freedom Benefits extends this coverage to also include Canada and Mexico. Except as listed above, all short term health insurance policies restrict coverage outside of the United States. (A separate international policy is recommended for international coverage).

All policies allow you to start the coverage on the date you choose and renew or re-apply to continue coverage for as long as you want. (A few states limit the maximum benefit period).

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.

Who is eligible?

The plan you use must be available in your state of residence.

American Health Shield is no longer available in any state. Freedom Benefits offers other short term insurance options in all states except MA and VT.

Celtic Insurance is available in all states except HI, KY, MA, ME, ND, NH, NJ, NY, OR, RI, SD, UT, VT and WA.

HPA is available in all states except MA, NJ, NY, and VT.

All policies use the same basic eligibility guidelines to determine who is eligible for coverage. Those with heart conditions, insulin-dependent diabetes, chronic disease or scheduled surgery are not eligible for coverage under any of these plans. Pregnant women or their male partners are not eligible for coverage during the term of the pregnancy.

The following special eligibility considerations should be observed:

• Applicants who are not U.S. citizens should only use the Freedom Benefits plan.
• Overweight applicants should use only American Health Shield.
• Those who were previously declined for coverage with another company should apply only to Celtic Insurance or HHC Insurance.  
• Applicants who are non-insulin diabetics, have high cholesterol or high blood pressure should use only HPA. 

What is not covered?

Pre-existing medical conditions are not covered under any of these policies. That includes maternity expenses and prescriptions that were being taken prior to the start of the policy. Because of this limitation, these policies are not suitable for anyone in the middle of expensive medical treatment.

What are the differences?

Now for the differences.  American Health Shield has the toughest citizenship requirement and is available only to U.S. citizens. The other policies are available to permanent residents. Freedom Benefits offers a discount for paying several months in advance whereas other plans use a standard 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 Freedom Benefits 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. Freedom Benefits tends to be priced lower for those over age 40 and American Health Shield 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 engines make price comparisons easy. It is possible to price a handful of different polices and apply for coverage online in less than five minutes.

Status: outdated

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