Comparing short term medical policies

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Comparing short term medical insurance policies

by Tony Novak, CPA, MBA, MT
, revised 5/9/201

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 withUnitedHealthOne.

“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 OnlineAdviserTM 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 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 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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tonynovak.comThis Web site is independently owned and operated by Tony Novak operating under the trademarks “Freedom Benefits”, “OnlineAdviser” and “OnlineNavigator”. Opinions expressed are the sole responsibility of the author and do not represent the opinion of any other person, company or entity mentioned. Tony Novak 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 and has no financial position in any stocks mentioned. Novak may act as and be compensated as an accountant, agent, adviser, writer, consultant, marketer, reviewer, endorser, producer, lead generator or referrer to the companies listed on this site or other commercial companies and non-governmental insurance exchanges. 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.

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