Short Term Medical plans are wonderful tools, if used correctly and judiciously. For example, if you’re between jobs, and need coverage for a short and definable period of time, they’re an inexpensive alternative to COBRA.
Or, you’ve started that new job, but there’s a 90 day waiting period until your new group coverage starts. Well, and STM plan will nicely fill that gap, offering protection until the group plan kicks in.
Maybe you’ve recently graduated from college or tech school, and need temporary coverage during your job search. Again, if you’re pretty confident that this will be a short time, say 3 or 4 months, then STM may be just what the doctor ordered [ed: couldn’t resist the pun, could you?].
But there are some pretty significant downsides to these plans, as well. Recently, I had occasion to exchange emails with a nice lady in a nearby town. Her daughter is taking some time off from school (college), and is unsure about how to go about getting coverage. Her daughter’s too old to be on her folks’ plan, but doesn’t have access to a group plan.
Which seems to mean that a STM plan would be the way to go.
But not so fast!
Since we really don’t know how long she’ll need coverage, we don’t how many months to buy (STM is typically sold in monthly increments). And as I noted above, I am leery of using STM’s for more than a few months at a time.
Why, you ask?
Simple: STM plans do not cover pre-existing conditions, and there is virtually no way to continue benefits once the plan runs out, even in the middle of a claim. Most plans limit “extension of benefits.” That is, once the plan ends, so does your coverage. A typical plan might extend those benefits for a period of time if you’re currently hospitalized. Okay, but what if it’s chemo, or some other condition that requires lengthy outpatient follow-up?