Short-term health insurance requires long consideration

Financial Planning Association of Greater Kansas City



Q. I recently graduated from college and am now on my own and looking for work. My parents said I need to look for temporary health-care insurance. What are some options, and what do they cost?



A. First, thank your parents for the timely and wise advice they have given you.



Proper insurance coverage, especially for health care until you are eligible for a group policy at your future employer, is very critical. Yet it is often overlooked.



There are many companies that offer individual short-term policies. Short term usually means 30-180 days, so you will have to seriously assess your employment probabilities to make sure your coverage lasts until you are employed.



I have included several Web sites for your research, and I encourage you to take the necessary time to review the best combination of benefits, premium and accessibility to cover your needs.



As you research the different companies and their options, consider the following:



■ Premium options: Are there monthly and single-pay? Are there discounts if you pay once in advance?



■ Any restrictions for pre-existing conditions?: Sometimes if you have been treated for something in the previous six months, they will exclude that from further coverage under their policy.



■ Deductible and/or coinsurance: This will be your out-of-pocket costs before the policy pays for a covered charge. The relationship is inversely related between deductibles and premiums — that is, the higher deductible you agree to have, the lower the premium, and vice versa. Copays are what you usually pay for each doctor’s office or hospital visit and may or may not count toward your deductible. Once a deductible is met, the policy’s payment percentage usually increases to 100 percent.



■ What plans are offered? The three choices generally are HMO, PPO and traditional, in the order of cost. See the Web site for a good definition of these three types.



■ Benefits: What is covered? Hospital, physician, pharmacy, emergency room and physical therapy are separate charges, and you will need to weigh the cost against the total package being offered.



■ Policy limits: Despite the fact this will only be for a short time and you hopefully will not have a claim, is there a maximum policy limit that will be paid?