QUESTION

My insurance company is offering me a short-term policy (less than months of coverage). The premiums are a lot lower than they would be for a 12-month policy. What are the risks and benefits of enrolling in a short-term policy?

Individuals with no coverage | Comparing Plans: Benefits and Costs
ANSWER

A short-term insurance policy, which is defined as a policy that covers you for less than a 3-month period, is not considered traditional health insurance and does not constitute minimum essential coverage under the Affordable Care Act. If you are enrolled in one of these plans, you will be subject to the law’s tax penalty for failing to have health insurance. In addition, short-term policies are exempt from many of the Affordable Care Act’s consumer protections, and as a result the policy may not provide the kind of access to health services and financial protection that you may need or want. You should carefully review the terms of the policy and any limits or exclusions before purchasing it. (45 C.F.R. § 144.103; 26 U.S.C. § 5000A; 81 Fed. Reg. 75316, Oct. 31, 2016).

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