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Short term medical insurance in Washington State

by Tony Novak, CPA, MBA, MT,   December 4, 2010


Recent high profile layoffs at Washington state companies like Clearwire raise the question of short term medical insurance options for those who are unemployed or waiting for new employer plan benefits. In the past Washington residents had few choices; those who were not eligible for COBRA or could not afford the premiums were out of luck since there were no immediate issue major medical plans approved by the state. A federal subsidy for COBRA benefits is now expired so the cost of interim coverage can be prohibitive.

Short term medical insurance

Fortunately there is at least one other strong option. "Smart Short Term Medical Insurance" from Markel Insurance Company is available for periods of one to twelve months. A policy may be issued for up to 6 months and a separate second subsequent policy s allowed if coverage is needed beyond the six month period. The premium rate can be controlled to fit any budget by adjusting the policy deductible. Deductible choices range from $250 to $5,000. Higher deductibles significantly reduce the cost of insurance. The most commonly selected deductible is $1,000.

Short term major medical insurance is less expensive than comparable renewable long term insurance because is does not cover the cost of treating pre-existing medical conditions. This means that if you are currently taking a medication or receiving weekly treatments from a doctor, these costs will not be applied to your short term policy deductible as covered charges.

Restricted Access

Washington residents still do not have access to many the nation's most popular low cost plans sometimes referred to as "junk insurance" including short term, mini-med, limited benefit and supplemental health insurance plans. In some states like Washington regulators see it as a duty to protect consumers from insurance choices that they may not understand or do not fit the needs of other constituents like the medical provider community or the states existing dominant insurance plans. This protectionist stance is unlikely to change in the state prior to implementation of the next round of federal health reforms in 2014.

While a state does not prohibit its residents from purchasing insurance legally available in other locations while travelling away from home, most low cost health insurance may not be purchased while living within the state's boundaries. For example, a Washington resident without insurance leaves to attend an event in Chicago. The event has a requirement that participants show proof of insurance. The person goes online to purchase an immediate-issue policy listing the temporary event residence as the place of purchase. The policy is downloaded and in force within hours. That policy remains in force and continues to provide coverage for the full length of time stated in the policy when the person returns home to Washington state and provides coverage that can be used with any medical provider back home.

If the scenario is reversed, a person who usually resides in Chicago may purchase insurance that provides coverage in Washington state (as well as all other states since all U.S. commercial policies listed on the Freedom Benefits insurance exchange provide nationwide coverage) regardless of whether that policy is available for purchase in Washington.  The important distinction is that health insurance availability is based on current location of residence declared by the applicant at the time of purchase that may be different from legal residence, mailing address or permanent residence. In an increasingly mobile society facing differences in health insurance laws, understanding this distinction can be very useful.

Supplemental Accident Insurance

The only product of this type listed on the Freedom Benefits insurance exchange for Washington is the Value Emergency Room coverage. The advantage of a supplemental policy is that it does not contain the same deductible and limitation as short term medical insurance above. For that reason, a combination of a high deductible short term medical policy with a supplemental accident plan or rider is often a strong choice for transitional coverage.


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