Filling the need for trusted information on national health issues…

I notice short-term policies are for sale outside of the Marketplace and they are much cheaper than many other policies. What is a short-term policy? If I buy a short-term policy, does that satisfy the requirement to have Minimum Essential Coverage?

As the name implies, a short-term health insurance policy offers coverage for a period of less than 12 months (e.g., many offer coverage for just 6 months) and are renewable at the option of the insurance company. Though you may be given an opportunity to request to renew the policy, if you’ve made claims since you bought it, the insurer can refuse to renew it. This is also called a non-guaranteed-renewable policy. In addition, short-term policies might not offer other protections found in qualified Marketplace plans.  For example, short-term policies can exclude coverage of pre-existing conditions and might not cover essential health benefits such as prescription drugs.  Short-term policies are not considered minimum essential coverage. If you only have coverage under a short-term policy, you could owe a tax penalty for not having minimum essential coverage.  Insurance companies that sell short-term policies are required to notify you that they do not constitute minimum essential coverage.

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Filling the need for trusted information on national health issues, the Kaiser Family Foundation is a nonprofit organization based in Menlo Park, California.