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January 1, 2010


What A Personnel Manger Should Know About Short Term Medical Insurance
By Health Insurance , MBA, MT, OnlineAdviser service

Short term medical insurance is the most commonly used solution for employees with a gap in employer provided coverage.  Personnel managers are frequently asked by employees for information, help and advice with medical insurance problems as so a working knowledge of short term medical insurance can add value to the their company.

Suitability and Eligibility

Short term medical insurance is suitable for applicants who are waiting to be covered under an employer provided health plan, are leaving an employer health plan, need a more affordable alternative to COBRA, do not have significant pre-existing medical conditions, starting a new business, college or graduate students, are moving from state to state or traveling, or needs a Certificate of Creditable Coverage under HIPAA. 

Short term medical insurance is not suitable for applicants with serious medical conditions.  In those cases, COBRA or HIPAA plans are a better option.  These alternatives are not discussed in this article, but more information is available in the Resources section below.

Everyone in the United States who can answer "no" to the medical questions regarding major health problems, is under age 65, has a social security number (or TIN) and a residential street address other than in MA, NJ, NY, or VT is eligible for short term medical insurance.  MedSave.com has published a separate article titled "Am I eligible for Short Term Medical Insurance?" that covers these eligibility criteria.

It is important to note that some people are eligible for short term medical insurance, but it is not a suitable choice due to the exclusion of coverage for pre-existing medical conditions.

Coverage Issues

Short term medical insurance is designed to be easily available, flexible, easy to understand and easy to use.

Legal Issues
- Short term medical insurance is not available in MA, NJ, NY or VT as a matter of state law.  Since most policies are issued online, transient residents of those states typically purchase coverage using an expiring or temporary address in another state.  There is no legal requirement that the address used be a permanent address, not that the address be used throughout the life of the policy.  The insurance is equally valid in all states.

Well-child care - The coverage provision in children's insurance coverage that is most likely to be affected by state mandates that address well-child care. These state mandates typically cover immunizations, tests and related examinations. The following states have laws that require all health insurance to provide specific well-child care benefits for children in addition to the usual treatment of accidents and illnesses: California, Colorado, Connecticut, District of Columbia, Florida, Georgia, Hawaii, Indiana, Iowa, Kansas, Louisiana, Maryland, Massachusetts, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Mexico, New York, Oklahoma, Pennsylvania, Rhode Island, Texas, Utah, Virginia, West Virginia, and Wisconsin.
Insurance Department Web sites - State mandates are listed for each state separately on the state's insurance department Web site. Links to the state insurance department Web sites are included at http://www.medsave.com /license.htm .

Parent's signature required - A health insurance policy is a commercial contract. All states require an adult parent or guardian to enter into any commercial contract on behalf of a child. This means that insurance companies may require the manual signature of the parent when an applicant applies for coverage on the Internet, since the online enrollment systems are equipped only to take the electronic signature of the applicant, not the parent. In this case, the application is submitted online and a copy of the application is submitted with the parent's manual signature at a later date.

Commercial Health Insurance Choices

Most commercial insurance carriers in the STM market offer strong service with few consumer complaints.  The popular choices are listed below in the order that they are recommended by OnlineAdviser service for a balance of value and quality of coverage.

1- Secure STM from Standard Security Life offers the strongest coverage options.  This is a month-to-month coverage with a policy length of 6 months, 12 months or three years, depending on the options chosen.

2- Simple STM or American Health Shield from Fairmont Specialty Group has been the a popular short term health insurance choice for young people, especially graduating high school and college students.  The brand name recognition of this product contributes to its market share. This coverage is available in most states and may be the lowest cost option of the plans listed here.

3 - Celtic Short Term Medical from Celtic Insurance has developed a niche as the most likely choice for dependant children because of the benefits specifically targeted for this purpose. The company points out that this insurance can be much less expensive than adding children to the parents' group health insurance plan through an employer.


OnlineAdviser service provides free support by telephone and e-mail during east coast business hours.

COBRAplan.com provides Q&A format information on COBRA and COBRA alternatives in a side-by-side comparative layout.

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