Americans are looking for lower cost alternatives when it comes to their health care needs. Those who do not need a high demand for medical services to be covered have other options. Even those with some monthly or quarterly medical requirements are fine with a little less coverage if they’re saving enough on premiums. The good news is that alternative plans are here and will continue to grow in demand throughout 2018.

The Trump Administration signed an executive order in the fall of 2017 requiring short-term health care plans to be extended from the current 90-day restriction to a full 365 days as before. These types of policies are not there to replace ACA plans, but to give individuals and families more options for their health care needs.

This is great news for millions of Americans who don’t qualify for federal health benefits and really can’t afford ACA plan premiums. By freeing up some of their hard-earned dollars, they can reinvest it in the economy, retirement, college, or whatever they need.

Short-term plans are non-ACA-qualified health plans that are not required to cover pre-existing conditions or certain ACA-required Essential Health Benefits (EHBs) (Obamacare) that are covered by ACA-qualified plans.

These benefits include:

  • Maternity and newborn care

  • Mental health and substance use disorder services

  • Specific preventive care benefits, such as routine exams, mammograms, cancer screenings, etc.

  • Pediatric services (oral and vision care)

Short-term plans are a great option without the previous coverages in the policy. Insurance is supposed to be for sudden, expensive things that you normally couldn’t afford on your own. Look at your auto and homeowners insurance. They provide coverage for unforeseen and costly risks that you cannot afford to take. Short-term medical plans do just that.

The short-term medical plan extension from the current maximum of 90 days to a maximum of 365 days is effective May 1. After that date, you can apply with an insurance company that offers the short-term plan that does not have the maximum 90-day limit.

Another drawback for 2018 is the individual mandate. The short-term medical plan is not ACA compliant according to the IRS and will be subject to the tax penalty when you file your taxes in 2018. There are other ways around this. You will need to seek out a professional in the field for more information. For the 2019 tax year, this tax penalty disappears.