Short-Term Plans Can Provide the Freedom to Retire Early
Dan loved his job. He’d been an accountant for nearly 30 years and he felt he could fill out tax forms in his sleep by now.
Through the years, Dan had come to love boating. These days, he spent most of his free time on the boat, doing overnight or weekend trips or cruising the local waterways. Dan’s dream for his retirement was to see the world by boat, stopping in a new port every few days to explore, gas up and continue the journey.
He’d been saving money and managing his investments so he could afford to enjoy the adventures. He was counting down the days until he could retire and sail off into the sunset. Everything was in place. There was just one thing holding Dan back from retiring early—his health coverage. It would be five more months before Dan could qualify for Medicare. His coverage through work would end 30 days after his last day. After that, he could have a COBRA plan, though the cost was too high for his budget. Being a careful planner and a numbers guy, Dan just didn’t feel right about having a gap in his health coverage for several months. So he decided to wait and retire right after he turned 65.
One evening over dinner, Dan mentioned his plan to a friend, an insurance agent in Florida. His friend’s response was the best news Dan had heard in a while. There were other options besides health coverage through his job or Medicare.
The agent noted that Dan qualified for a Special Enrollment Period, since he was losing coverage through his job. They also discussed Short-Term plans, which provide coverage for one to six months while a person waits to get in to more permanent coverage, like Medicare in Dan’s case. They don’t provide all the benefits that Affordable Care Act plans or Dan’s employer-provided plan did. Dan took all of this into account as he considered his situation, and he decided to go with a Short-Term plan.
How Do Short-Term Plans Work?
- Short-Term plans are designed to provide health coverage for one to six months with the option to reapply for an additional period of time.
- They cover care for only new health conditions and emergencies that develop after the plan’s start date. (The member would pay the full cost of care for any conditions that are considered pre-existing.)
- They include a program to get special discounted prices for prescription drugs.
Short-Term plans do not cover:
- Medical care for health conditions or injuries that a member has been treated for in the past 24 months before the plan’s start date (also called pre-existing conditions)
- Adult wellness checkups and preventive care (Preventive care is covered for children up to age 17. The only covered adult preventive care is an annual mammogram.)
- Maternity or newborn coverage (A rider can be purchased to add this coverage.)
- Habilitative services, like physical, occupational or speech therapy
- Traditional pharmacy coverage with copays and coinsurance
The Freedom to Choose Your Timing
Just when Dan thought he was stuck, he learned that he had options. Even though he didn’t yet qualify for Medicare, with a short-term plan, he could go ahead and retire and live the adventures he’d been dreaming of.
A short-term plan isn’t right for everyone, but it would provide what Dan needed for the few months between his early retirement and when his Medicare coverage would start. Now, he could start living his dreams on his own timeline.
We hope this helped you understand what’s covered by Short-Term plans. If you have questions about this blog, we’re here for you. You can call us at the number on the back of your member ID card.