Arizona Short Term Health Insurance: Self-Employed And SMB Guide
The leap from “employee” to “small business owner” involves exciting steps and new challenges. One of these hurdles is how you handle your health.
Whether you recently lost your employer-sponsored insurance or never had any, you want to remedy that problem now.
As a self-employed business owner or freelancer in Arizona, you may be able to buy short-term health insurance.
This guide will walk you through everything you need to know about short-term insurance policies in the Grand Canyon State and how you can protect your most important asset: your health.
What Does Short-Term Health Insurance Cover?
We’ll start by clarifying that if you’re rushing around to find short-term insurance so that you don’t get fined come tax season, breathe!
Some federal regulations in the health insurance industry are still in place, but those are geared more toward the insurer than the insured.
There is no penalty for not having insurance unless you live in states that mandate it, such as Massachusetts or California.
Arizona is not one of them.
Instead, the state provides multiple ways for residents to obtain health insurance coverage voluntarily, such as short-term insurance, including for a freelance electrician, freelance chef, and freelance piano tutor.
Understanding Short-Term Insurance
Arizona follows federal regulations about short-term health coverage, only allowing it to be purchased through insurers that also abide by those guidelines. Currently, at least eight companies fit the bill, giving you plenty to choose from.
Before you jump right in and nab your insurance plan, you should know what you’re getting into.
Not everyone needs a short-term policy.
According to federal regulations, short-term policies in Arizona can have an initial duration of up to 364 days, renewable for no longer than 36 months.
As long as you meet the insurer’s underwriting guidelines, you can purchase a policy.
On average, you must be in decent health and under 65. After 65, nearly everyone switches to Medicare, with rare exceptions.
Short-term plans work well for a generally healthy person. They often have exclusions for any pre-existing conditions; if your goal is to get an insurance policy to treat your ongoing medical problems, this might not be the way.
Insurers don’t have to cover the essential health benefits laid out by the Affordable Care Act (aka Obamacare), either.
Common exclusions are:
- Maternity care
- Mental health coverage
- Prescription medications
Plans may include these coverages as add-ons with a higher premium.
Companies In Arizona That Offer Short-Term Insurance
If you don’t mind the exclusions and can meet the underwriting requirements, your choices are many.
Short-term health insurance plans are offered by popular providers like:
- Blue Cross Blue Shield of Arizona (in partnership with IHC)
- Companion Life
- Everest Reinsurance
- Independence American Insurance Company
- National General
- The North River Insurance Company
- Standard Life/American National
- United Healthcare/Golden Rule
The state authorizes each company to sell short-term plans, but that doesn’t make them all equal. Review the plan’s provisions and exclusions to verify that it will suit your needs.
Should You Buy Short-Term Insurance?
Even if you meet the health guidelines and don’t have pre-existing conditions to consider, do you need short-term insurance?
This type of coverage is generally provided to two main categories of people:
- Those who are going into Medicare soon (within 36 months) and don’t need a long-term policy
- Those who qualify for the healthcare marketplace, HealthCare.gov, or another long-term policy but are waiting for the open enrollment period
If you rarely use insurance and are looking for protection in case of emergency — or if you need medical care and prescription coverage often — there are better solutions. We’ll give you those options next.
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What’s COBRA, And Is It Right For You?
If you recently left your job (willingly or unwillingly), you might not need a new short-term medical insurance policy. The Consolidated Omnibus Budget Reconciliation Act (COBRA, for short) protects your health in these cases.
COBRA stipulates that insurers must offer employees and their approved family members the option to continue group insurance coverage when it would otherwise be lost.
Is COBRA Worth The Price?
Employees who lose their health benefits when leaving a job have the right to continue to receive those benefits for a limited time.
You and your family can keep the same plan, but the insurer can increase the premium to 102% of the cost.
If your employer was paying part of the coverage, this could be a hefty spike in your budget. Still, it’s worth the price tag for people with expensive medical conditions needing ongoing care.
When COBRA Is A Good Idea
While COBRA can be helpful for some, there are alternatives to pursue if you don’t want to pay the stiff premiums to keep your short-term COBRA policy.
The easiest and generally most affordable choice is to head to the healthcare marketplace. Most people must wait for the open enrollment period, but there’s an exclusion for those who have changed jobs and lost insurance during the rest of the year.
It’s the best option for those with pre-existing conditions that may not meet the underwriting guidelines for private carriers.
Whether you go through the government exchange or find a private policy you qualify for, it should be cheaper than COBRA. Once you’re approved for the new policy, cancel that expensive COBRA coverage.
Is A Long-Term Policy Your Best Bet?
COBRA is one alternative to short-term coverage, but there are others.
If you don’t fall into the categories of people who qualify for a short-term policy and don’t have a COBRA fallback, why not look for long-term coverage?
Long-term policies have many advantages over their short-term counterparts, including the pre-existing coverage option.
Long Term Versus Short Term Insurance Plans
A typical health insurance policy lasts the entire calendar year unless you:
- No longer qualify for coverage
- Cancel the policy
- Quit paying the premiums
These plans are smart for anyone wanting protection against unexpected medical costs. You pay the premium each month to keep the policy, but if you ever need healthcare, your coverage kicks in to reduce the out-of-pocket costs.
Short-term coverage does the same for a short time, but it doesn’t fall under the “minimum essential coverage” requirements. The service you want your policy to cover could be excluded.
What Both Coverages Include
Both types of insurance typically include catastrophic coverage for urgent and emergency care.
Take the average cost of a heart attack as an example: close to $760,000. If you have insurance, your part of this expense is limited to your out-of-pocket maximum.
What does that mean?
No matter what policy you have, you’re going to have standard costs associated with it, including (but not limited to):
- Insurance premiums
- Excluded expenses
However, you’ll probably have an annual out-of-pocket (OOP) maximum, too. This means that anything you pay for your medical expenses — not counting the monthly premiums — adds up throughout the calendar year.
Once you go over that OOP max, your insurance pays 100% of the approved claims.
It’s a great way to have peace of mind that you won’t ever have more than the OOP maximum medical bills.
Where Can You Buy Long-Term Policies In Arizona?
The first place many consumers head to for long-term insurance is HealthCare.gov.
It’s quick, simple, and affordable:
- You enter your information into the online forms using your prior year’s income tax return.
- From there, the marketplace lets you know if you qualify for any premium tax credit to lower your monthly costs.
- Then it shows you all the policies available in your area, using filters like prescription drugs and preferred medical providers.
You choose the plan you want, looking at the premiums, deductibles, copays, and coinsurance.
Pay your first premium, and you’re in!
How To Get Short-Term Coverage In The Meantime
Remember, you may have to wait for the special enrollment period.
In the meantime, a short-term medical plan can be your stopgap.
As mentioned earlier, you can skip the marketplace and head straight to Arizona’s private insurance companies authorized to sell short-term plans with no waiting period.
They usually have an insurance agent who can help you understand which policies are available and their costs based on your zip code.
Are There Other Ways To Protect My Health?
Regardless of which way you go, health insurance coverage isn’t cheap. Unless you qualify for discounts with government subsidies, you might prefer other ways to save money on your healthcare.
Savings plans are, in a nutshell, a cash discount membership plan. You pay an annual membership fee and receive a card or member ID number that qualifies you for reduced rates.
Head to any doctor in the plan’s network, and pay cash for your visit. The membership card entitles you to reduced cash rates.
There are no monthly premiums, deductibles, copays, claim forms, or other insurance hassles.
Health Savings Accounts
Even with insurance, emergencies and serious health problems cause a massive hit to your budget. A health savings account (HSA) minimizes the damage.
An HSA is funded by pre-tax dollars and is only possible if you have a high-deductible insurance policy. You can add money into this account throughout the year, then use those untaxed funds to cover health expenses until your deductible is met.
HSA funds roll over, so you’ll never lose them.
If you know you’re going to have medical costs coming up, consider opening an HSA account and putting a few dollars a paycheck into it.
One way to get around the hefty premiums of a standard insurance policy but keep the protection is to look at indemnity plans.
These policies, like those offered to self-employed workers by Gigly, are much simpler to deal with and less expensive.
With an indemnity plan, you can see any physician within the plan’s network. With Gigly, you’ll have access to thousands of providers near you.
The plan pays a percentage of the reasonable and customary charges for each service, and you pay the rest. So, if your plan says they cover 50% of your visit, your coinsurance is the other 50%.
No referrals are necessary. You’re in charge of your healthcare journey, and all you do is pay your premium and your portion of the visit.
Is short-term insurance the way to go for you and your family?
It depends on whether you want to pay the monthly premiums or deal with exclusions and limits on your doctor visits and medical coverage. These are the choices that a freelance videographer and freelance welder must make.
A long-term plan could be the ideal choice or, if you’re generally healthy, an indemnity plan through Gigly works even better. It allows you to seek affordable, preventive care services and still protects you from major financial headaches.