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HEALTH Insurance

I am in between jobs and need short-term medical insurance. How broad is the benefit coverage under short-term medical insurance?

Short-term medical insurance, also called temporary health insurance, is designed for healthy people who need coverage for a limited period of time, such as recent college graduates, retirees under 65 waiting to qualify for Medicare and workers between jobs or waiting to qualify for employer-sponsored coverage.

Short-term policies provide coverage for less than 12 months and do not feature many of the consumer protections of standard individual and group health insurance plans. They are exempt from the Health Insurance Portability and Accountability Act of 1996 and the Patient Protection and Affordable Care Act, the federal health care reform law passed by Congress in 2010.

The policies are not automatically renewable, and they do not cover pre-existing conditions. After a short-term health plan expires, you have to reapply, and you can be turned down for coverage if you have developed any new medical conditions. Benefits, deductibles, copayments and coinsurance vary among temporary health insurance plans, but generally the policies provide a narrower scope of coverage than comprehensive individual and group health insurance. Many short-term policies do not cover preventive care or prescription drugs.

Although temporary policies can provide affordable health insurance to bridge a short coverage gap, they're not a replacement for standard health insurance over the long haul.

If you think you might need coverage for a year or more, get quotes for individual major medical insurance plans, which provide comprehensive, guaranteed renewable coverage. One money-saving possibility is a high-deductible health insurance policy. In exchange for a higher-than-average deductible, these plans feature lower-than-average premiums. Many high-deductible plans are also eligible for health savings accounts, which let you set aside pretax money for out-of-pocket medical expenses. Unused money in health savings accounts rolls over from one year to the next and can even be used in retirement.

For more about saving money with a high-deductible plan, see "Pros and cons of catastrophic health insurance."