Demystifying temporary medical insurance

During his Major League Baseball career, Larry Burchart never threw a knuckleball in a game. But he certainly saw a number of them from the bullpen. “If I weren’t a pitcher I would have felt sorry for some of those hitters,” he says. “They would get so confused by the movement on the ball sometimes they’d walk back to the dugout shaking their heads.”

Temporary medical insurance, often called short-term medical or STM, likely leaves many insurance producers feeling the same way. Changes to products, carriers exiting the market, and the impact of the Patient Protection and Affordable Care Act have made STM a challenging environment for carriers, distributors and producers. There still is a large and growing need for STM even in light of the changes in the marketplace, and producers looking for revenue growth would be wise to consider giving STM another look.

A lead source

As part of the federal stimulus, Congress passed the American Recovery and Reinvestment Act of 2009 in part to subsidize COBRA health insurance continuation coverage rates for workers involuntarily terminated prior to the end of May 2010. AARA allowed for a 65 percent COBRA subsidy for up to 15 months, as long as the person was not eligible under another group health plan or Medicare. As a result of ARRA, many people who may have recently been candidates for STM coverage opted to use COBRA continuation coverage under their prior employer’s health plan instead.