Health insurance is one of the most important financial decisions you’ll make, and for some people, short-term health insurance seems like the right fit. These plans are known for being less expensive and more flexible than traditional ACA coverage, but they also come with significant trade-offs.
If you’re between jobs, missed the enrollment period, or simply need temporary protection, short-term medical coverage can provide a safety net. Still, it’s essential to understand what these plans do and don’t offer before you buy. Here are six things to keep in mind.
What Exactly Is Short-Term Health Insurance?
Short-term health insurance is designed to cover temporary gaps in care. It’s often used by people waiting for new employer coverage, those who missed open enrollment, or individuals in transition such as recent graduates or early retirees. Unlike ACA plans, these policies are medically underwritten, meaning your health history can affect eligibility. While they may cover many basic needs, they typically don’t include all of the protections that ACA-compliant plans guarantee.
1. Lower Premiums Come With Trade-Offs
The biggest draw of short-term plans is affordability. Monthly costs are usually far below those of ACA marketplace plans. However, this savings often comes at the expense of coverage. Pre-existing conditions are generally excluded, and benefits like maternity care, preventive screenings, or prescription drugs may be limited or missing altogether. Some plans also cap how much they’ll pay for certain services, leaving you with higher out-of-pocket risks.
2. Eligibility Depends on Your Health History
Unlike ACA plans, which must accept all applicants, short-term insurance can deny coverage based on your medical background. You may be required to fill out a health questionnaire, and even if you’re approved, expenses related to pre-existing conditions are typically not covered. This makes these plans better suited for healthy individuals without ongoing medical needs.
3. No Access to Federal Subsidies
ACA marketplace plans often come with tax credits and subsidies that lower monthly premiums, but short-term coverage doesn’t qualify for those savings. If your income makes you eligible for assistance, an ACA plan could actually cost less while offering more comprehensive benefits.
4. Not Required to Follow ACA Standards
ACA-compliant plans must cover essential services like preventive care, maternity, mental health, and prescription drugs. Short-term policies are not bound by these requirements. While some may include hospitalization, urgent care visits, or wellness checkups, others exclude routine care or limit access to medications. Always read the policy details carefully to know what you’re paying for—and what you’re not.
5. Flexible Enrollment, but Limited Duration
One advantage of short-term insurance is that you can enroll at any time of year, and coverage often starts as soon as the next day. Policies, however, are limited in duration. Federal rules currently restrict them to a few months, though some states allow longer terms. Renewal isn’t guaranteed, and in many cases you’ll need to reapply and pass another health screening.
6. Best for Temporary or Specific Situations
Short-term health insurance can be useful in certain circumstances: waiting for job-based benefits to start, bridging the gap until Medicare eligibility, or covering healthy individuals who just need basic protection. But it’s not ideal for people with chronic conditions, those planning a pregnancy, or anyone needing comprehensive long-term coverage. For those situations, ACA marketplace plans—even at a higher cost—are often the better investment.
Bottom Line
Short-term health insurance can be a smart, budget-friendly option for healthy individuals facing a temporary gap in coverage. However, it’s not a substitute for long-term protection. Before enrolling, compare benefits carefully, review your state’s rules, and consider whether an ACA plan with subsidies may provide more complete coverage. Making an informed choice now can help you avoid costly gaps later.
