Short-Term Health Insurance in the U.S.: A Quick Guide

Short-term health insurance serves as a temporary bridge for Americans who find themselves without comprehensive health coverage. Whether you're between jobs, waiting for employer benefits to kick in, or missed open enrollment for an ACA marketplace plan, these policies can provide essential protection during coverage gaps.

What Is Short-Term Health Insurance?

Short-term health insurance provides temporary medical coverage, typically lasting from 30 days to just under 12 months. Unlike comprehensive health plans, these policies are designed to cover unexpected medical emergencies and accidents rather than routine care. They're regulated primarily at the state level and don't have to comply with all Affordable Care Act (ACA) requirements.

What It Covers

Short-term plans typically include:

• Emergency room visits and urgent care
• Hospital stays and surgical procedures
• Diagnostic tests like X-rays and lab work
• Prescription drugs (often with limitations)
• Doctor visits for new injuries or sudden illnesses

However, these plans generally exclude pre-existing conditions, preventive care, maternity coverage, mental health services, and prescription drugs for chronic conditions. Coverage limits are common, and benefits may be subject to annual or per-incident caps.

Who Should Consider Short-Term Insurance?

Short-term health insurance may be appropriate for individuals in transitional situations:

• Recent graduates: Those aging off their parents' plans who haven't yet secured employment with benefits
• Between jobs: Individuals waiting for new employer coverage to begin
• Early retirees: People who have retired before becoming Medicare-eligible at age 65
• Seasonal workers: Those with employment gaps between seasonal positions
• Missed enrollment: People who missed open enrollment for ACA marketplace plans

What It Doesn't Cover

Understanding exclusions is critical when considering short-term insurance:

• Pre-existing conditions: Any medical condition diagnosed or treated before the policy starts is typically excluded
• Preventive care: Annual check-ups, vaccines, and screenings are usually not covered
• Maternity care: Pregnancy, childbirth, and related services are excluded
• Mental health: Counseling and psychiatric services are often not included
• Prescription drugs for chronic conditions: Ongoing medications may have limited or no coverage
• Substance abuse treatment: Rehabilitation services are typically excluded

State Regulations Vary Significantly

Short-term insurance availability and regulations differ dramatically by state. Some states have banned these plans entirely, while others allow them with various restrictions:

• Banned states: California, Colorado, Connecticut, Hawaii, Maine, Massachusetts, New Jersey, New Mexico, New York, Rhode Island, Vermont, and Washington, plus the District of Columbia
• Duration limits: Many states impose maximum coverage periods, often three to six months
• Renewal restrictions: Some states limit how many times you can renew a short-term policy

Always check your state's specific regulations before purchasing a short-term plan.

Costs and Financial Considerations

Short-term plans typically cost 50-80% less than ACA marketplace plans because they provide less comprehensive coverage. However, lower premiums come with trade-offs:

• High deductibles: You may pay thousands out-of-pocket before coverage begins
• Coverage caps: Annual or per-incident limits could leave you responsible for significant expenses
• No subsidies: Unlike ACA plans, short-term insurance doesn't qualify for federal premium tax credits
• Medical underwriting: Insurers can deny coverage or charge more based on health history

Alternatives to Consider

Before choosing short-term insurance, explore these potentially better options:

• Special Enrollment Period (SEP): Qualifying life events like job loss may allow you to enroll in an ACA plan outside open enrollment
• Medicaid: If you meet income requirements, Medicaid provides comprehensive coverage with little to no cost
• COBRA: Continue your employer coverage for up to 18 months, though premiums are typically high
• Spouse's plan: Marriage or other qualifying events may allow you to join a partner's employer plan
• Health Care Sharing Ministries: Faith-based alternatives, though these aren't insurance and have their own limitations

Important Considerations

While short-term insurance can provide valuable temporary protection, it's not a long-term solution. These plans don't satisfy the ACA's individual mandate requirements (where still applicable) and may leave significant coverage gaps. Always read the fine print carefully, understand what's excluded, and have a plan for obtaining comprehensive coverage as soon as possible.

Before purchasing, ask these critical questions:

• What is the maximum coverage limit?
• What is the deductible, and what does it apply to?
• Are prescription drugs covered, and what are the limitations?
• What happens if I get seriously ill or injured?
• Can I renew the policy, and for how long?
• What pre-existing condition exclusions apply?

Additional Resources

For more information about health insurance options, consider exploring:

• HealthCare.gov for information about ACA marketplace plans and Special Enrollment Periods
• Your state's Department of Insurance for state-specific regulations on short-term plans
• Medicaid.gov to check eligibility for Medicaid coverage in your state
• Licensed insurance brokers who can help you compare all available options