Short-term health insurance offers a temporary solution for individuals in need of immediate health coverage, bridging gaps during transitions like changing jobs or waiting for other insurance to start. Designed to provide quick, limited protection against unforeseen medical costs, these plans are typically easier to qualify for and can be activated swiftly. However, it’s crucial to understand that they do not offer the comprehensive coverage found in standard health insurance plans available through the Marketplace. In this article, we’ll explore how short-term health insurance works, what it covers, its limitations, and when it might be a suitable option for your healthcare needs.

What is Short-Term Health Insurance?

Before September 1, 2024, short-term insurance is health coverage typically available for limited durations of 365 days or fewer. Depending on where you live, you may be able to renew a short-term policy or purchase another short-term policy for coverage up to a cumulative 36 months. These time limits are subject to change and will be reduced to 3 months starting  September 1, 2024.

Short-term health insurance, as the name implies, is designed for people who experience a temporary coverage gap in major medical insurance offered by an employer, or purchased on the state or federal exchange, or provided by Medicare, for example. 

State regulations govern the sale of short-term health insurance and vary by state.  Some states prohibit or place significant restrictions on the sale of short-term policies. In 2024, these states include: Washington, California, Colorado, New Mexico, Hawaii, New York, Vermont, New Hampshire, Maine, Massachusetts, Connecticut, New Jersey, and District of Columbia. Other states are receptive to short-term health insurance as an affordable option for consumers and means of reducing the number of state residents who are uninsured.

Short-Term Health Insurance coverage details

The exact coverage and benefits offered by a short-term plan depend on the particular policy and insurance company you choose, and short-term plans cover much less than comprehensive major medical insurance plans. However, short-term health insurance policies typically cover at least some of the cost of health care related to unexpected illness and injury that is not linked to a pre-existing condition.

What is covered by short-term plans?

Generally, short-term plans cover a portion of the cost of the following medically necessary services:

• Inpatient and outpatient hospital services
• Medications ordered during a hospital stay
• Surgeries
• Lab work, imaging and diagnostic tests

Short-term health policies have cost-sharing arrangements. This means you are responsible for paying an annual deductible and coinsurance and/or copayments for covered service. Typically coverage contains annual and lifetime maximum coverage limits for designated covered services.

Many short-term insurance policies include a network of participating healthcare providers. In this case, you must use the hospitals, doctors, and other health providers in the network to receive the maximum benefits of the plan.

What is not covered by short-term plans?

Under federal rules, short-term plans are not required to cover the ACA’s essential health benefits. Therefore, most short-term insurance plans have gaps in coverage of essential benefits included in ACA-compliant plans.  For example, even if you’re eligible for coverage based on the short list of questions asked on the application, you will generally not have coverage for any pre-existing medical conditions while you’re enrolled in the plan.

Short-term plans provide coverage for medical conditions that have not arisen at the time you apply for coverage. Other healthcare services short-term insurance plans commonly exclude from coverage include preventive care, maternity care, mental health and substance use care, and prescription drugs. In addition, short-term plans typically have limits on the total amount they will pay even for covered items.

Short-term health insurance is characterized by its limited scope and duration, and it’s important to recognize what it does and doesn’t cover:

What Short-Term Insurance Covers:

• May cover basic medical services for unexpected illnesses and injuries.
• Can provide some level of emergency service coverage.

What Short-Term Insurance Does Not Cover:

• Does not cover preexisting conditions such as diabetes, cancer, stroke, arthritis, heart disease, and mental health or substance use disorders.
• Lacks coverage for essential health services including prescription drugs, preventive screenings, maternity care, hospitalization, pediatric care, and physical therapy.
• Offers no caps on out-of-pocket expenses, potentially leading to high medical costs.
• Does not qualify for federal financial assistance for premiums and out-of-pocket costs.
• Does not meet federal standards for comprehensive health coverage typically found in Marketplace plans.

Eligibility and enrollment for Short-Term Health Insurance

Navigating the eligibility and enrollment process for short-term health insurance is straightforward, making it an accessible option for those seeking immediate coverage. Whether you’re between jobs, waiting for other coverage to start, or facing a gap in your healthcare plan, understanding how to navigate these short-term policies can help you secure the necessary coverage quickly and efficiently.

Who is eligible for short-term insurance?

You can purchase a short-term health plan if you successfully complete the basic medical underwriting process, which typically involves answering a series of yes/no questions about major medical events. However, it’s important to note that these plans usually exclude coverage for any pre-existing medical conditions, even those not specifically mentioned in the health questionnaire on the application.

Enrollment periods

Enrolling in short-term health insurance is flexible and can be done at any time without the need for specific enrollment periods, making it a convenient option for those who need immediate coverage. To start, you should compare plans from various insurers online or through a broker to find the most suitable coverage for your needs and budget. Once you apply, approval is usually quick, often allowing coverage to start as early as the next day. Make sure to thoroughly review the terms and coverage limits of the selected plan before finalizing your enrollment to ensure it meets your temporary health insurance needs effectively.

How to apply for short-term insurance

Applying for short-term health insurance is a straightforward process. Follow these steps to successfully apply for coverage:

1.  Research and Compare Plans: Begin by researching different insurance providers and short-term health insurance plans available in your area. Compare their coverage options, benefits, deductibles, premiums, and other relevant details.
2. Gather Personal Information: Collect the necessary personal information, including your name, date of birth, contact information, Social Security number, and any dependent information if you’re applying for family coverage.
3. Determine Coverage Period: Decide on the duration of coverage you need. Short-term health insurance typically provides coverage for a specific period, usually up to 364 days. Choose the start and end dates that align with your needs.
4. Obtain a Quote: Use online tools or contact insurance providers to obtain a quote for the short-term health insurance plan you’re interested in. The quote will provide an estimate of the premium you’ll need to pay.
5. Complete the Application: Visit the insurance provider’s website or contact their customer service to access the online application form. Provide accurate information about yourself and any dependents you’re including in the coverage.
6. Review and Select Coverage Options: Review the coverage options available within the short-term health insurance plan. Select the benefits, deductibles, and coverage limits that best align with your healthcare needs.
7. Provide Payment Details: Enter your payment information to cover the initial premium. Short-term health insurance typically requires payment upfront for the chosen coverage period.
8. Review and Confirm: Carefully review the application form to ensure all information is accurate and complete. Confirm your selections and payment details before submitting the application.
9. Submit Application: Submit your application online or through the provided channels. You may receive a confirmation email or receipt acknowledging the submission.
10. Await Approval and Coverage: After submitting the application and payment, wait for the insurance provider’s approval. Once approved, you’ll receive your policy details, insurance cards, and instructions on how to access your coverage.

Applying for short-term health insurance allows you to bridge coverage gaps and gain financial protection for some unexpected medical expenses. It’s important to read the policy terms and conditions thoroughly to understand the coverage you’re purchasing. Remember that short-term health insurance is not a comprehensive substitute for long-term plans and typically have limitations in coverage.

Cost considerations with Short-Term Health Insurance

Cost considerations for short-term health insurance are an essential factor for those evaluating their healthcare options, especially for individuals not eligible for premium subsidies through the ACA Marketplace. Short-term plans typically feature lower monthly premiums, which can be particularly attractive for those in immediate need of coverage or those who find ACA-compliant plans financially out of reach. For example, premiums for short-term policies can start at less than $100 per month, with many plans offering premiums below $200.

However, it’s important to understand that while short-term health insurance can provide immediate and cost-effective coverage for basic and emergency healthcare needs, it does not offer the same breadth of coverage as ACA-compliant plans. For instance, the deductibles and out-of-pocket maximums in short-term plans are generally higher—deductibles can reach up to $10,000 and out-of-pocket maximums can go up to $20,000. These plans typically cover services like inpatient and emergency care, surgeries, and some outpatient services such as lab work and imaging, but coverage for inpatient prescription drugs is less common, and outpatient prescriptions are rarely covered. Therefore, while short-term health insurance can be a viable temporary solution, it’s essential to weigh the benefits against the limitations and potential high out-of-pocket costs.

Pros and cons of short-term insurance

In this section, we will explore the advantages and disadvantages of short-term health insurance to help you determine whether it aligns with your healthcare needs and financial situation.

Advantages of short-term plans

Short-term health policies may be a valuable solution if you are struggling to find affordable, temporary health insurance. Features that attract consumers to short-term health insurance include:

• Affordability. Typically, short-term insurance plans have lower premiums than ACA-compliant comprehensive health insurance. In a survey eHealth conducted of customers who purchased short-term health insurance, 61% of respondents said that the primary factor that led them to choose a short-term plan was affordability. However, this lower cost comes with much less coverage.
• Limited Coverage. For healthy people who are primarily interested in some financial protection from unexpected medical care during a limited duration between major medical coverage, short-term policies may be the right insurance solution.
• Flexibility. Individuals seeking temporary health insurance can purchase short-term plans when the need arises; they are not constrained to certain times of the year and specific life circumstances.

Disadvantages of short-term plans

This temporary, limited policy offers fewer benefits and federal protections compared to more comprehensive health insurance options available on HealthCare.gov. It may exclude coverage for preexisting conditions such as diabetes, cancer, stroke, arthritis, heart disease, and mental health and substance use disorders. Additionally, the policy might not cover essential health services including prescription drugs, preventive screenings, maternity care, emergency services, hospitalization, pediatric care, and physical therapy. There is often no cap on what you pay out-of-pocket for care, and you won’t qualify for federal financial assistance to help with premiums and out-of-pocket costs. Furthermore, this type of insurance does not need to meet federal standards for comprehensive health coverage. If your short-term coverage expires or you lose eligibility for coverage, you might have to wait until an open enrollment period to get other health insurance coverage.

Short-Term Health Insurance vs. traditional plans

Short-term health insurance and traditional health insurance plans have distinct characteristics that cater to different needs and situations. Here’s a comparison to help you understand the differences between the two:

1. Coverage Duration:

Short-Term Health Insurance: Designed to provide temporary coverage for a specific period, up to a maximum of 4 months. It may work for individuals who need immediate coverage for a brief period, such as during a job transition, waiting for employer benefits to start, or during travel, but intend to transition to long-term coverage when possible after this brief period.

Traditional Plans: Offer long-term coverage, often on an annual basis, and can be renewed. These plans provide comprehensive coverage for a wide range of medical services, making them suitable for individuals seeking ongoing protection and essential healthcare services – in general, most people choose traditional plans when available as an option.

2. Coverage and Benefits:

Short-Term Health Insurance: Provides basic coverage for covered unexpected medical expenses, such as emergency care and hospitalization. Benefits can vary, and coverage for pre-existing conditions, prescription drugs, preventive care, maternity care and other ACA essential benefits is generally excluded.

Traditional Plans: Offer comprehensive coverage that includes preventive care, prescription drugs, hospital stays, doctor visits, specialist consultations, and various medical services. They are designed to provide comprehensive protection and support for a wide range of healthcare needs.

3. Cost:

Short-Term Health Insurance: Generally more affordable in terms of monthly premiums compared to traditional plans. However, they may come with higher out-of-pocket costs and limited benefits.

Traditional Plans: Typically have higher monthly premiums but offer more comprehensive coverage and lower out-of-pocket costs for medical services. However, government subsidies under the ACA can make traditional plans less expensive than short-term health insurance for many people.

4. Pre-Existing Conditions:

Short-Term Health Insurance: Often do not cover pre-existing conditions, and any existing health conditions may lead to denial of coverage or limited benefits.

Traditional Plans: Under the Affordable Care Act (ACA), traditional plans cannot deny coverage or charge higher premiums based on pre-existing conditions. They provide comprehensive coverage for both pre-existing and new medical conditions.

5. Network Access:

Short-Term Health Insurance: May have limited provider networks, and out-of-network care typically are not covered.

Traditional Plans: Offer broader access to healthcare providers within a network and often provide out-of-network coverage, albeit with higher costs.

6. Renewability:

Short-Term Health Insurance: Generally cannot be renewed beyond the initial coverage period, and reapplication may involve new underwriting.

Traditional Plans: Can be renewed annually and may offer continuous coverage as long as premiums are paid.

7. Suitability:

Short-Term Health Insurance: Suited for individuals with temporary coverage needs or those seeking lower-cost options for a limited time.

Traditional Plans: Ideal for individuals and families seeking comprehensive and long-term coverage for ongoing healthcare needs.

When considering short-term health insurance versus traditional plans, it’s essential to evaluate your specific healthcare requirements, budget, and coverage preferences to make an informed decision that aligns with your needs.

Short-Term Health Insurance FAQs

Is Short-Term Health Insurance the same as Obamacare?

No, short-term policies don’t satisfy the requirements for minimum essential coverage under the Affordable Care Act (ACA), also known as Obamacare.

The Obamacare major medical plans do offer minimum essential coverage, which includes (but isn’t limited to) preventive care, outpatient care, pregnancy and maternity, mental health, and prescription drugs.

In addition, ACA plans may be eligible for government subsidies to make them affordable to many people and may even cause ACA plans to cost less than short-term health insurance plans. There are no government subsidies for short-term health insurance.

What happens if I need long-term care during my short-term plan?

Short-term plans are not designed for long-term care. If you need ongoing or extended medical treatment beyond the coverage period, you may need to seek alternative insurance options, such as traditional health plans or other coverage solutions.

Is Short-Term Health Insurance right for me?

Short-term policies are not intended to serve as permanent health insurance coverage (also sometimes called major medical or comprehensive coverage).

Short-term plans may be suitable if you are in transition. Transitional circumstances include:

• Missed open enrollment for the year, and don’t qualify for a special enrollment period for major medical health insurance plans
• Lost employment and do not qualify for government subsidies to help with the cost of purchasing an Affordable Care Act (ACA) exchange plan
• Need quick proof of insurance for a special activity or trip
• Are waiting for your Medicare coverage to begin.

Short-term plans are usually not suited to people with pre-existing conditions, as those aren’t covered.