Quick overview

Short-term health insurance plans are temporary medical policies sold to cover a limited period—commonly 30 days to 12 months depending on state rules and the insurer. Insurers design them to be inexpensive compared with major medical (ACA-compliant) plans, but the trade-offs are significant: many short-term plans exclude pre-existing conditions, do not cover the ACA’s 10 essential health benefits, and may impose high out-of-pocket costs for serious care. (Source: Healthcare.gov.)

How short-term plans work

  • Duration: Policies are issued for defined terms. Federal rules no longer strictly limit duration across the board; state laws vary. Many insurers market plans renewable monthly up to a maximum allowed by the state—commonly 3, 6, or 12 months. Always check state limits.
  • Enrollment timing: Unlike ACA marketplace plans, short-term policies typically allow enrollment year-round. This can be appealing if you have a sudden loss of employer coverage or miss an Open Enrollment deadline.
  • Underwriting: Most short-term plans use medical underwriting or health questionnaires to set eligibility and pricing. That means an insurer can deny coverage or exclude treatment tied to conditions you already have.
  • Benefits and network: Coverage is generally narrower. Preventive care, maternity, mental health and substance use treatment, and prescription drug coverage may be limited or excluded.

Why people choose short-term plans

  • Lower monthly premiums than many ACA plans.
  • Immediate start dates and flexible enrollment.
  • Useful as a bridge after job loss, before employer coverage begins, or while waiting to qualify for Medicare.

In my work advising clients, I’ve seen short-term plans help people avoid a coverage lapse that could otherwise interfere with care. However, I always stress they’re a bridge, not a replacement for comprehensive coverage.

Key trade-offs to understand

  • Pre-existing conditions: Most short-term policies exclude them. If you have chronic care needs, a short-term plan can leave you responsible for large bills.
  • No ACA essential benefits: Short-term plans often don’t meet the ACA’s minimum standards—missing preventive services, prescription drug coverage, maternity care, and mental health services (Healthcare.gov).
  • Cost-sharing and caps: Even when a short-term plan pays, benefit limits and high deductibles or coinsurance can still leave you with significant out-of-pocket costs.
  • Renewal and stability: Many plans are not guaranteed renewable; insurers may change terms or refuse renewal.

Short-term plans vs. ACA marketplace plans vs. COBRA

  • ACA marketplace plans (Obamacare) cover the 10 essential health benefits and cannot exclude pre-existing conditions. These plans are eligible for premium tax credits if you qualify. (HHS, Healthcare.gov)
  • COBRA (Consolidated Omnibus Budget Reconciliation Act) lets some employees keep employer group coverage for up to 18 months (or longer in special cases) but usually requires paying the full premium plus a small administrative fee. COBRA keeps your existing coverage and provider networks intact; short-term plans typically do not. See our guide: “What is COBRA continuation coverage?” (https://finhelp.io/glossary/what-is-cobra-continuation-coverage/).

Choose short-term only when you understand the gaps and have a plan to move to comprehensive coverage quickly. For help selecting between options when changing jobs, see “Choosing Health Insurance When Changing Jobs” (https://finhelp.io/glossary/choosing-health-insurance-when-changing-jobs/).

Who should consider short-term coverage

Short-term plans can be reasonable for:

  • Healthy adults without chronic conditions who need very temporary coverage (e.g., 1–3 months).
  • People who can’t afford higher marketplace premiums and accept the risk of limited benefits.
  • Individuals waiting for employer-sponsored insurance or Medicare to start, provided the gap is short-term.

Not appropriate for:

  • People with ongoing medical needs or recent serious diagnoses.
  • Families needing maternity or pediatric care.
  • Anyone who relies on preventive care or certain prescription drugs not covered by the plan.

Practical examples

  • Transition between jobs: A client I worked with left an employer on December 15 and had new coverage starting February 1. COBRA was unaffordable and she did not qualify for marketplace subsidies. She purchased a three-month short-term plan that covered urgent visits and routine illness care but did not cover a previously diagnosed thyroid condition—she accepted the gap and scheduled care knowing the plan’s limits.
  • Student finishing school: A recent graduate with no chronic conditions used a short-term plan for three months while applying for employer coverage.

How to evaluate a short-term plan (step-by-step checklist)

  1. Confirm maximum duration and whether the insurer offers renewals in your state.
  2. Read the policy exclusions and the list of pre-existing conditions explicitly excluded.
  3. Check deductible, out-of-pocket maximum, and coinsurance for hospital stays and ER visits.
  4. Verify whether prescription drugs and mental health services are covered and, if so, under what limits.
  5. Confirm provider network rules—out-of-network care can be very expensive.
  6. Compare the total monthly premium plus potential worst-case out-of-pocket costs against marketplace plans or COBRA.
  7. Ask whether the plan is guaranteed renewable and what happens at renewal.

Cost and tax considerations

  • Premiums: Short-term plan premiums are usually lower, but the plan’s benefit caps and exclusions can shift costs to you when care is required.
  • Tax treatment: Premiums for short-term plans are generally not eligible for premium tax credits available on the ACA marketplace. If you itemize deductions, unreimbursed medical expenses may be deductible above the IRS threshold (see IRS guidance for medical expense deductions). Consult a tax professional for your situation. (Source: IRS)

When to avoid short-term plans

  • If you have chronic health conditions, need regular prescriptions, or expect major medical care soon.
  • If you expect to qualify for marketplace subsidies or Medicaid — switching later could be difficult after a costly uncovered health event.

How to enroll safely

  • Get the policy in writing and save all documentation.
  • Ask the insurer to provide a clear list of exclusions and a sample explanation of benefits (EOB) for common claims.
  • If possible, contact a licensed insurance broker who can compare marketplace, COBRA, and short-term options.

Common misconceptions

  • “They’re equivalent to insurance.” They are not equivalent to comprehensive insurance. They may help with small, acute problems but often leave large exposures.
  • “I can renew indefinitely.” Many plans are not guaranteed renewable; state rules differ.

Frequently asked questions (concise answers)

  • Can short-term plans deny me if I’ve been sick? Yes—many use medical underwriting and can deny coverage or exclude conditions.
  • Do these plans cover preventive care? Usually not; preventive services required under the ACA are often excluded.
  • Can I get marketplace coverage after using a short-term plan? Yes—Open Enrollment or a qualifying life event lets you enroll in ACA plans. If you qualify for Medicaid, you can apply anytime.

Related FinHelp resources

Sources and further reading

  • Healthcare.gov — Short-term plans overview: https://www.healthcare.gov/short-term-plans/ (U.S. Department of Health & Human Services)
  • Consumer Financial Protection Bureau — consumerfinance.gov (guides on short-term insurance and consumer protections)
  • Internal Revenue Service — guidance on medical expense deductions at IRS.gov

Professional disclaimer

This article is educational and does not constitute personalized insurance, tax, or legal advice. Rules vary by state and individual circumstance; consult a licensed insurance agent or tax professional before purchasing coverage.

Bottom line

Short-term health insurance plans can be a useful, lower-cost bridge for healthy people with brief coverage gaps. However, they commonly exclude pre-existing conditions, lack many ACA-required benefits, and may leave you with significant financial risk. Treat them as a temporary stopgap and plan to move to comprehensive coverage as soon as you can.