Short-term health insurance: Should you buy it?

What are short-term health insurance plans?

Short-term health insurance plans provide coverage for a limited period. They are more affordable than standard health insurance, but they do not offer the same level of coverage or consumer protections.

“The coverage is more affordable and allows people greater flexibility to buy coverage that better meets their needs,” says Brian Blase, president of Paragon Health Institute, a healthcare policy research group.

For example, a short-term plan may not offer as many benefits as a typical one and might lack some consumer protections.

The ACA guaranteed that all health plans must meet minimum standards of care and services. However, the ACA does not govern short-term plans.

The biggest advantage of short-term plans may be their costs. They are often much more affordable than standard health insurance.

But these plans are medically underwritten. That means that many people with pre-existing conditions typically do not qualify for coverage.

How can you get temporary health insurance?

You can buy short-term health insurance directly from an insurer or through a private insurance broker or comparison website, such as eHealth. These plans are not sold through the federal or state ACA marketplaces.

You cannot buy short-term health insurance on the federal or state-based health insurance marketplace. All plans sold on these marketplace platforms must meet the standards established by the Affordable Care Act. Short-term plans are not held to these standards and thus are not sold in the marketplace.
As with any health insurance plan, you must apply for short-term coverage. However, unlike standard health insurance sold under ACA rules, you do not automatically qualify for coverage. You can be rejected for a number of reasons, including pre-existing health conditions, being obese, or being pregnant.
It is also important to note that some states have prohibited the sale of short-term health insurance that does not offer protections to those with pre-existing conditions. Such states include California, Massachusetts, New Jersey, and New York, according to the Kaiser Family Foundation.
Many other states have imposed restrictions on these plans. In some cases, the restrictions are severe enough that no provider offers short-term plans in those states.

How long can you have short-term health insurance?

You can have short-term health insurance for as long as federal rules, state law, and the policy's terms allow. Some plans provide coverage for only a few months. Don’t assume you can renew your policy or extend coverage when the initial term ends.

Federal rules governing short-term plans are subject to change, and state restrictions also affect coverage duration. Check the current rules and your policy documents before enrolling.

The Kaiser Family Foundation cautions that losing coverage through a short-term insurance plan does not qualify you for a special enrollment period under the Affordable Care Act. That means that if you lose short-term health insurance coverage, you may not be eligible for health coverage until the next open enrollment period.

What is the best short-term health insurance?

The best short-term health insurance plan fits your budget, provides the medical benefits you need, and offers adequate protection against covered expenses.

Many different health insurance companies offer short-term health insurance. Some examples include:

UnitedHealthcare
National General
Companion Life
Everest

Finding the right coverage means comparing companies until you find one that best suits your situation.

How much is short-term health insurance?

Short-term health insurance typically costs far less than major medical insurance. For instance, eHealth notes that some of its plans start at $55 a month.

Of course, it’s important to remember that you get a lot less coverage with a short-term medical plan and that if you become sick or injured, you could end up paying far more in out-of-pocket costs.

What does short-term health insurance cover?

Short-term health insurance covers selected medical services, such as doctor visits, emergency care, and hospitalization, but benefits vary by policy. Unlike ACA-compliant health insurance, short-term plans do not have to cover all essential health benefits. Some policies exclude prescription drugs, mental health treatment, and maternity care or impose strict limits on covered services.

Common benefits include:

Doctor visits: Coverage for eligible office visits, subject to deductibles, copayments, or other limits.
Emergency care: Coverage for qualifying emergency room treatment, subject to policy terms and cost-sharing requirements.
Hospitalization: Coverage for eligible hospital stays; benefits may have daily or overall dollar limits.
Diagnostic tests: Coverage for eligible laboratory tests, imaging, and other diagnostic services, subject to exclusions and limits.

It is also crucial to emphasize that short-term health insurance coverage may not be as robust as what you would receive with a major medical health insurance plan. There may be caps and limitations on how much coverage you receive.

For example, hospitalization coverage might be capped at a specific amount, such as $1,000 per day. For perspective, the federal government says the average three-day hospital stay costs $30,000.

Or you might have to pay a percentage of the care you receive.

So, if you need more expensive care in these situations, you could be on the hook for high medical bills.

Who should buy short-term health insurance?

Short-term health insurance suits people who need temporary coverage during a gap between comprehensive health plans. You might consider it after leaving a job, while waiting for new employer-sponsored coverage to begin, or during another short transition. It is not suitable if you need comprehensive benefits or ongoing treatment for a pre-existing condition.

“Most people use little, if any, medical care during the year,” Blase says. “This coverage is great for people who are interested in real insurance, meaning protection against low-occurrence but very costly medical events or health conditions developing.”

In fact, Blase says his family was covered by short-term health insurance for most of last year.

Short-term plans may also appeal to younger or healthier people who rarely go to the doctor and are willing to buy less coverage to save money.

FAQ: Short-term health insurance

Is short-term health insurance worth it?

Short-term health insurance is worth purchasing if you need temporary medical coverage for basic care. Lower premiums reduce monthly costs, but exclusions, benefit caps, and limited coverage for services such as prescription drugs and mental health care mean you're responsible for more medical expenses. Compare the premium, deductible, covered services, and potential out-of-pocket costs with an ACA-compliant plan before enrolling.

Who doesn’t qualify for short-term health insurance?

People with pre-existing conditions generally don’t qualify for short-term coverage. You will not qualify if you are not a U.S. citizen or legal resident, or if you are already covered by another health plan.