Health insurance is essential, but not everyone needs—or can afford—long-term coverage. That’s where short-term health insurance comes in. Designed to provide temporary coverage during gaps in traditional insurance, these plans are increasingly popular among individuals in transition. But is short-term health insurance right for you?
This article explores the pros and cons of short-term health insurance to help you make an informed decision.
What Is Short-Term Health Insurance?
Short-term health insurance (STHI), also known as temporary health insurance, is a limited-duration plan meant to cover basic medical needs for a short period—usually from a few months up to 364 days, depending on state laws. Some states allow renewals for up to 36 months, while others limit or ban these plans entirely.
They are not compliant with the Affordable Care Act (ACA) and are exempt from many of its regulations, which affects what they cover and how they operate.
Who Might Need Short-Term Health Insurance?
Short-term plans are ideal for people who experience temporary gaps in health coverage, such as:
- Recent college graduates
- Between jobs or laid off
- Waiting for employer benefits to begin
- Missed Open Enrollment and don’t qualify for Special Enrollment
- Early retirees not yet eligible for Medicare
- Individuals seeking lower-cost alternatives to ACA plans
Pros of Short-Term Health Insurance
1. Lower Premiums
Short-term plans are often much cheaper than ACA-compliant plans. For healthy individuals, the monthly premium can be as low as $50 to $150. These savings appeal to people without chronic health issues or those just looking for emergency coverage.
2. Immediate Coverage
Most short-term health insurance plans start within 24 hours of application approval. This fast processing time is ideal for people who suddenly lose coverage and need protection right away.
3. Flexible Duration
You can buy coverage for as little as 30 days or up to nearly a year, depending on your state. Some insurers offer renewable plans, giving you the option to extend coverage if your situation doesn’t change.
4. Wide Provider Networks
Many short-term plans use large PPO networks, allowing enrollees to visit a wide range of doctors and specialists without strict referral systems.
5. Customizable Coverage
You can often choose your deductible, coinsurance, and coverage level, allowing you to tailor a plan to fit your budget and needs. Some plans may include optional add-ons for things like:
- Doctor visits
- Emergency room care
- Prescriptions
- Accident benefits
Cons of Short-Term Health Insurance
1. Limited Coverage
Short-term plans do not cover essential health benefits required by the ACA. This often includes:
- Maternity and newborn care
- Mental health services
- Substance use disorder treatment
- Prescription drugs
- Preventive care (like immunizations and screenings)
This means you might be responsible for paying out-of-pocket for common medical needs.
2. Pre-Existing Condition Exclusions
Unlike ACA plans, short-term health insurance can deny coverage or charge more based on your health history. If you have a pre-existing condition, even something minor, it may not be covered—or you may be rejected altogether.
3. No Subsidies
Short-term health insurance does not qualify for premium tax credits or other subsidies offered through the ACA marketplace. Even if you meet the income criteria, you’ll have to pay the full premium cost yourself.
4. Caps on Benefits
Many short-term policies come with coverage limits, such as:
- $250,000–$1 million maximum benefit caps
- Daily hospital reimbursement limits
- Limited visits to doctors or specialists
A serious illness or extended hospital stay could leave you with major out-of-pocket expenses.
5. Not Renewable in Some States
Certain states like California, New York, Massachusetts, and New Jersey have banned or heavily restricted short-term plans. In other states, renewal may not be allowed, meaning you’ll need to reapply and go through underwriting again if your coverage ends.
6. Risk of Gaps
Because these plans are meant for short-term coverage, they don’t offer long-term security. If your situation doesn’t resolve quickly, you may find yourself uninsured again.
States with Restrictions on Short-Term Plans (2025)
| State | Status |
|---|---|
| California | Banned |
| New York | Banned |
| Massachusetts | Banned |
| New Jersey | Banned |
| Colorado | Max 6 months, non-renewable |
| Illinois | Limited duration and renewals |
| Florida | Allowed (up to 364 days) |
| Texas | Allowed with renewals (up to 36 mo) |
| Arizona | Allowed (364 days + renewals) |
Short-Term vs. ACA-Compliant Plans
| Feature | Short-Term Plan | ACA Plan |
|---|---|---|
| Covers Pre-Existing Conditions | ❌ No | ✅ Yes |
| Essential Benefits Included | ❌ No | ✅ Yes |
| Monthly Premiums | ✅ Lower | ❌ Higher (without subsidies) |
| Open Enrollment Required | ❌ No (year-round) | ✅ Yes (Nov–Jan) |
| Federal Subsidies Available | ❌ No | ✅ Yes |
| Guaranteed Issue | ❌ No | ✅ Yes |
When Short-Term Insurance Makes Sense
You might consider a short-term health insurance plan if:
- You’re between jobs and don’t want to pay COBRA premiums
- You’re healthy and want low-cost, catastrophic coverage
- You missed Open Enrollment and don’t qualify for a Special Enrollment Period
- You’re waiting for Medicare eligibility
In these situations, a short-term plan can act as a bridge until more permanent coverage becomes available.
Tips for Choosing a Short-Term Plan
- Read the Fine Print: Understand exactly what is and isn’t covered.
- Check the Provider Network: Make sure your preferred doctors or hospitals are included.
- Watch for Caps and Limits: Review maximum benefit limits and cost-sharing rules.
- Compare Multiple Quotes: Shop around before choosing a policy.
- Use as Temporary Coverage Only: Don’t rely on short-term plans as a substitute for comprehensive, long-term insurance.
Conclusion
Short-term health insurance can be a useful solution in specific situations where affordable, temporary coverage is needed. Its lower premiums and flexibility make it attractive for healthy individuals during transitions. However, the trade-offs—like lack of comprehensive coverage, no subsidies, and denial of pre-existing conditions—can leave you vulnerable if you’re not careful.
Before choosing a short-term plan, weigh the pros and cons carefully and consider your health needs, budget, and long-term insurance strategy. For many, it’s a helpful bridge—but not a permanent solution.