What Is Short-Term Health Insurance?

Short-term health insurance is meant to cover your medical bills for a short time, often during a gap in other insurance coverage. However, short-term health insurance only provides limited cꦦoverage compared to traditional health 🏅insurance. Insurers can charge more and even deny applicants with pre-existing medical conditions. The duration of these plans is subject to federal rulemaking, and different administrations have changed regulations several times.

How Short-Term Health Insurance Works 

Short-term health insurance may also💞 be known as limited-duration health insurance or short-term, limited-duration insurance (STLDI). If your state allows these policies, you can enroll in short-term insurance for up to four months of every 12-month period.

澳洲幸运5开奖号码历史查询:Short-term health insurance plans aren’t defined as “individual health insurance coverage” under the Public Health Service Act. As a result, short-term plans work differently than traditional health insurance coverage. Insurers have more flexibility in how they design the plans. Users of these plans also don’t benefit from federal consumer protections spelled out in the 澳洲幸运5开奖号码历史查询:Affordable Care Act (ACA).

♎ Many short-term insurance plan providers offer sꦑignificant consumer choices regarding coverage and costs. For example, you may be able to choose your own: 

• 澳洲幸运5开奖号码历史查询:Deductible: This is per person, per term, such as $2,500 or $12,000.
• Term 澳洲幸运5开奖号码历史查询:coinsurance maximum: The most you pay for covered services after you meet the deductible  
• Maximum coverage: The most the plan pays for covered services during the term, per person
• Copay or coinsurance: Your share of the cost for each service
• Prescription drug cost: Your share of prescription drug coverage, if available

Changing these variables will change your monthly premium. You may be able to add supplemental benefits, including virtualꦰ health care services, vision, dental, and other benefits, ಌfor an additional cost.

Short-Term He🎃alth Insurance vs. Health Insurance

Federal regulations for short-term health insurance primarily only cover how long the plan can last and whether yo🐟u can renew the plan. Some states have additional rules for short-term insurance benefits, while others don’t. 

In contrast, traditional health insurance is highly regulated by federal and state law. Here are some significant ways short-term h🔴ealth insurance differs from traditional insuraꦯnce. 

Availability and Cost

You can buy an 澳洲幸运5开奖号码历史查询:Affordable Care Act (ACA) plan on the 澳洲幸运5开奖号码历史查询:ACA Health Insurance Marketplace or your state exchange. Buying on one of these websites may allow you to qualify for premium tax credits and 澳洲幸运5开奖号码历史查询:cost-sharing reductions that lower the cost of your healthcare. Plans can only use your age, family ♒size, location, tobacco usage, and plan category to determine your monthly cost.

In contrast, you must buy a short-term health insurance plan directly from the insurer or a licensed insurance agent. It isn’t available on the ACA Marketplace, and you won’t qualify for federal aid or reductions. Short-term plans can♛ base your premiums on any number of aspects, in⭕cluding your health. 

Policy Length and Renewability

ACA plan🔯s typically last one calendar year🅰 and are renewable even if you develop health issues. 

As previously mentioned, as of Sept. 1, 2024, short-term 🌸health insurance plans can last 🌞only up to four months in total for each 12-month period. 

Prior to Sept. 1, 2024, short-term health insurance plans could last for up to 364 days per 12-month period, due to a Trump administration rule set in 2018. They could be extended twice, for a maximum term of almost three years. It’s likely that the new Trump administration will once again extend the all𒁏owed duration for short-term plans. 

Maximum Out-of-Pocket Expenses

Traditional health plans typically feature an out-of-pocket maximum or cap on how much you would be required to pay out of pocket for health services. For example, the most you’ll pay out of pocket on a Marketplace plan is $9,200 for an individual and $18,400 for a family in 2025. Once you hit the maximum🌸, the plan continues to pay for covered care. There’s no limit on how much the traditional health plan will pay for your♚ treatment. 

In🥂 contrast, short-term health plans have a lifetime maximum the insurer will pay, often between $250,000 and $2 million. This is the total your plan will pay for covered costs. So, if you have a $1 million plan maximum, once your medical bills total $1 mill⭕ion, the plan won’t pay anything else toward your care.

Pre-Existing Conditions

Short-term health insurance providers can deny you coverage if you have a 澳洲幸运5开奖号码历史查询:pre-existing condition, charge you more because you’ve had a condition, or refuse to pay for specific procedures i🔜f the insurer determines you have a pre-existing condition. 

In contrast, because of the Affordable Care Act, health insurance ꧒cannot deny you coverage or charge you more based on your health history or current health.

Standard Procedure Coverage

Many types of care coverage required in an ACA or 澳洲幸运5开奖号码历史查询:group health insurance plan may not be included or available in your short-term health insu🌼rance plan. 

These include the ACA 10 Essential Health Benefits and othe♊r standard benef🌼its such as: 

• Outpatient care
• Maternity and newborn care
• Preventive services and wellness
• Prescription drug coverage
• Lab services
• Immunizations

Limits on Treatment of Common Conditions

With short-term health insurance, whether or not you have a pre-existing condition, an insurer may deny coverage for specific conditions for a period of time, such as the first six months, or for the entire contract. According to a 2020 staff report from the U.S. House 🎉of Representatives, these common conditions include: 

• Kidney disease
• Skin disease
• Allergy treatment or diagnosis
• HIV and AIDS
• Organ transplants
• Eye surgery
• Sleep disorders 

Coverage Limits

Even if treatment is covered, plans may impose maximum🌠 coverage limits for treatment. For example, some plans limit:

• Doctor visits: How often you can visit the doctor or a dollar maximum, such as $500 per policy period
• Daily hospital stays: May range from $500 to $10,000
• Emergency room coverage: Caps on treatment reimbursements could be as low as $250.
• Surgery: Limits may be placed on the number of surgical procedures that are covered or on the dollar amount covered.

Due to these limits, you could be billed by the facility or provider for the remaining amount, which could quickly spi൩ral into ♛medical debt.

Ad♓vantages and Disadvan♚tages of Short-Term Health Insurance 

Pros Explained

• Affordable premiums: Short-term plans offer limited coverage, so their monthly premium costs may be much lower than an ACA plan, particularly if you’re young and healthy. 
• Can start the next day if necessary: While some ACA or employer health plans may not start until the first day of the next month, you can enroll in a short-term plan that starts the next day.
• Can cover a short gap: If you’re stuck without insurance for a brief period, a short-term plan can offer some temporary relief while you wait for another health insurance plan to kick in. It may be better than going without any coverage altogether.
• Potentially more provider options: Many short-term plans don’t use provider networks, so you may be able to see any doctor you wish. However, remember that the plan likely will not pay the full amount of your visit.

Cons Explained

• Potentially higher costs: If you have high medical bills while on a short-term plan, you could pay more out of pocket due to exclusions, deductibles, and lifetime or treatment limits. Someone choosing a short-term limited duration plan is taking on “additional risk and may spend substantially more for treatment of a condition newly diagnosed while enrolled in an STLD policy compared to an ACA compliant policy,” according to a February 2020 report from Milliman.
• Limited coverage for services and treatments: As noted earlier, many short-term plans place dollar, frequency, or other limits such as exclusions on expected health services and treatments.
• Coverage denial or higher rates based on pre-existing conditions: If you have a pre-existing condition, the short-term plan provider may deny you coverage, charge you a higher premium, or exclude your condition from any future treatment.  
• Confusing documentation: Shopping for a short-term health insurance plan can be very confusing, with plenty of exclusions and fine print. Short-term health insurance plans do not follow set standards like ACA plans.

History of Short-Term Health Insurance

Regulations✱ and controversy around short-term hea🥃lth insurance have bounced around over the past 20 years or so.

In June 1997, federal regulations restricted short-term health insurance contracts to a maximum of 12 months of coverage. Then, in January 2017, the Obama administration shortened that maximum duration to up to three months𓃲 of coverage.

But in October 2018, the Trump administration’s 澳洲幸运5开奖号码历史查询:Depa🎀rtment of Health and Human Services increased the short-term maximum durat🧔ion to up to 12 months. In addition, it allowed a short-term plan to be renewed for up to 36 months.

After thos൲e changes, many🐓 states set limits on plans based on plan design, plan contract length, and options to renew. 

Prior to the Biden administration’s rule change, states tended to set their own rules around how short-term plans work. In Alabama, a short-term plan couldn’t last more than 12 months and was renewable for up to 36 months. But in Colorado, a short-term plan couldn’t last more than six months and could not be renewed.

In March 2024, the Biden administration, calling short♏-term insurance “junk insu✱rance,” instituted the nationwide rule limiting plan duration to four months max and requiring clearer disclosure of limits.

The new Trump administration is likely to restore the short-term health insurance regulations enacted during Trump's previous tenure as president.

Choosing a Short-Term Health Insurance Plan

When comparing short-term plans,ꦡ make sure you understand the following: 

• Definition and coverage of pre-existing conditions
• Whether the short-term plan uses a provider network, and if so, how much of a doctor’s visit is covered
• What 澳洲幸运5开奖号码历史查询:deductible you have to meet before the plan pays, and whether you have enough savings to pay that in full if necessary
• The maximum amount the plan pays per term or lifetime
• Whether the plan covers expensive emergency room visits, hospital stays, surgery, or prescription drugs, and if so, what the limitations are
• Whether the plan covers preventive care, and if so, what type
• Any exclusions in the policy and whether you might need those services

In most cases, you’ll want to closely read the policy documentation—which may be many pages long. Get help from a consumer advocate or licensed insurance agent to ask more challenging questions.

When comparing pricing, ensure you compare apples-to-apples by looking at plans with the same deductible and maximum🐠 benefit amount (such as a $2,500 deductible and $1 million benefit) and overall coverage (such as similar preventive services coverage).

The Bottom Line

Sometimes, a short-term health insurance plan may make sense as a temporary solution. However, you’ll need to seriously investigate any plan’s benefits and drawbacks before enrolling—you may not be buying the coverage you think you’re getting. Research your options; don’t just go with the cheapest plan out of haste or confusion. Get help, if necessary, from a licensed health insurance agent referred by friends or family.🔯