What to Know About Short-Term Health Plans
Need coverage between jobs or outside Open Enrollment? Short‑term health plans look cheap,
but the fine print matters.
This guide shows where these “gap” plans shine—and where they leave you exposed.
| Short‑Term Plan | ACA/Marketplace Plan | |
|---|---|---|
| Coverage Length | 30 days – 12 months (varies by state; often renewable) | Full calendar year (renewable annually) |
| Essential Health Benefits Required? | No (can exclude maternity, Rx, mental health) | Yes (10 mandated benefits) |
| Underwriting | Yes—medical questions; can deny pre‑existing conditions | No—guaranteed issue |
| Subsidies Available? | No | Yes—premium tax credits & cost‑sharing reductions |
| Max Out‑of‑Pocket Cap | None federally mandated; varies widely | $9,450 individual / $18,900 family (2024) |
| Who it Helps Most | Healthy individuals who need temporary, low‑premium coverage | Anyone needing comprehensive, long‑term protection |
1. What Exactly Are Short‑Term Plans?
- Private policies that fill gaps between major medical coverage.
- Sold year‑round—no Open Enrollment dates.
- Regulated at both federal and state levels; some states ban or tightly limit them.
2. Pros
- Premiums often 50 %–80 % lower than ACA Bronze plans.
- Fast approval (sometimes same‑day).
- Can choose any doctor out‑of‑network—just pay higher share.
Cons
- Pre‑existing conditions can be denied or excluded.
- May cap benefits at $250k–$2 million.
- No maternity, mental‑health parity, or preventive‑care guarantees.
- Claims do not count toward an ACA deductible if you later switch.
3. When a Short‑Term Plan Makes Sense
- Waiting for employer coverage to start (new job).
- Recent college grad aged off parents’ plan outside OE.
- Healthy traveler needing U.S. coverage for a short stint home.
- Missed Open Enrollment and no qualifying SEP—need protection until next cycle.
4. Key Watch‑Outs
- Read exclusions list—some skip prescription drugs entirely.
- Look for “continuous coverage” rules when renewing: a new application may re‑underwrite you.
- Factor in state taxes/penalties (Massachusetts, New Jersey, California) for being uninsured by ACA standards.
FAQ
- Can I cancel early?
Yes—most are month‑to‑month and refundable pro‑rata. - Does it cover COVID testing?
Only if the plan lists viral testing; many do not. - Will a short‑term policy satisfy the individual mandate?
No—in states with a mandate you may still owe a penalty.
Written by Izayah Littlefield, Independent Health‑Insurance Broker.
I specialise in bridging gaps—let’s be sure a short‑term plan truly protects you.
