Short-term health insurance plans have lower premiums than ACA marketplace plans. But there's a reason: they're not real comprehensive insurance. Here's the honest breakdown.
What Short-Term Plans Are
Short-term limited duration insurance (STLDI) is designed to fill temporary coverage gaps. They're regulated less strictly than ACA plans, so they have lower premiums but limited coverage.
The Pros
- Premiums often 50–70% cheaper than ACA plans
- Can buy any time — no Open Enrollment needed
- Coverage starts as soon as next day
- Useful for gaps between ACA plans, between jobs, or for early retirees
The Major Risks
- Pre-existing conditions usually NOT covered — anything diagnosed before enrollment can be excluded
- 10 essential benefits not required — many don't cover maternity, mental health, or prescription drugs
- Coverage caps exist — some plans cap total payouts at $1M or even less
- Can be canceled retroactively — if you don't disclose a condition, plan can rescind
- Doesn't qualify as MEC — doesn't satisfy state individual mandate (CA, NJ, RI, MA, DC)
- Limited duration — typically 12 months max in many states
When Short-Term Makes Sense
- You're between jobs and don't qualify for ACA subsidies
- You missed Open Enrollment with no qualifying event AND can't afford ACA
- You're in a 30-day gap before COBRA or new job coverage starts
- You're an early retiree under 65 and ACA premiums are unaffordable
When NOT to Use Short-Term
- You have any pre-existing condition (including ones being investigated)
- You qualify for any ACA subsidy at all
- You need maternity, mental health, or prescription coverage
- You'd qualify for Medicaid
- You need long-term coverage (more than 6 months)
The Better Alternative
Most people who consider short-term plans actually qualify for $0–$100/month subsidized ACA plans. Always check your subsidy first — many people are surprised.
Compare short-term vs subsidized ACA before you buy. Get both options compared →