Short-term health insurance is having a moment, and not necessarily a good one for your wallet.
These plans, which were designed as a stopgap for people between jobs, can now last up to 36 months in many states under federal rules.
That's a far cry from the three-month limit that existed before 2018.
Short-term plans don't have to cover pre-existing conditions, prescription drugs, maternity care, or mental health treatment.
They also don't have to cap your out-of-pocket costs.
So that $89 monthly premium you see advertised might feel great until you actually need care.
The pitch is simple: cheap premiums for people who are healthy and just need something to bridge a gap.
A 2020 study in the journal Health Affairs found that short-term plans paid out only about 50 cents of every premium dollar in medical claims, compared to roughly 80 to 85 cents for ACA marketplace plans.
That gap shows up as higher bills when you get sick.
Gig workers, freelancers, early retirees who aren't old enough for Medicare, and people who missed open enrollment.
Roughly 3 million Americans were enrolled in short-term plans in recent years, according to estimates from the Kaiser Family Foundation.
Many of them are healthy and think they'll never need to use the coverage.
According to consumer complaints compiled by the National Association of Insurance Commissioners, the most common issues involve denied claims for services people assumed were covered.
One case involved a man who broke his leg and got stuck with a $23,000 hospital bill because his short-term plan classified the injury as related to a pre-existing condition.
Some states, including California and New York, have banned or severely restricted short-term plans.
Others, like Florida and Texas, allow the full 36-month terms.
That means a plan that's legal in one state might be off-limits if you move or travel for care.
Department of Health and Human Services has been tightening rules.
A 2024 regulation limited short-term plans to three months, with a maximum of four months total including renewals.
But the insurance industry sued, and the rule is tied up in court.
For now, the longer plans are still available in many states.
If you're considering one, read the fine print on what's excluded.
Look for the words "not essential health benefits" and "underwriting." If the application asks about your health history, that's a sign the plan can deny you coverage for anything it finds.
And check whether your doctors are in the plan's network, because many short-term plans use narrow or no networks at all.
A better option for many people is a marketplace plan with subsidies.
The American Rescue Plan and Inflation Reduction Act expanded subsidies through 2025, and for many households, a bronze or silver plan costs less than a short-term policy once you factor in tax credits.
You can check prices at healthcare.gov during open enrollment, which runs from November 1 to January 15 in most states.
The bottom line: short-term plans are cheap for a reason.
They're not a substitute for real coverage, and they can leave you exposed to bills that would wipe out your savings.
If you're healthy and between jobs, they might bridge a gap.
Final Thoughts
But go in with your eyes open, and don't assume the low premium means you're protected.