If you have ever typed "cheap health insurance" into a search bar and landed on a plan with a $98 monthly premium, you have met the short-term health insurance pitch.
These policies are marketed as a bridge for people between jobs, waiting on Medicare, or priced out of Affordable Care Act coverage.
The premiums can look like a steal next to a $600 ACA plan.
Short-term plans are not required to cover the ten essential health benefits that ACA plans must include.
That means no guaranteed coverage for prescription drugs, maternity care, mental health treatment, or preventive visits.
Some policies cap how much they will pay out per year or per condition, and that cap can be as low as $250,000.
Insurers in this market can also deny you outright or charge more because of your medical history.
Under ACA rules, a plan cannot turn you down for a preexisting condition.
Short-term policies can, and they often do.
If you have asthma, diabetes, or a past cancer diagnosis, expect a rejection letter or a rate you will not like.
A short-term plan is exactly that: short.
Federal rules allow terms of up to 364 days, and some states permit renewals.
But the insurer is not obligated to renew you at the same price, or at all.
Get sick mid-year, and you may find your policy simply does not continue.
The companies selling the plans, and the brokers earning commissions on each policy they place.
That is not a conspiracy, just an incentive.
A denial letter six months later does not generate a commission.
If you are healthy, between jobs for two or three months, and mainly want protection against a catastrophic accident, a short-term plan can function as a stopgap.
Read the exclusions page first, not the brochure.
Call the insurer and ask three questions: What is the annual payout cap?
Can it be canceled or non-renewed if I get sick?
Also check whether you qualify for a subsidy on HealthCare.gov before assuming you cannot afford real coverage.
Millions of Americans qualify for premium tax credits that make an ACA plan cheaper than the short-term alternative.
A 15-minute application can change the math entirely.
The honest take: these plans are cheap because they cover less, and the people selling them profit either way.
They can serve a narrow purpose, but they are not a substitute for comprehensive coverage, and the marketing rarely says so.
Final Thoughts
If the price seems too good, read the fine print until you find out why.