Short-term health insurance is having a moment again.
These plans, once capped at three months under Obama-era rules, can now run up to 12 months in many states, and they're being marketed hard to people squeezed by rising rent, grocery bills, and $400-plus monthly marketplace premiums.
The pitch sounds great: coverage in days, premiums that can run half the price of an ACA plan.
But consumer advocates and state regulators keep flagging the same problems.
These policies aren't required to cover pre-existing conditions, prescription drugs, maternity care, or mental health treatment, and many cap how much they'll pay per year.
The catch that trips people up most is underwriting.
Insurers can dig through your medical history and deny a claim or rescind a policy if you left something off the application.
A 2020 study in Health Affairs found that short-term plans denied roughly one in four claims, compared with about one in eight for ACA marketplace coverage.
You don't automatically roll over into a new ACA plan when a short-term policy expires.
If you develop a condition during those months, the next insurer can refuse you, and you may have to wait until open enrollment to get a comprehensive plan that covers it.
Hospital bills are where this gets genuinely dangerous.
Many short-term plans set annual maximums as low as $250,000, and some as low as $100,000.
A single serious car accident or cancer diagnosis can blow past that in days.
Then you're negotiating directly with the hospital, often without the network discounts that full insurance gets.
If you're considering one of these plans, treat it as a bridge, not a home.
Check whether your state allows 12-month terms or restricts them to under six months.
Read the exclusions page before the premium page.
And if you qualify for a marketplace subsidy, run those numbers first, because the subsidy can make a real plan cheaper than it looks.
One more thing: short-term plans don't count as minimum essential coverage, so you can't use them to avoid the tax penalty in states that still have one, and you can't pair them with a health savings account.
If an agent says otherwise, get it in writing.
For anyone between jobs or waiting on Medicare, a short-term policy can beat going uninsured for a few weeks.
The math changes fast once you're past 60 days, though, and that's exactly when people stop shopping and start trusting the renewal letter. **The bottom line:** short-term health insurance is a stopgap, not a substitute, and the people it hurts most are the ones who buy it expecting real coverage.
Final Thoughts
If you go this route, budget for the possibility that the plan pays far less than you assumed.