Short-term health insurance is having a moment.
These policies, often marketed as "temporary" or "gap" coverage, can carry premiums as low as $40 to $100 a month—a fraction of what a full ACA marketplace plan costs.
For anyone staring down a $600 monthly premium, that price tag is tempting.
But consumer advocates and state regulators keep flagging the same problem: what you save in premiums can vanish the moment you actually get sick.
Short-term plans aren't required to cover pre-existing conditions, maternity care, mental health treatment, or prescription drugs.
Many cap how much they'll pay out per year, and some cap how much they'll pay for your entire lifetime.
You buy a three-month policy for a few hundred dollars total.
Then you tear an ACL or land in the ER with appendicitis.
The plan may pay a slice of the bill and leave you responsible for thousands more—sometimes tens of thousands—because of per-day hospital limits, coverage exclusions, or a "reasonable and customary" payment formula that pays far less than the actual charge.
Congress loosened the rules on these plans in 2018, letting insurers offer policies lasting up to 364 days and renewable for up to three years in many states.
Some states, including California, New York, and New Jersey, have banned or tightly restricted them.
Others, like Florida and Texas, allow the longer terms.
That means your protection depends heavily on your zip code.
The people most likely to get burned are those with any health history.
If you've had cancer, diabetes, asthma, or even a past sports injury, the plan can exclude anything related to that condition—or reject you outright after reviewing your medical records.
Denials often show up after a claim, not before you buy.
There's a legitimate use case: a healthy 26-year-old between jobs who just needs catastrophic coverage for a few months and understands the trade-offs.
If that's you, read the exclusions list before you pay.
Ask three questions: What's the maximum the plan pays per year?
And what happens if I need care before the policy starts?
For everyone else, the math usually favors a marketplace plan, especially if you qualify for subsidies.
A recent analysis by the Kaiser Family Foundation found millions of people eligible for zero-premium bronze plans who never claim them because they assume they earn too much.
One more thing worth knowing: short-term plans don't count as minimum essential coverage.
That matters for the individual mandate in a handful of states that still enforce one, and it matters if you're trying to avoid a gap that could affect future coverage.
My take: these plans aren't automatically a scam, but they're sold like one—cheap, fast, and vague.
Final Thoughts
If a policy costs a third of real insurance, it's because it covers a third of what real insurance covers.