If you've priced health coverage lately, you've probably seen the ads: a policy for $80 a month, sign up in minutes, no open enrollment required.
Short-term health insurance looks like a life raft for anyone between jobs, freelancing, or staring down a $700 COBRA bill.
And the price gap is real, sometimes hundreds of dollars a month.
These plans aren't required to cover the ten essential health benefits that Affordable Care Act plans must include.
That can mean no prescription drug coverage, no maternity care, no mental health services, and no coverage for pre-existing conditions.
Insurers in most states can also review your medical history and reject you outright.
A 2020 study in the journal Health Affairs found that about half of short-term plan claims were denied, compared with roughly 15 to 20 percent for ACA marketplace plans.
Denials often trace back to the pre-existing condition exclusion, which insurers can define broadly: a past diagnosis, an old prescription, even a symptom you mentioned to a doctor once.
Federal rules let these plans run up to 364 days, and some states allow renewals that stretch coverage for years.
But the policy isn't guaranteed renewable the way ACA coverage is.
If you get sick, the insurer can simply decline to renew you, leaving you shopping for new coverage at the worst possible moment.
People who are healthy, need a bridge of a few months, and understand they're buying catastrophic protection rather than comprehensive care.
Someone waiting out a 90-day probation period at a new job fits that profile.
Someone managing diabetes or taking a monthly biologic does not.
States like California, New York, and New Jersey have tight restrictions or outright bans on short-term plans.
Others, including Texas and Florida, allow longer terms and renewals.
A policy that's legal and cheap in one state might not be sold in yours at all.
Short-term plans typically pay agents higher commission rates than ACA marketplace policies, which is one reason you see so many sponsored results when you search for coverage.
That doesn't make the agents wrong, but it does mean the sales funnel is optimized for the seller, not necessarily for you.
If you're comparing options, run the math past the premium.
Add up your deductible, out-of-pocket maximum, and the cash price of any prescriptions you take.
Then check whether you qualify for marketplace subsidies, which many people assume they won't but actually do.
A subsidized ACA plan can end up cheaper than a bare-bones short-term policy once you factor in what's covered.
The honest take: short-term health insurance is a legitimate tool for a narrow slice of people, and a trap for anyone who mistakes it for real coverage.
It's cheap because it covers less and can walk away when you need it most.
Final Thoughts
Read the exclusions before you enter a card number, not after.