The pitch lands in your inbox right after you lose a job: coverage for $87 a month, no waiting, no hassle.
Compare that to the $500-plus an average marketplace plan can run a family, and it looks like a lifeline.
That gap is real, and it's also the entire business model.
Short-term health insurance is cheap because it is not the same product as the coverage most people think they're buying.
These plans, technically "short-term, limited-duration" policies, were designed as a stopgap while someone moved between jobs or waited for new coverage to begin.
Federal rules loosened in 2018 let insurers stretch them up to 364 days and renew them for up to three years in many states.
But a short-term plan still isn't required to cover the ten essential health benefits that Affordable Care Act plans must include.
That means no guaranteed coverage of prescription drugs, maternity care, mental health treatment, or preventive visits.
Insurers can also deny you outright for a pre-existing condition, then investigate your medical history if you file a claim.
An application question about past back pain or an old prescription can become the reason a claim gets denied months later.
The renewal trap is where the real money shows up.
You buy a plan in January with a $3,000 deductible.
In March you get diagnosed with something serious.
When the policy term ends, the insurer simply declines to renew, and you're shopping again with a fresh pre-existing condition and no ACA-style protection against being turned down.
There's a federal tax detail that trips people up too.
Because these plans aren't minimum essential coverage, enrolling doesn't satisfy the individual mandate in states that still have one, and it doesn't let you claim a premium tax credit.
That $87 premium is paid entirely out of pocket, while a marketplace plan's sticker price often shrinks after subsidies are applied.
For a household earning $60,000, the actual after-subsidy cost of a bronze ACA plan can land close to what a short-term policy charges, with far more protection.
The people profiting here aren't hard to identify.
Insurers collect premiums while carrying far less claim risk than comprehensive carriers, and lead-generation websites earn commissions for every application they push through.
It's a legal, lightly regulated substitute being marketed to people who can't easily tell the difference.
If you're between jobs, the practical order is usually this: check Healthcare.gov or your state exchange for subsidies first, price COBRA, look at a spouse's plan, and consider a health-sharing ministry only with clear eyes about what it doesn't promise.
Treat a short-term policy as a bridge measured in weeks, not years, and read the exclusions page before the price page.
The uncomfortable truth is that a low premium is not a discount, it's a disclosure.
Someone decided which risks to cut out of the policy, and the buyer usually finds out only when the bill arrives.
Final Thoughts
Cheap coverage is easy to sell and hard to use, and that asymmetry is the whole point.