Short-term health insurance is having a moment.
These plans, which were designed as gap coverage for a few months between jobs, can now be sold for up to 12 months in many states under loosened federal rules.
The pitch sounds great: premiums that can run a fraction of what an Affordable Care Act plan costs.
Short-term plans are not required to cover pre-existing conditions, prescription drugs, maternity care, or mental health treatment.
Insurers can look at your medical history and turn you down outright, or charge you more.
If you get sick while covered, the plan may refuse to pay for anything related to a condition you had before you signed up.
The renewals are where people get burned.
Some insurers let you reapply at the end of the term, but each new policy is treated as a fresh application.
That means a diagnosis you received during the first year can become a pre-existing condition in year two, and the plan can deny or exclude it.
You are not guaranteed a renewal, no matter how many premiums you have paid.
The math looks compelling until you read the benefit caps.
Many plans pay a fixed dollar amount per day in the hospital rather than the actual bill, or cap total payouts at numbers like $250,000 or $2 million for the life of the policy.
A single serious hospitalization or cancer treatment can blow past those limits, and the leftover bill lands on you.
Low premiums often come with deductibles in the thousands and separate deductibles for hospital stays versus other care.
Some plans exclude entire categories of treatment, like emergency room visits for anything the insurer decides was not a true emergency.
The denial rate for short-term plans tends to run higher than for ACA coverage.
None of this means short-term plans are useless.
For a healthy 26-year-old between jobs, someone waiting for employer coverage to start, or a person who missed open enrollment and needs a stopgap, they can bridge a gap at a real discount.
The key is going in with clear eyes about what you are buying.
If you are considering one, read the exclusions page before the price page.
Check whether the plan covers the prescriptions you take and the doctors you see, because many use narrow networks with little out-of-network protection.
Ask what happens if you need care in month seven and want to renew in month thirteen.
And compare the total worst-case cost, not the monthly premium, against a full ACA plan, especially if you qualify for subsidies that could make comprehensive coverage cheaper than it looks.
Some states have banned or sharply limited short-term plans, while others allow the full 12-month terms.
Where you live changes what is even available to you.
Short-term coverage is a tool for a specific job, and it works best when nothing goes wrong.
Final Thoughts
Treat the low premium as the start of your research, not the end of it.