If you have ever typed "cheap health insurance" into a search box and gotten a flood of quotes for $89 a month, you have met the short-term health plan.
These policies are marketed as a bridge for people between jobs, waiting on Medicare, or staring down a $700 monthly COBRA bill.
The pitch is simple: real coverage, a fraction of the price.
Short-term plans are not required to cover the ten essential health benefits that Affordable Care Act plans must include.
That means no guarantee of prescription drug coverage, no maternity care, no mental health treatment, and no coverage for pre-existing conditions.
Insurers can also cap how much they pay out per year and per condition — limits that ACA plans are banned from using.
The price gap is real, and it is not an accident.
A 2020 analysis from the Kaiser Family Foundation found that short-term plans cost roughly $124 a month on average, compared to about $440 for a subsidized ACA marketplace plan.
But the same analysis found buyers could face thousands in out-of-pocket costs for services a standard plan would cover, including hospital stays and common prescriptions.
Because these plans are medically underwritten, the people who need coverage most are the ones most likely to be rejected or charged more.
A 2019 study in the journal Health Affairs estimated that 43 percent of people with pre-existing conditions who applied for short-term coverage would be denied.
Cancer history, diabetes, even a past C-section can trigger a rejection in some states.
The regulatory map is a patchwork, and it changes with whoever sits in the White House.
The Trump administration expanded these plans in 2018, stretching terms from three months to just under a year and allowing renewals up to 36 months.
The Biden administration cut that back to four months in 2024.
Several states, including California, New York, and New Jersey, effectively ban or heavily restrict them regardless of federal rules.
Insurers selling a low-cost product with high denial rates and payout caps, and healthy people who genuinely just need a gap of a few weeks.
Anyone who develops something serious mid-policy and discovers their "insurance" has a $10,000 annual cap and a list of exclusions longer than a CVS receipt.
If you are considering one, read the certificate of coverage — not the brochure.
Look specifically for the annual maximum, the per-day hospital limit, the prescription formulary, and the list of excluded conditions.
If you qualify for a marketplace subsidy, run those numbers first; the sticker price is often lower than it looks once tax credits kick in.
Short-term plans are not a scam in the legal sense.
They are a legal product doing exactly what the fine print says, which is often far less than what buyers assume.
The real problem is the marketing, which borrows the language of comprehensive coverage without the obligations.
Final Thoughts
Read the exclusions before you pay, and assume the cheapest quote is cheap for a reason.