Short-term health insurance is having a moment, and not necessarily a good one.
These policies, designed as a temporary bridge between jobs or during a gap in coverage, can now last up to 364 days in many states under federal rules, with renewals stretching the coverage even longer.
For anyone staring down a $600 monthly COBRA bill or a marketplace premium that just jumped, the pitch sounds tempting: premiums that can run half the price of an ACA plan.
But the cheap sticker price hides a pile of fine print, and consumer advocates say that gap is where people get hurt.
The biggest catch is what these plans don't cover.
Unlike Affordable Care Act plans, short-term policies aren't required to cover pre-existing conditions, prescription drugs, maternity care, or mental health treatment.
Insurers can also deny you outright if you have a health history, or charge you more based on age and where you live.
If you get diagnosed with something serious mid-policy, the plan can refuse to pay for treatment tied to that condition when you renew.
Short-term plans screen applicants, so the people who qualify tend to be healthier and cheaper to insure.
That skews the risk pool for ACA marketplace plans, which can push premiums up for everyone else.
Several states, including California, New York, and Massachusetts, have restricted or banned these plans entirely, so availability depends heavily on your zip code.
The renewal math deserves its own warning.
A policy might cover up to 364 days, but renewals aren't guaranteed, and some insurers re-underwrite you each time, meaning a new diagnosis can make you uninsurable when you need coverage most.
Annual and lifetime dollar limits, which ACA plans banned, can also reappear.
One hospital stay can blow past a $250,000 cap fast.
People in a genuine short gap, say 30 to 90 days between a job loss and new employer coverage, who are healthy, have savings set aside for the deductible, and understand they're buying limited protection, not comprehensive insurance.
Even then, compare it against a marketplace plan first.
Many households qualify for subsidies that shrink the price gap more than they expect, and a special enrollment period usually gives you 60 days after losing coverage to sign up.
Before you buy anything, read the exclusions list, not the marketing page.
Check whether prescriptions, lab work, and emergency care are covered, and look for the maximum payout.
If a plan's summary of benefits is hard to find, that's your answer.
One more thing worth knowing: these plans often pay commissions that are far higher than ACA policies, which is why you'll see them pushed hard in ads and by some brokers.
That doesn't make them scams, but it does mean the sales pitch isn't neutral.
Our take: short-term coverage can be a reasonable stopgap for a narrow slice of healthy people with a defined end date.
For everyone else, especially anyone managing a chronic condition or expecting to need real care, it's a gamble dressed up as a deal.
Final Thoughts
Run the numbers on a subsidized marketplace plan before you sign anything, because the cheapest premium is rarely the cheapest outcome.