What is Short-Term Health Insurance?
Short-term health insurance (also called temporary health insurance or short-term medical) is designed to provide temporary coverage during gaps in major medical insurance. It's meant for healthy people who need insurance for a limited time—like waiting for employer coverage to begin, transitioning between jobs, or recent graduates aging off parents' plans.
These plans are significantly cheaper than ACA marketplace plans because they offer much less coverage. They're NOT comprehensive health insurance—they're designed to protect you from catastrophic medical bills if you have an unexpected accident or illness, but they won't cover ongoing care or pre-existing conditions.
How Short-Term Insurance Works
Short-term plans are sold by private insurance companies and function like basic major medical insurance—with significant limitations:
What Short-Term Plans DO Cover
- ✓ Emergency care and hospitalization
- ✓ Doctor visits for new illnesses/injuries
- ✓ Diagnostic tests (X-rays, labs)
- ✓ Surgery and procedures
- ✓ Urgent care visits
- ✓ Some prescriptions (limited)
- ✓ Accidents and injuries
Coverage for NEW conditions that arise after your coverage starts
What Short-Term Plans DON'T Cover
- ✗ Pre-existing conditions (ANY prior health issue)
- ✗ Maternity and childbirth
- ✗ Mental health and substance abuse
- ✗ Preventive care and routine physicals
- ✗ Prescription drug coverage (or very limited)
- ✗ Pediatric services
- ✗ Many other essential health benefits
These are major gaps compared to ACA plans
Major Limitations of Short-Term Plans
Before you buy a short-term plan, understand these serious limitations:
#1: Pre-Existing Conditions NOT Covered
Short-term plans can deny coverage or exclude ANY pre-existing condition. A pre-existing condition is any health issue you had symptoms of, were diagnosed with, or received treatment for before your coverage started.
Examples that would be excluded:
- • High blood pressure, diabetes, asthma
- • Arthritis, back pain, migraines
- • Anxiety, depression
- • High cholesterol, thyroid conditions
- • ANY condition you've seen a doctor for recently
If you have ANY ongoing health condition, short-term insurance is not appropriate for you.
#2: Annual & Lifetime Limits
Unlike ACA plans, short-term insurance can have annual and lifetime benefit limits. Once you hit these limits, the plan stops paying—leaving you responsible for all additional costs.
Typical limits:
• Annual maximum: $1-2 million
• Lifetime maximum: $2-5 million (some unlimited)
A serious illness or major accident could exceed these limits, leaving you with massive bills.
#3: Plans Can Cancel or Refuse Renewal
Short-term plans are NOT guaranteed renewable. If you develop a serious health condition during your coverage period, the insurance company can refuse to renew your policy when it expires.
You could get sick, lose your short-term coverage, and then be unable to get ACA coverage until Open Enrollment (unless you qualify for a Special Enrollment Period).
#4: No Essential Health Benefits
Short-term plans are NOT required to cover the ACA's essential health benefits, which include:
- • Maternity and newborn care
- • Mental health services
- • Substance abuse treatment
- • Prescription drugs
- • Rehabilitative services
- • Preventive and wellness services
- • Pediatric services
- • Lab services (limited)
- • Chronic disease management
- • Many more...
#5: No Out-of-Pocket Maximum
Many short-term plans don't have an out-of-pocket maximum. This means your costs could be unlimited if you have significant medical expenses. ACA plans cap your out-of-pocket costs at $9,450 (2024) per person—short-term plans don't.
Short-Term Insurance Costs
Short-term plans are significantly cheaper than ACA marketplace plans, but understand what you're getting (and not getting) for that low price:
| Cost Component | Short-Term Plan | ACA Marketplace Plan |
|---|---|---|
| Monthly Premium | $100-300 typical | $400-600 (before subsidies) |
| Deductible | $2,500-10,000 | $1,000-8,000 depending on plan |
| Out-of-Pocket Max | Often none or very high | $9,450 max (2024) |
| Doctor Visit Copay | Pay toward deductible first | $20-50 typical |
| Premium Tax Credits | Not eligible | Available based on income |
| Pre-Existing Coverage | Excluded | Fully covered |
Compare to ACA Plans with Subsidies!
Many people assume ACA plans are too expensive without checking if they qualify for premium tax credits. Depending on your income, you might pay LESS for a comprehensive ACA plan than for a limited short-term plan. Always compare before buying!
When Short-Term Insurance Makes Sense
Short-term health insurance is appropriate in very specific, limited situations:
- You're very healthy - No ongoing health conditions, no regular medications, no recent doctor visits
- You need temporary coverage - Between jobs, waiting for employer coverage to start, recent graduate
- You're young - Typically under 40 with no health history
- You can't afford COBRA or ACA plans - And you don't qualify for ACA premium tax credits
- You missed Open Enrollment - And don't qualify for a Special Enrollment Period
- You understand the risks - And are willing to accept limited coverage
When Short-Term Insurance is NOT Appropriate
Do NOT buy short-term insurance if any of these apply to you:
You Have Health Conditions
- • Diabetes, high blood pressure, asthma
- • Ongoing back pain, arthritis
- • Mental health conditions
- • ANY condition you take medication for
- • ANY recent doctor visits (past 6-12 months)
Special Circumstances
- • You're pregnant or planning pregnancy
- • You have children needing pediatric care
- • You need mental health treatment
- • You take regular prescriptions
- • You need preventive care/screenings
Financial Considerations
- • You qualify for ACA premium tax credits
- • You can afford COBRA or ACA plans
- • You couldn't afford high out-of-pocket costs
- • You want financial protection from major illness
Timing Issues
- • You qualify for a Special Enrollment Period
- • Open Enrollment is happening now
- • You can get on a spouse's plan
- • You're starting a new job soon
Short-Term vs. ACA Marketplace Plans
Here's a complete comparison to help you decide:
| Feature | Short-Term Plan | ACA Marketplace Plan |
|---|---|---|
| Premium Cost | Lower ($100-300/mo) | Higher ($400-600/mo before subsidies) |
| Pre-Existing Conditions | NOT covered | Fully covered |
| Essential Health Benefits | NOT required | All 10 categories covered |
| Out-of-Pocket Max | Often none | $9,450 max (2024) |
| Annual/Lifetime Limits | Allowed | Prohibited |
| Renewal | Can be denied | Guaranteed renewable |
| Premium Tax Credits | Not eligible | Available based on income |
| Maternity | Not covered | Covered |
| Mental Health | Not covered | Covered |
| Prescriptions | Limited or none | Comprehensive coverage |
| Preventive Care | Not covered | Free (no copay/deductible) |
| Duration | Temporary (3-36 months) | Indefinite (renew annually) |
| Best For | Very healthy, short-term needs | Everyone, especially with health issues |
Short-Term Insurance Rules in Texas
Texas allows short-term plans with relatively long durations compared to some other states:
- Initial term: Up to 364 days (just under 12 months)
- Renewals/Extensions: Can be renewed for up to 36 months total
- Application: Medical underwriting allowed (can deny coverage based on health)
- Regulation: Less regulated than ACA plans; varies by carrier
Better Options Than Short-Term Insurance
Before buying short-term insurance, explore these alternatives:
ACA Marketplace (with subsidies)
If you qualify for premium tax credits, ACA plans may cost LESS than short-term insurance while providing comprehensive coverage. Losing employer coverage qualifies you for a Special Enrollment Period.
Compare ACA PlansCOBRA (if recently lost job)
COBRA is expensive but covers pre-existing conditions and includes comprehensive benefits. Good option if you're in the middle of treatment or have met your deductible.
Learn About COBRASpouse's Employer Plan
Losing your own coverage qualifies you for a Special Enrollment Period to join your spouse's employer-sponsored plan mid-year. Often the best option if available.
Wait for New Employer Coverage
If you're starting a new job in 1-2 months, consider going uninsured temporarily (risky!) or buying one month of short-term coverage rather than a longer policy.
Get Expert Guidance on Your Options
Don't buy short-term insurance without comparing all your options. In many cases, ACA marketplace plans with premium tax credits are cheaper AND offer comprehensive coverage. I can help you:
- Determine if you qualify for a Special Enrollment Period for ACA plans
- Calculate your premium tax credit eligibility
- Compare short-term plan costs to ACA marketplace plans
- Understand what each option covers (and doesn't cover)
- Review medical underwriting for short-term plans
- Enroll in the best option for your situation and budget
Compare Short-Term vs. ACA Plans
Don't settle for limited short-term coverage without exploring comprehensive ACA marketplace plans. I'll show you all your options and help you find the most affordable coverage for your needs. Free consultation, no obligation.
Final Warning About Short-Term Insurance
Short-term plans can leave you exposed to massive medical bills if you get sick or injured. They're called "junk insurance" by consumer advocates for a reason. If you have ANY health history or can afford comprehensive coverage, choose an ACA marketplace plan instead. Your future self will thank you.