You’re between jobs. Or maybe you missed the Open Enrollment window and now you're staring at a six-month gap where one bad trip on the sidewalk could cost you $50,000. It's a terrifying spot to be in. Honestly, the first thing most people do is Google "cheap insurance," and that is exactly how they end up looking at short term health plans. But there is a massive amount of misinformation floating around about these policies, especially after the federal government decided to shake things up again recently.
Short term coverage isn't actually "insurance" in the way most of us think about it—at least not by the standards set by the Affordable Care Act (ACA). It's more like a safety net made of thin string. It might catch you, but it’s got some pretty big holes.
The 2024 rule change that changed everything
If you looked at these plans a couple of years ago, you might remember they could last for nearly a year. Some even let you renew them for up to thirty-six months. That is gone. As of late 2024, the Biden-Harris administration finalized a rule that strictly limits the duration of new short term health plans to just three months. You can technically get a one-month extension, but that’s the hard ceiling—four months total.
Why the hammer blow?
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The Department of Health and Human Services (HHS) argued that people were being misled into thinking these were long-term replacements for comprehensive coverage. They weren't. When people stayed on these plans for years, they often found out too late that their "insurance" didn't cover maternity care, mental health, or prescription drugs. By shrinking the timeline, the government is trying to force these plans back into their original lane: true temporary bridges.
What these plans actually (don't) cover
Here is the kicker. Because short term health plans don't have to follow ACA rules, they can—and usually do—discriminate based on your medical history.
If you have asthma, or had a bout with cancer five years ago, or even if you're just pregnant, the company can simply say "no." They use a process called medical underwriting. It’s old-school insurance logic. They want to insure people who won't actually use the insurance.
- Pre-existing conditions? Usually excluded entirely.
- Prescription drugs? Often not covered unless you're in the hospital.
- Mental health? Rarely included in the base price.
It's a "skinny" plan. You're basically paying for protection against a catastrophic car accident or a sudden appendectomy, not for your monthly check-up or your Allegra prescription.
The "Bait and Switch" of low premiums
The price tag is why people buy them. You might see a short term health plan for $80 a month while a Bronze plan on the Exchange is $400. It looks like a steal. But you have to look at the "Out-of-Pocket Maximum." Many of these plans have limits that are incredibly high, or worse, they have a "lifetime maximum benefit."
Imagine you have a $2 million heart surgery. A standard ACA plan has no limit on what they'll pay to save your life. A short-term plan might cap their payout at $100,000. You’re on the hook for the other $1.9 million. That's a life-altering debt.
Who is this actually for?
I'm not saying these plans are a scam. They have a very specific, very narrow use case.
If you are a 24-year-old in perfect health who just graduated and starts a corporate job with "real" benefits in sixty days, a short-term policy makes total sense. It’s better than being "naked" (uninsured). It covers the "what ifs."
It’s also a common choice for people who are retiring early but aren't quite 65 yet, though even then, it’s risky. If you develop a chronic condition while on a short-term plan, that condition becomes "pre-existing" when you try to renew the plan or move to a new one. You could effectively lock yourself out of coverage.
The "Bridge" Strategy: Better Alternatives
Most people don't realize they probably qualify for a Special Enrollment Period (SEP). If you lost your job, got married, or moved, you can get a "real" ACA plan mid-year. These plans are often subsidized.
Thanks to the Inflation Reduction Act (which was extended), those subsidies are more generous than ever. I've seen people qualify for a Silver-level ACA plan for $10 a month because their income was in a certain bracket. That is a way better deal than a short term health plan because it covers everything—even the stuff you don't think you'll need.
Then there’s COBRA. It’s notoriously expensive because you’re paying the full premium plus a 2% admin fee. But it’s continuous. You keep your same doctors and your deductible carries over. If you've already hit your deductible for the year, COBRA might actually be cheaper than starting over with a new, low-cost short-term plan.
Navigating the fine print
If you absolutely must buy a short-term policy, you have to be a detective. Read the "Exclusions" section first. Don't look at what they cover; look at what they refuse to cover.
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Check for "waiting periods." Some plans won't cover an illness for the first 15 days of the policy. If you get the flu on day three, you're paying out of pocket. Also, look at the "renewability" clause. Since the new federal rules kicked in, you basically can't "renew" these in the way you used to. You have to re-apply, and that means you have to pass the medical exam all over again.
Essential Action Steps
Stop and breathe before you click "buy" on that cheap plan.
First, go to Healthcare.gov. It is the only way to know for sure if you qualify for a subsidy. Don't trust a third-party site that also sells short-term plans; they are incentivized to steer you toward products with higher commissions.
Second, check your "Effective Date." If you buy a plan today, does it start at midnight, or in two weeks? Gaps are where the danger lives.
Third, if you do go the short-term route, keep it short. Use it for the 60 or 90 days you need, and have a hard exit strategy for when you'll transition to a permanent, ACA-compliant plan.
The goal isn't just to have a card in your wallet that says "Insurance." The goal is to make sure that if the worst happens, you aren't choosing between your health and bankruptcy. Short term health plans can bridge a gap, but they are a terrible place to build a home.