Pros and Cons of Short-Term Insurance Policies

*Updated December 23rd, 2025

Short-term insurance policies—often called temporary health insurance, short term medical, or short-term medical insurance—are designed to provide short-term coverage during gaps in a traditional health insurance plan. These short-term policies are commonly used by people between jobs, waiting for employer benefits, or those who missed the Affordable Care Act (ACA) open enrollment period.

Unlike ACA health insurance, which includes essential health benefits and protects you from being denied for a pre-existing condition, a short-term health insurance plan typically offers more limited health coverage with a lower monthly premium, but potentially higher out-of-pocket costs. Many short-term plans may exclude coverage for pre-existing conditions, limit certain health services, and offer fewer protections than a comprehensive ACA plan.

This article breaks down the pros and cons of short-term health insurance and explains key differences between ACA coverage and a short-term plan, so you can decide what type of plan fits your health needs.

What Is Short-Term Health Insurance?

Short-term insurance refers to temporary insurance coverage designed to provide financial protection for a limited period. These policies exist across different lines (auto, disability, etc.), but the most common version is short-term health insurance, which offers a temporary health plan for people experiencing gaps in coverage.

While health insurance provides more comprehensive protection under ACA plans, a short-term health plan is meant to offer basic coverage for unexpected medical bills—usually at a lower cost, with more restrictions.

How Short-Term Health Insurance Differs from Traditional Long-Term Coverage

The biggest differences between ACA plans and short-term health insurance come down to coverage rules, cost, and eligibility.

Below is a comparison between a short-term health insurance plan and ACA health plans:

Typical Coverage Duration and Renewal Options

Short-term health plans typically last between 30 days and 4 months (depending on your state and the insurer). Under current federal rules, short-term health insurance plans:

• Can be purchased year-round, without waiting for enrollment periods

• Have a maximum duration of 4 months (3 months with a 1-month extension)

• Do not guarantee renewability—if your health status changes, you may be denied coverage when reapplying

A short-term health insurance plan can help while you’re waiting for other insurance, but it’s not designed to replace comprehensive coverage long-term.

Pros of Short-Term Health Insurance Plans

Despite their limitations, short-term insurance plans can be a practical option for certain people who need temporary coverage. Here are the main benefits of a short-term health insurance plan.

1. Affordability

One of the biggest draws of short term health insurance is the lower premium compared to an ACA plan. Because short-term plans are not required to provide essential health benefits (like maternity, mental health services, and preventive care), pricing is often cheaper.

Common reasons premiums are lower:

• Lower monthly premium

• Flexible deductible and benefit limit options

• Coverage tailored to basic needs (not full, standardized benefits)

Just keep in mind that lower premiums often mean higher out-of-pocket costs, and you may pay out of pocket for services the plan doesn’t include.

2. Quick Approval Process

Many short-term health insurance options are built for speed:

• Simple applications with basic health questions (medical underwriting is common)

• Coverage can start quickly—sometimes as soon as the next day

• Fewer steps than applying for ACA health coverage through the Marketplace

3. Flexible Coverage Options

Unlike ACA plans, short-term health insurance can be more flexible in duration. Many plans available let you choose 30 days to 4 months. Some plans offer optional add-ons like limited prescription drugs coverage, telehealth services, or accident benefits (varies by state and provider).

4. Temporary Coverage for Transitional Periods

A short-term plan can be a good fit for people in transition, such as:

• Between jobs and waiting for employer coverage

• Recent graduates transitioning off a parent’s plan

• Early retirees under 65 waiting for Medicare

• Freelancers/gig workers seeking private insurance

• People who missed the Marketplace window and don’t qualify for a special enrollment period

5. Wide Availability (Year-Round Enrollment)

Because short-term plans are sold outside Marketplace rules, enrollment is typically available year-round. That can be helpful if you need coverage quickly and aren’t eligible for an ACA open enrollment period or special enrollment period.

Cons of Short-Term Health Insurance Policies

While short-term plans can help in a pinch, they come with real trade-offs. Here are the biggest drawbacks.

1. Limited Coverage (Often Missing Essential Benefits)

Most short-term health insurance plans are not required to include essential health benefits. This can limit coverage and create gaps in protection.

Common exclusions or limitations:

• Pre-existing condition coverage: many plans exclude coverage for pre-existing conditions

• Preventive care: routine screenings and vaccines may not be covered

• Maternity and maternity care: typically excluded (including prenatal and delivery)

• Mental health care and mental health and substance treatment: often excluded or limited

• Prescription drugs: may be limited or excluded (some plans cover small lists only)

2. No Guaranteed Renewability

Unlike ACA plans, short-term plans are typically not guaranteed to renew. When the policy ends, you usually must reapply—and the insurer can deny coverage if your health condition or health status has changed.

3. Higher Out-of-Pocket Costs

Even with a lower monthly premium, many short-term plans come with:

• High deductible amounts (often $2,500–$10,000)

• Coverage caps per illness or per term

• Higher cost-sharing that can lead to large medical bills

This is where people sometimes end up paying more than expected.

4. Does Not Meet ACA Requirements (ACA vs Short-Term)

A short-term health plan does not meet ACA “minimum essential coverage.” That means:

• No Marketplace subsidies

• Fewer consumer protections than ACA health insurance

• Coverage may be less comprehensive than comprehensive ACA options

5. Potential Coverage Gaps and Claim Denials

Some short-term plans include narrow networks or claim review rules that lead to:

• Limited provider choices

• Claim denials for services deemed unnecessary or excluded

• Coverage interruptions if you can’t qualify for a new plan after the term ends

Who Should Consider a Short-Term Health Insurance Plan?

A short-term health insurance plan may work best for:

• Healthy people who want basic coverage and rarely use care

• People waiting for other insurance (new job, Medicare, etc.)

• People who need temporary coverage outside Marketplace timing

If you have ongoing needs—especially related to a pre-existing condition, ongoing medications, or planned care—an ACA plan may be a better fit.

Alternatives to Short-Term Health Insurance

If you need more comprehensive protection, consider:

• ACA health plans (often with subsidies)

• Medicaid/CHIP (year-round eligibility in many cases)

• COBRA (keeps employer benefits but can be expensive)

• Healthcare sharing programs (not guaranteed insurance coverage)

Internal-link opportunity: ACA health insurance options, types of health insurance, or Marketplace enrollment guides.

How to Choose the Right Short-Term Health Insurance Policy

Because short-term plans vary, it helps to compare carefully before enrollment:

• Assess your health needs and budget

• Compare benefits, exclusions, and out-of-pocket costs

• Confirm state rules and plans available

• Check whether the plan includes limited prescription drugs coverage, telehealth, or hospital care

• Read cancellation rules and understand what happens when the plan ends

Remember: many short-term plans use medical underwriting, and coverage can be denied or limited based on your health history.

Conclusion

Short-term health insurance can be a useful temporary option, but it’s not a substitute for comprehensive health coverage. If you expect ongoing care or need protections like coverage for essential health benefits and coverage for pre-existing conditions, exploring an ACA health insurance plan, Medicaid, or COBRA may be a better long-term choice.

Always compare options and, if needed, speak with an insurer or licensed advisor before choosing a type of plan.

FAQs

How long does a short-term health insurance policy last?
Most short-term plans last between 30 days and 4 months, depending on state rules and the insurer.

Can a short-term plan cover a pre-existing condition?
Usually not. Many short-term plans exclude coverage for pre-existing conditions and may deny coverage based on health history.

How much does short-term health insurance cost?
A short-term plan often has a lower monthly premium than an ACA plan, but higher deductible amounts and potentially higher out-of-pocket costs.

Can I cancel a short-term health insurance plan anytime?
Often yes, but refund policies vary by insurer and plan. Check the terms before enrolling.

What health services are covered under short-term health insurance?
Coverage varies, but many plans include:

• Emergency care and some hospital care

• Limited doctor visits

• Some telehealth services

• Limited prescription drugs coverage (varies)