Short-term health insurance can cost 50 to 80 percent less than an ACA marketplace plan. That sounds like a deal until you look at what you actually get. In 2026, federal rules cap these plans at four months total, most states have their own restrictions on top of that, and the coverage gaps are significant enough to leave you with a five-figure hospital bill even after paying premiums. Here is a straight look at the pros and cons so you can decide whether a short-term plan, an ACA plan, or Medicaid makes sense for your situation.
What Is Short-Term Health Insurance?
Short-term health insurance (sometimes called STLDI, or short-term limited-duration insurance) is a temporary medical plan that falls outside the ACA's requirements. Because insurers do not have to follow ACA rules, they can offer lower premiums, reject applicants with pre-existing conditions, and exclude entire categories of care.
These plans were originally designed for people between jobs or waiting for employer coverage to kick in. In 2026, they remain a legal option in most states, but federal and state rules have narrowed when and how you can use them.
The federal rule that matters: Any short-term plan sold or issued on or after September 1, 2024, is limited to an initial term of three months and a total duration of no more than four months, including any renewals. After a four-month policy expires, you cannot buy another short-term plan from the same insurer for 12 months from the original effective date.
As of August 2025, the federal government announced it would begin a new rulemaking process and would not prioritize enforcement against insurers that do not meet the current definition, so the regulatory picture may shift. Check the latest guidance at CMS.gov before buying.
States Where Short-Term Plans Are Not Available
Short-term plans are either banned or effectively unavailable in a significant number of states. If you live in one of these states, the rest of this article still matters for understanding your ACA options, but a short-term plan is not something you can purchase.
| State / Territory | Status |
|---|
| California | Not available |
| Colorado | Not available |
| Connecticut | Not available |
| Hawaii | Not available |
| Illinois | Not available |
| Maryland | Limited to 3 months, no renewals |
| Massachusetts | Not available |
| New Jersey | Prohibited by state law |
| New Mexico | Limited to 3 months, no renewals, no insurers currently offering |
| New York | Prohibited by state law |
| Oregon | Limited to 3 months |
| Vermont | Limited to 3 months, no renewals |
| Washington | Not available |
| Washington, D.C. | Not available |
Even in states where they are technically legal, not every insurer participates. Availability varies.
The Pros of Short-Term Health Insurance
Lower Monthly Premiums
This is the main draw. A healthy 35-year-old might pay $100 to $200 per month for a short-term plan. A comparable ACA silver plan in the same market could run $400 to $600 per month without a subsidy, and ACA premiums are rising roughly 26 percent on average in 2026.
If you earn too much to qualify for a premium tax credit and do not have access to employer coverage, the cost difference is real.
You Can Enroll Any Time
ACA marketplace plans require a qualifying life event or an annual Open Enrollment Period (November 1 to January 15 for 2026 coverage). Short-term plans have no enrollment window. You apply, get approved in as little as 24 hours, and coverage can start the next day.
That flexibility matters when you are between jobs, just graduated, or in another brief transition.
Useful for Genuine Short Gaps
If you know exactly how long your gap is, for example, you start a new job in six weeks and the employer plan kicks in after 90 days of employment, a short-term plan can cover that window for less than what you would pay for COBRA continuation coverage.
The Cons of Short-Term Health Insurance
No Coverage for Pre-Existing Conditions
This is the biggest risk. Short-term plans use medical underwriting, meaning they evaluate your health history when you apply and can deny the application or exclude conditions that existed before the policy started. The definition of "pre-existing" is evaluated at claim time, not when you sign up, so even conditions you did not know you had at enrollment can be excluded retroactively.
If you have diabetes, high blood pressure, a history of cancer, asthma, depression, or dozens of other common conditions, you may find that the plan pays nothing when you actually need it.
Missing Coverage Categories
ACA plans must cover ten essential health benefits. Short-term plans are not required to cover any of them. Common gaps include:
- Prescription drugs (many short-term plans exclude this entirely)
- Mental health and substance use treatment
- Maternity care and newborn care
- Preventive care at no cost
- Rehabilitative services and devices
- Lab tests not tied to an acute illness visit
An emergency appendectomy might be covered. Six weeks of physical therapy afterward might not be.
Annual and Lifetime Benefit Caps
ACA plans cannot put dollar limits on essential benefits. Short-term plans can and often do. A plan might pay a maximum of $250,000 per year. A single serious hospitalization can exceed that. The cap that seemed generous when you enrolled becomes the ceiling that leaves you with a six-figure bill.
Very Short Duration in 2026
The four-month federal limit means a short-term plan is not a viable long-term substitute for real coverage. If your gap turns out to be longer than expected, you either have to go without coverage, buy from a different insurer, or pay COBRA rates while you wait to enroll in an ACA plan.
No Subsidy Eligibility
Premium tax credits only apply to ACA marketplace plans. If you qualify for a subsidy, you get no discount on a short-term plan. A person earning $35,000 per year (roughly 250 percent of the 2026 federal poverty level for a single adult) could get their ACA silver plan cost down to $100 to $150 per month with tax credits. At that price, the ACA plan is often cheaper than the short-term plan and covers incomparably more.
Cost Comparison: Short-Term vs. ACA Marketplace vs. Medicaid
The right comparison depends entirely on your income.
| Situation | Best option | Typical monthly cost |
|---|
| Income below 138% FPL (Medicaid expansion states) | Medicaid | $0 |
| Income 138% to 400% FPL | ACA plan with premium tax credit | $0 to $150 depending on income and age |
| Income above 400% FPL, healthy, short gap | Short-term plan | $100 to $250 |
| Income above 400% FPL, any health conditions | ACA plan, no subsidy | $400 to $700+ |
| COBRA available | Compare to both options above | Often $600 to $1,200 |
For 2026, 138 percent of FPL is approximately $22,025 for a single person and $37,702 for a family of three.
Use the CoveredUSA screener at /screener to find out if you qualify for Medicaid, a subsidized ACA plan, or another program before assuming a short-term plan is your only affordable option.
Who Short-Term Insurance Actually Makes Sense For
The right use case is narrow. A short-term plan is worth considering if:
- You are in good health with no significant medical history
- You have a defined, short coverage gap of no more than three to four months
- You earn above the subsidy threshold and do not qualify for Medicaid
- You do not have a qualifying life event to trigger an ACA Special Enrollment Period
- Short-term plans are legal and available in your state
If any of those conditions do not apply, the short-term plan probably costs you more in total risk than the premium savings justify.
How to Apply for a Short-Term Plan
If you have worked through the checklist above and still want a short-term plan, here is how the process works:
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Compare plans from multiple insurers. UnitedHealthcare, Blue Cross, Cigna, and regional carriers offer short-term plans in eligible states. Use a licensed broker or an aggregator site to compare benefit structures, not just premiums.
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Read the exclusions list. Every short-term plan has a schedule of benefits and a list of exclusions. Read both before you apply. Pay special attention to the definition of "pre-existing condition" used by that specific plan.
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Complete the health questionnaire honestly. Misrepresentation on the application is grounds for rescission (retroactive cancellation) when you file a claim.
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Confirm your state's rules. Check that short-term plans are legal in your state and confirm the maximum duration allowed.
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Set a calendar reminder. Mark when the policy expires. Start looking at ACA options well before that date. If a qualifying life event opens a Special Enrollment Period before then, take it.
When to Check an ACA Plan Instead
ACA plans are the stronger option when:
- You qualify for a premium tax credit (household income below 400 percent FPL, though 2026 rules may change after enhanced credits expire)
- You have any chronic conditions or take regular medications
- You expect to need mental health, maternity, or specialty care
- Your coverage gap is likely longer than four months
- You want guaranteed-issue coverage with no underwriting
The ACA Open Enrollment Period for 2027 coverage will open on November 1, 2026. If you miss it, losing other coverage, moving, getting married, having a child, and certain other events trigger a 60-day Special Enrollment Period.
Check your eligibility now at CoveredUSA, it takes 2 minutes.
Frequently Asked Questions
Does short-term health insurance cover pre-existing conditions?
No. Short-term plans use medical underwriting and can exclude coverage for pre-existing conditions. The exclusion is typically assessed at the time of a claim, not at enrollment, so conditions you did not disclose or did not know about can still be excluded. ACA plans cannot exclude or charge more for pre-existing conditions.
How long can a short-term health insurance plan last in 2026?
Under the federal rule that took effect in September 2024, short-term plans are limited to an initial term of three months and a total duration, including renewals, of four months. After that, you cannot buy another short-term plan from the same insurer for 12 months. As of August 2025, the federal government announced it is reconsidering this rule, so the limit could change for plans sold under future guidance.
Can I get short-term health insurance in California, New York, or New Jersey?
No. California, New York, and New Jersey either prohibit or do not allow the sale of short-term health plans. Residents of these states should look at ACA marketplace plans, Medicaid, or other ACA-compliant coverage.
Is short-term health insurance cheaper than COBRA?
Usually, yes. COBRA continuation coverage lets you stay on your former employer's group plan, but you pay the full premium the employer was paying plus a 2 percent administrative fee. That often works out to $600 to $1,200 per month for a family. A short-term plan will typically cost less per month, but the coverage is also much thinner. If you or a family member have significant medical needs, COBRA's comprehensive benefits may be worth the higher cost.
Does short-term health insurance count as minimum essential coverage?
No. Short-term plans do not count as minimum essential coverage under the ACA. The federal individual mandate penalty is currently $0, so there is no federal tax penalty for having a short-term plan. However, some states have their own individual mandates with penalties. Check your state's rules.
What is the difference between short-term health insurance and a health share plan?
Both are alternatives to ACA coverage, but they work differently. Short-term plans are insurance products regulated as insurance in the states where they are sold. Health share plans (also called health care sharing ministries) are not insurance at all. They are member-based cost-sharing arrangements with no guarantee of payment, no state insurance regulation, and no ACA protections. Both carry significant coverage risks compared to ACA or Medicaid coverage.
How do I know if I qualify for subsidized ACA coverage instead of a short-term plan?
Your eligibility depends on your income relative to the federal poverty level, your household size, your state's Medicaid rules, and whether you have access to affordable employer coverage. The fastest way to check is to run the CoveredUSA screener at /screener, which evaluates your eligibility across Medicaid, ACA marketplace plans, Medicare, and other programs in about two minutes.
Can I switch from a short-term plan to an ACA plan mid-year?
Yes, if you have a qualifying life event. Losing your short-term plan (including when it expires) counts as losing coverage and may trigger a Special Enrollment Period depending on your state and marketplace rules. Contact HealthCare.gov or your state marketplace to confirm eligibility for a Special Enrollment Period when your short-term plan ends.
