Short-Term Health Plans: Pros, Cons, and Pitfalls

Introduction

Temporary health insurance, also known as short-term health plans, is a type of health insurance that provides coverage for a limited period, typically ranging from 1 to 12 months. These plans are often appealing to individuals in transitional periods, such as those between jobs, awaiting open enrollment, or waiting for employer-sponsored benefits to take effect. They are an easy way out for individuals who require coverage without having to do a full-fledged health insurance policy.

Short-term health plans are being sold as flexible, cheap, and convenient. Their low costs, however, are often accompanied by trade-offs. They can also leave out necessary health benefits and coverage, and fail to cover individuals with pre-existing conditions, unlike ACA-compliant plans. Such restrictions imply that short-term health insurance can be a temporary solution, albeit not a stable long-term option.

Pros of Short-Term Health Plans

While short-term health plans may not be suitable for everyone, they offer certain advantages that make them appealing in specific situations. Their affordability, flexibility, and temporary coverage benefits can provide peace of mind during uncertain periods.

Lower Premiums

One of the biggest attractions of short-term health plans is their significantly lower premiums compared to ACA-compliant insurance. These cost savings appeal to individuals seeking affordable coverage during brief periods.

Short-term premiums are often a fraction of the cost of traditional health insurance. For instance, where an ACA plan might cost several hundred dollars monthly, a short-term plan could be available at half—or even less. This makes them appealing to young, healthy individuals who want basic protection at the lowest possible price.

Tip: If you rarely visit a doctor and primarily need emergency coverage, short-term plans can help you save money without leaving you entirely uninsured.

Flexibility and Convenience

Short-term health insurance provides unmatched convenience for individuals seeking immediate coverage. Unlike ACA-compliant plans that require enrollment during specific windows, short-term plans can be purchased at any time of year.

Applications are typically brief and straightforward, and approval can be obtained in just a few days—or even less. This flexibility is especially useful for individuals transitioning between jobs, students who require temporary coverage, or those waiting for the next open enrollment period.

Tip: Consider short-term plans if you need insurance immediately without waiting weeks or months for enrollment windows to open.

Limited Coverage for a Specific Period

Short-term health plans are explicitly designed to provide coverage for temporary situations. They typically last up to 12 months, although in some states and with certain insurers, renewals may extend this period up to three years.

This feature makes them a practical choice for bridging short gaps in coverage, such as when you are waiting for employer benefits to kick in or you are between academic terms. However, once the coverage ends, individuals must seek another plan to avoid gaps.

Tip: Only opt for short-term coverage if you are certain about your timeline and know when your permanent health coverage will begin.

Cons of Short-Term Health Plans

Despite their benefits, short-term health plans come with serious limitations. Understanding these drawbacks is crucial to making an informed decision about whether they meet your needs.

Limited Coverage

The most significant drawback of short-term health insurance is its restricted benefits. These plans often exclude essential health services such as maternity care, mental health support, preventive care, and prescription drugs.

This can leave policyholders vulnerable when they require medical services beyond basic emergency care. For instance, if you rely on ongoing prescriptions or routine doctor visits, you may find yourself paying significant out-of-pocket expenses.

Tip: Always read the fine print carefully before committing to a plan. Do not assume coverage extends to essential benefits offered by ACA-compliant policies.

No Protection for Pre-existing Conditions

Short-term health plans almost universally exclude pre-existing conditions. If you have a chronic illness such as diabetes, asthma, or heart disease, any related care will not be covered under your policy.

For example, someone diagnosed with diabetes before enrolling in a short-term plan would need to pay for all diabetes-related treatments themselves. This creates a substantial financial risk for individuals who require ongoing medical care.

Tip: Short-term plans work best for individuals with no major health conditions or ongoing treatment needs. If you have pre-existing issues, you are better served by ACA-compliant plans.

Risk of Coverage Gaps

Because these plans are temporary, there’s always the risk of facing a coverage gap once the policy expires. Renewals are often restricted, and in many states, you cannot continuously reapply without limitations.

If you fail to transition into another plan when your coverage ends, you could be left uninsured. This can create serious financial risks if unexpected medical needs arise during this uninsured window.

Tip: Always plan your next coverage step before your short-term health plan expires to avoid unexpected periods without insurance.

Pitfalls of Short-Term Health Plans

Beyond the general pros and cons, short-term health plans carry pitfalls that often go unnoticed. These risks may leave individuals underinsured or financially vulnerable in the event of unexpected medical expenses.

Lack of Comprehensive Benefits

Short-term plans often strip down benefits to the bare minimum. Essential services like preventive screenings, prescription drugs, and mental health care are typically excluded, leaving policyholders exposed to high costs for routine needs.

For example, if you need ongoing mental health therapy, a short-term plan may leave you paying entirely out of pocket—something that ACA-compliant coverage would generally support.

Tip: If comprehensive benefits are essential to your health and well-being, short-term plans are unlikely to provide the necessary safety net.

Risk of Being Underinsured

Even when you do have coverage, short-term health plans often impose high deductibles, limited benefits, and steep coinsurance requirements. This can leave you technically insured, but functionally underinsured.

In practice, you might pay for most of your care yourself until deductibles are met. If a major health event occurs, you could face overwhelming medical bills despite having insurance.

Tip: Carefully evaluate your potential out-of-pocket costs before choosing a short-term plan. Paying more up front for comprehensive insurance can save you more in the long run.

Regulatory Concerns

Short-term health plans are not required to meet ACA standards, allowing them to sidestep consumer protections such as coverage for essential benefits and pre-existing conditions.

Additionally, government subsidies that help reduce the cost of ACA-compliant insurance cannot be applied to short-term health insurance. As a result, while these plans may look cheaper, they may not always be the best financial choice.

Tip: If you qualify for subsidies under the ACA, it’s often better to explore those options rather than settle for a short-term plan.

Uncertainty of Renewal

Most short-term plans are non-renewable or only allow for limited renewals. Even when renewal is possible, insurers may decline to continue coverage if your health status has changed.

This means that while a short-term plan may work for now, it may not provide long-term security. Once your plan ends, you could be left scrambling for coverage.

Tip: If you anticipate needing long-term coverage, consider more reliable insurance options rather than depending on short-term renewals.

Who Should Consider a Short-Term Health Plan?

While short-term health insurance has significant drawbacks, it can still serve specific groups well. Understanding whether you fall into one of these categories can help determine if such a plan is suitable for you.

Temporary Coverage Needs

If you need health insurance for a limited time, such as during job transitions, waiting periods for employer benefits, or while studying abroad, short-term plans can be an effective solution.

For example, someone starting a new job in 90 days might rely on a short-term plan for coverage until employer benefits begin. This ensures no coverage gaps while avoiding high premiums for ACA plans.

Tip: Short-term plans are best used as temporary bridges—not permanent solutions.

Healthy Individuals with Minimal Medical Needs

For young, healthy individuals who rarely require healthcare beyond emergencies, short-term plans may be a cost-effective option. Since these individuals typically do not require preventive or chronic care, exclusions may not have a significant impact on them.

If you only need protection against accidents or unexpected illnesses, these plans can serve as affordable stopgap measures. However, it’s crucial to understand their limitations upfront.

Tip: If you are in good health and confident in your low healthcare usage, short-term plans can save money without leaving you entirely unprotected.

Those Who Can Afford to Pay Out-of-Pocket for Some Care

Individuals who are financially stable enough to cover certain medical costs out-of-pocket may find short-term plans suitable. They provide emergency coverage while leaving routine costs to be covered by the individual.

For instance, someone who can afford to pay for minor doctor visits or prescriptions but wants protection against a major accident may find short-term plans appealing.

Tip: Evaluate your financial ability to absorb out-of-pocket costs before choosing this route.

How Beem Helps You Compare Short-Term Health Plans

Navigating the world of short-term versus ACA-compliant health plans can be confusing. Beem simplifies this process by providing tools and comparisons that empower you to make confident decisions.

Beem’s Cost Estimator gives you real-time insights into premiums, deductibles, and out-of-pocket costs, ensuring transparency about what you’ll truly pay under each plan.

With Beem’s Plan Comparison, you can evaluate short-term health plans against traditional insurance side-by-side, weighing affordability against benefits. This helps you choose the best option tailored to your health and financial circumstances.

Conclusion

Short-term health plans can provide affordable, temporary coverage for individuals in transition; however, their limitations—such as a lack of comprehensive benefits and no protection for pre-existing conditions—make them a risky option for long-term use. By weighing both the advantages and disadvantages, you can make more informed decisions about health insurance.

Use Beem’s platform to explore and compare short-term plans against ACA-compliant options, ensuring you choose the right plan for your health, financial situation, and long-term needs. The app enables families to make informed decisions with confidence by tracking qualifying life events, supporting them through documentation requirements, and providing tools for comparing plans and predicting costs. Download the app here.

FAQs for Short-Term Health Plans: Pros, Cons, and Pitfalls