Short-term health insurance plans have earned the nickname "junk insurance" from critics, but that doesn't tell the whole story. While these plans come with serious limitations, they can serve a purpose in very specific situations. The question isn't whether they're inherently good or bad: it's whether they're right for your particular circumstances.
Let's cut through the noise and break down exactly what you're getting (and what you're not getting) with short-term health plans, so you can make an informed decision.
What Are Short-Term Health Plans?
Short-term medical insurance plans are temporary health coverage designed to bridge gaps between more comprehensive insurance policies. Think of them as a Band-Aid solution: they're meant to provide basic protection for a limited time, not serve as your long-term healthcare strategy.
These plans typically cover emergency medical situations, sudden illnesses, and accidents. However, they operate under completely different rules than the comprehensive health plans you might be familiar with through your employer or the ACA marketplace.
The Trump administration expanded access to these plans in 2018, allowing them to last up to 364 days with renewals possible for up to 36 months. But the Biden administration rolled back those changes in 2024, limiting short-term plans to a maximum of four months (three months with a one-month extension) within any 12-month period.
Why Critics Call Them "Junk Insurance"
The harsh nickname stems from what these plans don't cover compared to comprehensive insurance. Unlike ACA-compliant plans, short-term insurance isn't required to include essential health benefits such as:
- Prescription drug coverage
- Preventive care and screenings
- Maternity and newborn care
- Mental health and substance abuse treatment
- Chronic disease management
- Pre-existing condition coverage
Insurance companies can also deny your application based on your health history, charge different rates based on your medical background, and exclude coverage for any pre-existing conditions you might have.
When Short-Term Plans Might Actually Be Worth It
Despite their limitations, short-term plans can make sense in specific scenarios. Here's when they might be your best option:
Recent job loss without COBRA eligibility. If you've lost your job and your former employer doesn't offer COBRA continuation coverage (or you can't afford COBRA premiums), a short-term plan can provide basic protection while you search for new employment.
Waiting for employer benefits to kick in. Many employers require a 60-90 day waiting period before new employees can enroll in company health insurance. A short-term plan can cover this gap.
Early retirement before Medicare eligibility. If you're under 65 and have retired but don't yet qualify for Medicare, short-term coverage might bridge the gap if you're generally healthy and don't anticipate major medical needs.
Missing open enrollment deadlines. If you missed the ACA marketplace open enrollment period and don't qualify for a special enrollment period, short-term insurance might be your only option until the next open enrollment.
Healthy individuals needing catastrophic-only coverage. If you're young, healthy, and primarily concerned about major accidents or sudden serious illnesses, the lower premiums might make financial sense.
The Real Limitations You Need to Know
The biggest trap with short-term plans is assuming they work like regular health insurance. Here are the critical limitations that can leave you financially exposed:
Pre-existing conditions are completely excluded. If you have diabetes, high blood pressure, depression, or any other ongoing health condition, these plans will not cover related treatments. This includes conditions you might not even know you have yet.
No prescription drug coverage. Most short-term plans don't include prescription benefits. If you take regular medications, you'll pay full retail prices, which can be hundreds or thousands of dollars monthly.
Limited provider networks. These plans often have very restrictive networks, meaning your current doctors might not be covered. Out-of-network costs can be astronomical.
High deductibles and out-of-pocket maximums. While premiums are lower, you might face deductibles of $5,000-$15,000 or more. The out-of-pocket maximums can reach $25,000 annually.
No preventive care coverage. Annual checkups, cancer screenings, and vaccinations aren't covered, meaning you'll pay full price for routine healthcare.
Real-World Cost Comparison
Let's look at actual numbers. A 35-year-old in Texas might pay:
- Short-term plan: $150-$300 per month with a $10,000 deductible
- ACA Bronze plan: $350-$450 per month with a $6,000 deductible (before subsidies)
- ACA Bronze plan with subsidies: $50-$150 per month for someone earning $35,000 annually
The short-term plan looks cheaper initially, but remember that 80% of ACA marketplace enrollees qualify for subsidies that can reduce premiums to $10 per month or less. When you factor in the superior coverage and consumer protections, ACA plans often provide better value.
Better Alternatives to Consider
Before settling for a short-term plan, explore these options:
ACA Marketplace Plans with Subsidies. Even if you think you don't qualify for financial assistance, recent expansions mean more people than ever can get help with premiums. Income limits have increased significantly, and even middle-class families often qualify for some assistance.
Medicaid Expansion. If your state expanded Medicaid, you might qualify for free or low-cost comprehensive coverage. Eligibility extends to individuals earning up to 138% of the federal poverty level (about $20,120 for individuals in 2025).
Healthcare Sharing Plans. While these aren't insurance and come with their own limitations, healthcare sharing ministries can provide some protection at lower costs. However, they typically require shared religious beliefs and may exclude certain types of care.
COBRA Continuation Coverage. If you've lost job-based insurance, COBRA lets you keep your existing plan for up to 18 months. While expensive, it provides comprehensive coverage and might be worth the cost if you have ongoing health needs.
Special Enrollment Opportunities
Many people don't realize they might qualify for special enrollment periods that allow them to sign up for ACA plans outside of open enrollment. Qualifying events include:
- Job loss or reduction in hours
- Marriage or divorce
- Having a baby or adopting a child
- Moving to a new area
- Losing other health coverage
- Becoming a U.S. citizen
If any of these apply to you, you might be able to get comprehensive coverage immediately rather than settling for a short-term plan.
Making the Right Decision for Your Situation
Here's our straightforward assessment framework:
Choose a short-term plan if:
- You're healthy with no pre-existing conditions
- You need coverage for less than four months
- You don't take regular medications
- You're primarily concerned about major accidents or sudden illnesses
- You've explored all other options and they're genuinely not available or affordable
Avoid short-term plans if:
- You have any ongoing health conditions
- You take prescription medications regularly
- You're planning to start a family
- You need mental health services
- You want preventive care coverage
- You can qualify for subsidized ACA coverage
The Bottom Line
Short-term health insurance isn't inherently "junk," but it's not comprehensive coverage either. These plans can serve a specific purpose for healthy individuals who need temporary protection and have limited alternatives.
However, for most people, the combination of ACA subsidies, Medicaid expansion, and consumer protections makes comprehensive insurance more affordable and valuable than you might expect. The peace of mind that comes with knowing your pre-existing conditions are covered and that you won't face medical underwriting or coverage exclusions often outweighs the premium savings from short-term plans.
Get Expert Help Navigating Your Options
Choosing the right health insurance can feel overwhelming, especially when you're weighing options with dramatically different coverage levels and costs. At Total Benefit Solutions, we help individuals and families compare all available options in their area: from subsidized ACA plans to short-term coverage to healthcare sharing programs.
We'll review your specific health needs, budget, and timeline to recommend the coverage that makes the most sense for your situation. Our services are free to you (we're compensated by insurance companies), and we're not tied to any single insurer, so you can trust our recommendations are truly in your best interest.
Don't make this important decision in isolation. Contact us today to schedule a consultation and get personalized advice on your health insurance options. Visit Total Benefit Solutions or call us to speak with one of our licensed insurance professionals who can help you navigate the complex world of health insurance and find coverage that truly protects you and your family.