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Short-Term Health Insurance vs ACA Plan
You search for cheap health insurance and a short-term plan pops up at a fraction of the price of an Obamacare plan. It’s tempting. Sometimes it’s even the right choice. But a short-term plan is a very different product, and the fine print matters.
Here’s an honest side-by-side.
What a short-term plan is
Short-term health insurance, also called short-term limited duration insurance, was designed to fill a gap: a few months between jobs, a waiting period before a new plan starts, or a missed enrollment deadline.
These plans aren’t required to follow most ACA rules. That’s why they’re cheaper, and it’s also why they’re risky.
How long can you keep one in 2027?
The rules have flipped several times:
- From 2018, federal rules allowed plans of up to 364 days, renewable for up to 36 months.
- In September 2024, a federal rule cut that to a total of four months.
- In August 2025, the Trump administration said it would no longer prioritize enforcing the four-month limit. In many states, 36-month plans are being sold again (healthinsurance.org).
- Regulators have signaled that a new federal rule is coming, but nothing was final at the time of writing (Healthcare Insider).
States can set stricter rules, and some, including California and Massachusetts, ban short-term plans entirely. Check with your state’s insurance department.
Short-term vs ACA: side by side
| Short-term plan | ACA marketplace plan | |
|---|---|---|
| Pre-existing conditions | Usually excluded; you can be turned down | Always covered; can’t be turned down |
| Covered services | Often no maternity, mental health or prescription coverage | All 10 essential health benefits |
| Limits on payouts | Can cap what they pay per year or lifetime | No annual or lifetime dollar caps |
| Out-of-pocket max | Can be very high or missing | Capped by federal law |
| Premium tax credit | No | Yes, if your income qualifies |
| When you can buy | Any time (where sold) | Open enrollment or a special enrollment period |
The real cost difference
The sticker price of a short-term plan is usually lower than a full-price ACA plan. But two things narrow the gap:
- Tax credits. Many people qualify for a marketplace premium tax credit, which can bring an ACA plan’s cost below a short-term plan’s. Check HealthCare.gov before you assume the ACA plan is more expensive.
- What isn’t covered. If you need a prescription, get pregnant, or have a condition the insurer calls pre-existing, a short-term plan may pay nothing for it. One hospital stay can cost more than years of premiums.
When a short-term plan can make sense
- You’re healthy, with no ongoing prescriptions, and you need coverage for a few months.
- You missed open enrollment and don’t qualify for a special enrollment period.
- Your income is above the subsidy cliff and you’ve checked that you won’t get a tax credit.
When to choose an ACA plan instead
- You have any ongoing health condition or take regular medication.
- You’re planning a pregnancy.
- You qualify for a premium tax credit.
- You need coverage for a year or longer.
FAQ
Is short-term health insurance worth it? For a healthy person bridging a short gap, it can be. For anyone with health needs or who qualifies for a tax credit, an ACA plan is usually the better deal.
Does short-term health insurance cover pre-existing conditions? Usually not. Most plans review your health history and can exclude or deny coverage.
Can I get a 36-month short-term plan? In many states, yes, as of 2026. Some states limit or ban them, and federal rules may change.
When can I switch to an ACA plan? During open enrollment, November 1, 2026 to January 15, 2027 in most states. Note that a short-term plan ending usually does not trigger a special enrollment period.
General information, not insurance advice. Read the plan’s exclusions before you buy.
Sources: healthinsurance.org: short-term health insurance · Healthcare Insider: short-term plans in 2027 · NAIC: short-term limited duration plans · HealthCare.gov
