Short-Term Health Insurance

Short-term health insurance is a medically underwritten policy sold to cover a defined, limited period, most often as a stopgap between other coverage. Federal regulation calls it short-term, limited-duration insurance and defines it at 45 CFR 144.103, and the definition that matters most to a buyer is a different one in the same section: "[i]ndividual health insurance coverage means health insurance coverage offered to individuals in the individual market, but does not include short-term, limited-duration insurance." That exclusion is the whole legal position. Because these policies are not individual health insurance coverage, the Affordable Care Act's individual market requirements do not attach to them, which is why they can be cheaper and why they can decline an applicant, exclude a condition, omit a benefit category, cap what they pay, and leave the policyholder with no ceiling on what they owe.

The name is worth stating both ways. Buyers, brokers and advertisements say "short-term health insurance", "short-term medical", or "temporary health insurance". The regulatory term of art is "short-term, limited-duration insurance", often abbreviated STLDI, and it is the phrase used in the statute at 42 USC 300gg-91(b)(5), in 45 CFR 144.103, and in every federal document about the product. Nothing turns on which name a policy is sold under; the legal test is whether the coverage meets the regulatory definition.

What the current federal definition says. Under 45 CFR 144.103, short-term, limited-duration insurance is coverage with an expiration date "no more than 3 months after the original effective date" that, "taking into account any renewals or extensions, has a duration no longer than 4 months in total." A renewal or extension for this purpose includes a new policy from the same issuer, or from another issuer in the same controlled group, to the same policyholder within the 12 months beginning on the original effective date. The same definition requires a notice, in at least 14-point font, displayed on the first page of the policy and in marketing, application and enrollment materials.

And what the agencies that wrote it have said about enforcing it. In a statement dated August 7, 2025, the Departments of Labor, Health and Human Services and the Treasury said they intend to undertake notice-and-comment rulemaking "to consider the need for amendments to the regulatory definition of 'short-term, limited-duration insurance'", and, in the meantime, that "[u]ntil future rulemaking is issued and applicable, the Departments do not intend to prioritize enforcement actions for violations related to failing to meet the definition of 'short-term, limited-duration insurance' in the 2024 final rules, including the notice provision." The statement encourages states to take a similar approach and says HHS will not treat a state as failing to substantially enforce the relevant individual market requirements where it does so, or where it applies its own state law definition. As of this writing no superseding rule has been published.

The practical reading, which is the honest one. The federal definition is on the books, and the agencies charged with enforcing it have said they do not intend to prioritize doing so while they reconsider it. What that leaves is state law, and state law is not uniform. The Departments' own statement contemplates a state "appl[ying] its State law definition of 'short-term, limited-duration insurance'", which is an acknowledgment that separate state definitions exist. So the terms a particular buyer can actually obtain are a question about their state and their insurer rather than a question with one national answer, and any source stating a single national duration should be read with its date attached.

What the exclusion from individual health insurance coverage actually costs a buyer. Every consumer protection in the individual market is attached to that definition, so none of them reaches a short-term policy. Applications are medically underwritten and can be declined. Pre-existing conditions are routinely excluded, and the exclusion is often written to reach any condition for which a symptom existed before coverage began, whether or not it had been diagnosed. There is no required package of essential health benefits, so maternity care, mental health and substance use treatment, and prescription drugs may be absent or narrowly limited. Annual and lifetime dollar caps are permitted, and there is no out-of-pocket maximum, so there is no point at which the policy takes over the whole of the bill. 45 CFR 149.20(b)(2) also puts short-term, limited-duration insurance outside the federal surprise-billing protections. And the policy is not minimum essential coverage: 26 CFR 1.5000A-2(d)(1) defines a plan in the individual market as coverage offered to individuals in the individual market "other than short-term limited duration insurance." Since the Marketplace special enrollment period for lost coverage is triggered by the loss of minimum essential coverage (45 CFR 155.420(d)(1)(i)), the expiry of a short-term policy does not open one the way losing real coverage does.

It is not a catastrophic plan, and the two are often shelved together. A catastrophic health plan is Affordable Care Act coverage: it must provide the essential health benefits, cannot exclude pre-existing conditions, and caps what the enrollee pays. A short-term policy is defined by its exclusion from that framework. Both are sold on a low premium, and that is the only thing they have in common.

Where it can still make sense, stated narrowly. The realistic case is a healthy person with a short, known gap and no other route to coverage, who has checked whether a Marketplace special enrollment period is open, whether Medicaid or the Children's Health Insurance Program applies, and what continuation coverage would cost. The comparison to run is not premium against premium but worst case against worst case: what the short-term policy leaves unpaid in a bad year, against what an Affordable Care Act plan's out-of-pocket maximum would have capped.

1. You apply and are underwritten. Health questions are asked and an application can be declined outright, which does not happen on the Marketplace.

2. The policy is issued for a set term, with an expiration date, and its permitted length depends on the federal definition, the enforcement posture described above, and above all on your state's own law.

3. Pre-existing conditions are generally excluded, often by reference to symptoms rather than diagnoses, and the exclusion is the most common reason a claim is denied.

4. Claims are paid subject to the policy's own limits: a deductible, coinsurance, per-service caps, and a policy maximum, with no out-of-pocket ceiling behind them.

5. The term ends. Because the policy is not minimum essential coverage, its expiry does not by itself open a Marketplace special enrollment period.

A hypothetical. Suppose a short-term policy carries a $2,500 deductible, 30% coinsurance, a $500,000 policy maximum and no out-of-pocket maximum. A covered hospitalization produces $60,000 of eligible charges. The insured pays the $2,500 deductible, then 30% of the remaining $57,500, which is $17,250, for a total of $19,750, and nothing in the policy stops the total climbing further on the next claim. On an Affordable Care Act plan the same year's cost sharing for covered in-network care would have stopped at that plan's out-of-pocket maximum, whatever the year's federal ceiling is. And if the admission had been for a condition the underwriting excluded, the short-term policy would have paid nothing at all, leaving the whole $60,000. The dollar figures are illustrative; the shape of the exposure is the point.

Pros

• Premiums are generally lower than compliant coverage, because the insurer can decline applicants and exclude conditions.
• Coverage can usually begin within a day or two, and can be bought at any time of year rather than only during open enrollment or a special enrollment period.
• The term can be matched to a known gap, so a person is not buying twelve months of coverage for a two-month problem.
• It is real insurance from a licensed insurer, regulated by the state, rather than an arrangement that is not insurance at all.

Cons

• It is not individual health insurance coverage under federal law, so none of the Affordable Care Act's individual market protections apply.
• Applications are underwritten and can be declined, and pre-existing conditions are routinely excluded, sometimes by reference to symptoms rather than diagnoses.
• There is no required benefit package, so maternity care, mental health and substance use treatment and prescription drugs may be missing or capped.
• There is no out-of-pocket maximum and dollar limits are permitted, so a serious claim has no ceiling.
• The federal surprise-billing protections do not reach it, and its expiry does not open a Marketplace special enrollment period.