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When shopping for health insurance, most people compare Affordable Care Act (ACA) Marketplace plans. But for some people, a Short-Term Medical (STM) plan can be a practical and affordable alternative.
Short-Term Medical plans are temporary health insurance policies offered by private insurance companies. Unlike ACA plans, which are generally only available during Open Enrollment or after a qualifying life event, short-term plans are generally available year-round in states where they are offered and often become effective quickly.
Pros and Cons of Short-Term Medical Plans
Pros
- Lower monthly premiums than many unsubsidized ACA plans
- Available year-round with no Open Enrollment restrictions
- Fast approval process, often with next-day coverage available
- Many Short-Term Medical plans utilize PPO networks, which may provide broader provider access than some ACA plans
- Can be a useful bridge between other health insurance plans
Cons
- Pre-existing conditions are often excluded
- Coverage for prescription drugs, maternity care, and mental health services may be limited or unavailable
- Applicants can be denied coverage based on their health history
- Benefits are generally less comprehensive than ACA plans
- Designed for temporary coverage rather than long-term health insurance needs
How Do They Compare to ACA Plans?
ACA plans must cover essential health benefits, including preventive care, prescription drugs, maternity care, mental health services, and pre-existing conditions. Short-Term Medical plans are not required to provide all of these benefits and may exclude pre-existing conditions altogether.
Because of this flexibility, short-term plans often cost less than unsubsidized ACA coverage. However, many ACA enrollees qualify for subsidies that can significantly reduce their monthly premiums.
Who Are Short-Term Medical Plans Best For?
Short-Term Medical plans are often best suited for:
- People between jobs
- Recent college graduates
- Individuals waiting for employer benefits to begin
- Those waiting for Medicare eligibility
- Healthy individuals seeking temporary coverage
For people with ongoing medical needs, expensive prescriptions, or pre-existing conditions, ACA plans are usually the better choice.
It’s also important to remember that short-term plans are intended to be temporary. Current federal regulations generally limit newly issued plans to an initial term of up to three months and a total duration of no more than four months, though state rules may vary.
The Bottom Line
If you need comprehensive, long-term coverage, an ACA plan is usually the better choice. But if you’re healthy, in a transitional period, and looking for affordable protection from unexpected medical bills, a Short-Term Medical plan can be a valuable bridge until permanent coverage becomes available.
Have Health Insurance Questions?
We hope this information on Short-Term Medical Plans was useful to you.
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Availability, benefits, exclusions, and eligibility vary by carrier and state. Always review plan documents carefully before enrolling.