What Is Short-Term Health Insurance?

What Is Short‑Term Health Insurance (STLDI)?

A Guide From Creditvana

Short‑term health insurance, also called short‑term limited‑duration insurance (STLDI), is designed to cover temporary gaps in health insurance. Examples include when someone’s job‑based coverage ends and the new plan hasn’t yet kicked in.

What’s New: Term Limits Under the Recent Federal Rule

As of September 1, 2024, new STLDI plans are limited to maximum initial contract terms of 3 months. Centers for Medicare & Medicaid Services+3healthinsurance.org+3WTW+3
The total coverage duration (including renewals or extensions) cannot exceed 4 months. healthinsurance.org+2American Hospital Association+2
Policies in place before September 1, 2024 still follow older rules, which allowed initial terms of up to 12 months and total duration (with renewals) of up to 36 months. WTW+2healthinsurance.org+2

These changes aim to prevent STLDI from being used long‑term, instead of serving as truly short gap coverage. American Hospital Association+2healthinsurance.org+2

What STLDI Covers — And What It Usually Doesn’t

Because STLDI is not considered comprehensive or individual/ACA‑compliant insurance, it lacks many of the protections and benefits you get under ACA marketplace plans.

What It Might Cover

Basic doctor or urgent care visits
Emergency care (often limited)
Some preventive care (but not guaranteed)
Possibly prescriptions (or a prescription discount card) depending on the plan and state Centers for Medicare & Medicaid Services+2American Osteopathic Association+2

Common Exclusions & Limitations

Coverage for pre‑existing conditions is often excluded. Even if your condition was not diagnosed before, if underwriters find signs of it, claims can be denied. Centers for Medicare & Medicaid Services+1
Maternity care, mental health, substance abuse treatment are frequently not covered. Centers for Medicare & Medicaid Services+2National Health Council+2
High out‑of‑pocket costs: deductibles and copays may be large, and limits on how much the plan will pay annually or over a lifetime can apply. Centers for Medicare & Medicaid Services+1

How STLDI Works: Key Mechanics

Underwriting is common. Your health status (or medical history) may affect your eligibility and what is covered. Centers for Medicare & Medicaid Services+1
Claims may be denied if it’s determined that a condition existed before the policy started. Some states have protections, but many do not for STLDI. Centers for Medicare & Medicaid Services+1
Out‑of‑pocket costs can be steep. Deductibles often high; some plans may limit how much they’ll cover overall. Once you hit the limits, you’re responsible for everything else. Centers for Medicare & Medicaid Services

Legal Status & Availability

STLDI is not ACA‑compliant. That means it doesn’t meet the federal standards for minimum essential coverage. Centers for Medicare & Medicaid Services+1
It is not legal or available in all states. Some states ban STLDI entirely; others restrict what insurers can offer. healthinsurance.org+1
Because it’s not ACA‑compliant, you can’t buy it on the ACA Health Insurance Marketplace. You must go through private insurers. healthinsurance.org+1

Pros & Cons: Is It Right for You?

✅ When STLDI Might Be Useful

You need very short‑term gap coverage (e.g., between jobs or before your new plan starts).
You don’t qualify for, or can’t afford, ACA marketplace plans (though this is increasingly rare in many areas due to subsidies).
You accept that coverage will be limited and that many benefits won’t apply.

❌ When STLDI Might Be Risky

If you have a pre‑existing medical condition, it may be excluded or lead to claims denials.
If you expect to need maternity, mental health, or long‑term ongoing care.
If you want predictable and comprehensive protection (those are features of ACA or employer plans).
Because of limited duration, you may need to scramble to find ACA coverage once STLDI ends, especially outside open enrollment.

Alternatives to STLDI

If you’re considering STLDI because you need coverage, these alternatives are worth exploring:

Marketplace (ACA) Health Plans — Often offer more comprehensive coverage, federal protections, and subsidies that lower costs. Losing a job or other qualifying event may allow you a special enrollment period.
COBRA — If you recently lost employer coverage, COBRA often lets you keep your old plan for 18‑36 months. It can be pricey, since you pay both your former employer’s share and your own.
Medicaid — Depending on your income and state, Medicaid may be an option. Some states expanded Medicaid to cover lower income residents.
Catastrophic Plans — If you’re under 30 (or qualify for hardship), these are very high deductible plans that cover essential care but leave you paying most costs until a large deductible is met.

What You Should Do

If you’re thinking about STLDI, read the policy carefully. Pay special attention to what’s not covered, how high your deductible is, and the policy’s duration.
Know your state’s rules: some states ban STLDI or limit how it works.
Compare STLDI vs. ACA plans during open enrollment — ACA plans may cost more in premium but less in risk and surprise expenses.
If your short‑term plan ends, check whether you’re eligible for ACA coverage or special enrollment.

Final View from Creditvana

Short‑term health insurance can fill temporary gaps, but it is far from a full solution. With the new federal limits (3 months initial, up to 4 months with extension) and varied state rules, it’s more tightly regulated — but still incomplete by design.

For most people, ACA marketplace plans or other comprehensive coverage options (especially if subsidized or income‑based) offer more reliable protection. Use STLDI only if it’s truly a bridge, not a foundation.

What Is Short-Term Health Insurance?