Short-term plans: Get this for health insurance between jobs

Looking for health insurance between jobs?

If you’re among the estimated 6.8 million people in the U.S. who are unemployed, or you know your work status is about to change, what’s your plan for health insurance?¹

You could sign up for:

• COBRA, which would mean paying out of your own pocket to continue with your former company’s group insurance plan.²
• A health plan through the Healthcare Insurance Marketplace made available through the Affordable Care Act (ACA).³

But there’s at least one other option to get the coverage you need for a little while: short-term health insurance.

Here’s a look at short-term limited duration insurance to help you determine if it’s right for you.

What is short-term health insurance?

Short-term health insurance is a form of coverage that provides medical services for a limited period of time.

If you’re looking for health insurance between jobs, a short-term plan might be right for you. But it’s important to keep in mind, it’s a short-term solution:

• New rules for short-term health insurance adopted in June 2024 “limit the length of the initial contract term to no more than three months and the maximum coverage period to no more than four months.”⁴

Short-term health insurance between jobs covers the basics

While short-term health insurance won’t offer the kind of robust coverage you’d get from an ACA plan or an employer-sponsored plan, most plans will cover the basics, such as:

• Emergency hospital services
• Some visits to the doctor’s office

No, it’s not a comprehensive health insurance plan. It’s considered a form of insurance designed to provide healthcare coverage if you’re between jobs.

Without insurance, you could be stuck with expensive medical bills.⁵

For example:

• Fixing a broken leg can cost up to $7,500
• The average cost of a 3-day hospital stay is around $30,000

Pros & cons of short-term health insurance between jobs:

Wondering if a short-term plan is right for you? Here are the pros and cons of this type of health insurance plan:

Short-term health insurance: Pros

Even though short-term health insurance doesn’t provide the same level of coverage as an ACA plan or employer-sponsored plan, there are some pros (especially if you’re between jobs), such as:

Pay lower premiums

• The big appeal of short-term plans is the cost, as they generally have low monthly premiums.⁴

Apply any time

•  Short-term health insurance is available year-round, and coverage often begins within 1 to 5 days of applying.⁶
• You can’t enroll for ACA plans anytime—though if you lose employer-sponsored insurance coverage, it would be considered a qualifying life event, and you’d be eligible for a special enrollment period (SEP).

Save money

• If you’re not eligible for a SEP or ACA premium tax credits, your premium for a short-term plan will most likely be lower than the premiums for an ACA plan with no premium tax credit.
• If you are healthy and rarely need to see the doctor, a short-term plan might work. But remember – short term is not a replacement for full ACA coverage, just a possible short-term solution for when you are between jobs.

Short-term health insurance: Cons

These plans aren’t for everyone. There are some drawbacks to getting short-term health insurance between jobs that you need to consider. Short-term plans…

Don’t cover pre-existing conditions

If you have a preexisting condition, it could disqualify you for short-term health insurance.⁷

Short-term health insurance plans are not subject to the prohibitions on discrimination based on:

• Health status
• Pre-existing condition exclusions
• Lifetime and annual dollar limits on essential health benefits

Don’t cover preventive care

Short-term health plans are not required to comply with certain federal market requirements regarding coverage for things like:⁴

• Preventive care
• Emergency services
• Hospitalization
• Prescription drugs
• Mental health services
• Maternity coverage
• Substance use disorder services

Aren’t available in all states

Short-term plans aren’t offered in all states. States that don’t offer short-term health insurance include:⁸

• California
• Colorado
• Connecticut
• Hawaii
• Maine
• Massachusetts
• New Jersey
• New Mexico
• New York
• Rhode Island
• Vermont
• Washington

Don’t last longer than 4 months

New rules for short-term health insurance “limit the length of the initial contract term to no more than three months and the maximum coverage period to no more than four months.”⁴

It’s a big shift. Before the new rules were adopted in June 2024, short-term health insurance plans could be extended up to three years.

Looking for short-term health insurance between jobs?

If you’re still not sure if a short-term plan is right for you, especially while between jobs, we can help. Give us a call to talk with a licensed insurance agent at (800) 827-9990 or find a licensed insurance agent in your area. We’ll review your situation and help identify your health insurance options.