What short-term health insurance actually is
Short-term limited duration insurance (STLDI) is a category of health coverage explicitly exempt from the Affordable Care Act's essential health benefits and pre-existing condition protections. Carriers can underwrite it (ask health questions, decline coverage, charge higher rates for medical history), cap annual benefits, and exclude entire categories of care. In exchange, premiums are 50-80% lower than ACA marketplace plans of similar nominal coverage.
The 2024 federal rule under the Biden administration capped STLDI plan duration at 3 months initial term plus 1 month renewal — 4 months total per 12-month period. (The prior 2018 Trump-era rule allowed 12 months plus renewals up to 36 months total; that rule was rescinded in 2024. A future administration may restore the longer duration — check current federal status before buying.)
STLDI is regulated at the state level on top of federal rules. Several states ban it outright, several restrict duration or require ACA-equivalent benefits, and most accept the federal framework.
When short-term coverage actually makes sense
STLDI is appropriate in a small number of well-defined gap scenarios — and inappropriate as a replacement for real major-medical coverage.
- Gap between job-based plans (you've taken a new job, coverage starts in 60 days)
- Gap between graduating and starting employer coverage
- Waiting for Medicare to start (under 65, retiring at 64½)
- Missed open enrollment, no qualifying life event, ACA marketplace not available until next open enrollment
- Bridge to a future ACA marketplace plan with a known start date
When STLDI is the wrong answer (use ACA instead)
If any of these apply, STLDI is not the right product — even if it's cheaper on the surface.
You have any pre-existing condition. STLDI excludes them entirely. A diabetes diagnosis, a prior cancer, a depression history, pregnancy, asthma — none are covered. ACA marketplace plans cannot decline you or exclude pre-existing conditions, by federal law.
You qualify for ACA premium tax credits. If your household income is between 100% and 400% of the federal poverty level (and the enhanced subsidies through the American Rescue Plan / Inflation Reduction Act may extend beyond 400%), your ACA marketplace plan is often free or near-free after subsidies. STLDI is then more expensive than the ACA option.
You need maternity, mental health, substance abuse treatment, or prescription drug coverage. STLDI carriers either exclude these outright or impose very low benefit caps.
You expect to need coverage for more than 4 months. The federal duration cap will force you to reapply (and be re-underwritten) every 4 months, which is risky if you develop any condition during the first term.
Real costs and benefit structure
A healthy 35-year-old non-smoker typically pays $80-$140/month for STLDI with a $5,000 deductible and $1M annual benefit cap. The same person on an ACA bronze plan (without subsidies) pays $350-$500/month with no benefit cap, full essential health benefits, and pre-existing condition coverage.
But that comparison ignores subsidies. At $40,000 household income, the ACA silver plan after subsidies is often $0-$50/month with cost-sharing reductions that cap deductibles at $1,000-$2,500. Always price the subsidized ACA option before buying STLDI.
Typical STLDI plan structure: $2,500-$10,000 deductible, $1M-$2M annual cap, 20-50% coinsurance after deductible, $0-$50 doctor visit copays, prescription drugs often excluded or capped at $500/year, no maternity, no preventive care without copay, mental health excluded or capped.
States that ban or heavily restrict STLDI
These states have either banned STLDI outright or imposed restrictions that effectively eliminate the market. If you live in one of these states, your options are the ACA marketplace, employer coverage, COBRA, Medicaid, or Medicare.
- California — banned (since 2019)
- New York — effectively banned (requires ACA-equivalent benefits)
- New Jersey — banned
- Massachusetts — banned
- Connecticut — banned
- Hawaii — restricted to 3 months, non-renewable
- Rhode Island — banned
- Vermont — banned
- Colorado — restricted to 3 months, non-renewable, full disclosure required
- Washington, Maryland, Illinois, New Mexico, Delaware, Maine — various duration limits stricter than federal
Major STLDI carriers (in states where allowed)
UnitedHealthcare (Golden Rule) — largest STLDI writer nationally. Wide availability, fast online enrollment, strong agent distribution.
Pivot Health — heavily marketed online, competitive pricing, easy quoting through brokers.
National General (now Allstate Health Solutions) — long-standing STLDI carrier with broad state availability.
Everest Re / IHC Group — common in independent broker channels.
Companion Life — underwrites for many private-label STLDI products sold online.
Manhattan Life — focused on senior gap coverage and STLDI bridge products.
Note: many STLDI products you see advertised are sold by brokers (HealthCare.com, eHealth, Pivot, Agile Health, IHC) but underwritten by the carriers above. Always identify the underwriting carrier before buying.
What to verify before you buy
1) State legality — confirm STLDI is allowed in your state and at what duration. State Department of Insurance websites list approved carriers and products.
2) Federal duration — current rule is 4 months total per 12-month period. Confirm current federal status with the carrier before assuming you can renew.
3) Pre-existing condition definition — most STLDI plans look back 12-60 months. Anything diagnosed, treated, or showing symptoms during the look-back is excluded. Read this section of the policy carefully.
4) Annual benefit cap — minimum $1M, ideally $2M. Single hospitalization for a serious accident or illness can hit $500K easily.
5) Network — STLDI plans typically use PPO networks (Cigna PPO, Aetna PPO, MultiPlan PHCS, First Health). Confirm your providers are in network.
6) Prescription drugs, maternity, mental health — confirm whether covered, capped, or excluded.
7) Compare against the ACA marketplace at HealthCare.gov (or your state exchange) with subsidies applied. Run the comparison before deciding.