Short-term vs. ACA health insurance

The short answer

Buy an ACA marketplace plan if you qualify for a premium tax credit, have any ongoing medical condition, take a maintenance prescription, are pregnant or planning a pregnancy, or need coverage that lasts a full year. Consider a short-term plan only as a bridge of a few months when you are healthy, missed open enrollment, have no qualifying life event, and cannot get a subsidy.

The price gap is also smaller than the advertising suggests once subsidies are in play. KFF's review of roughly 200 short-term products found that for a 40-year-old in Houston earning $45,140, the cheapest subsidized bronze marketplace plan was 5% cheaper than the cheapest short-term plan for a man and 23% cheaper for a woman. In nine of the ten cities KFF examined, even the highest-cost subsidized bronze plan cost less than the highest-cost short-term plan.

Federal duration rules, as of the 2026 plan year

The duration limits have changed three times in under a decade, so check current rules and your own state before you buy.

In August 2025 the federal government announced it would no longer prioritize enforcement of the four-month limit and encouraged states to do the same, and healthinsurance.org reports that longer-duration products, in some markets up to 36 months including renewals, became available again. Rulemaking to formally roll back the 2024 limits has been signaled for completion by the end of 2026.

What this means in practice: duration is now primarily a state and carrier question. In one Wyoming market, healthinsurance.org found available maximum durations ranging from 6 to 36 months, with the longest plans priced substantially higher. KFF's review found most products run one to six months, some up to twelve, and one insurer sells stacked policies covering up to three years.

What short-term plans leave out

This is the part that decides the question. KFF's review of about 200 short-term products sold by nine major insurers found:

• Pre-existing conditions. Every product reviewed excluded them. Applicants with cancer, diabetes, heart disease, Crohn's disease, depression, obesity or a recent pregnancy are typically declined outright.
• Maternity care. 98% of products do not cover pregnancy care or childbirth. KFF found maternity coverage available only in Montana and New Hampshire.
• Mental health. 40% cover nothing. Among those that do, limits such as a $50 cap per outpatient visit, a 31-day inpatient maximum and a $3,000 benefit cap per policy term are common.
• Substance use treatment. 40% cover nothing, and covered plans generally exclude illness or injury sustained while under the influence.
• Outpatient prescriptions. 48% cover nothing. Of the products that do, nearly all cap the drug benefit, typically between $1,000 and $5,000 per policy term.

Two structural features matter as much as the exclusion list. First, these plans are not guaranteed renewable, unlike every other individual health product since 1996. If you develop a serious illness mid-term, the policy ends at the term date and you cannot renew it. Second, plans can deny a claim for a newly diagnosed condition if symptoms should have prompted an ordinarily prudent person to seek care before the policy started, which turns a new diagnosis into a coverage dispute.

Side-by-side comparison

The out-of-pocket maximum line is the one people underweight. An ACA plan puts a hard ceiling on what a catastrophic year costs you in network. A short-term plan with a $1,000,000 headline benefit but a $3,000 mental health cap, a $5,000 drug cap and no maternity coverage has no equivalent ceiling on your exposure.

When a short-term plan is defensible

There are legitimate uses. All of them are narrow and all of them assume you are currently healthy.

• A true gap of a few months. You start a new job in ten weeks and the plan has a waiting period, and you have already checked that COBRA and a marketplace special enrollment period cost more.
• Missed open enrollment with no qualifying event. You have no path onto a marketplace plan until January and want catastrophic protection until then.
• Early retirement before Medicare with high income. You are above 400% of poverty for the 2026 plan year, so you receive no credit, and unsubsidized premiums in your county are extreme.
• Waiting out an immigration or residency requirement. You are not yet eligible for marketplace coverage.

Before you buy, exhaust the alternatives. Loss of job-based coverage, marriage, birth, adoption, divorce and a permanent move generally open a 60-day marketplace special enrollment period. COBRA is expensive but keeps your network and your accrued deductible. Medicaid has no enrollment window at all and eligibility is checked year-round. Adult children can stay on a parent's plan until 26. A student plan may be cheaper than either option.

State rules and bans

Short-term plans do not exist everywhere. KFF found them sold in 36 states, with sale prohibited outright in California, Illinois, Massachusetts, New Jersey and New York, and unavailable in nine more states plus the District of Columbia where regulation is strict enough that insurers do not offer them. That is 15 jurisdictions with no product on the shelf. healthinsurance.org reaches the same count for 2026 and lists Colorado, Connecticut, Hawaii, Maine, Minnesota, New Mexico, Rhode Island, Vermont and Washington among the unavailable states.

Where the plans are sold, states set their own limits on duration, renewability, rate review and required disclosures, and those rules change from legislative session to session. Federal regulations currently require short-term policies to display a conspicuous notice that they are not comprehensive coverage. Verify what applies in your state before you sign anything, because a product legal in one state may be unavailable across the border.

Mistakes that turn a bridge into a hole

Treating it as year-round coverage. Stacking short-term policies restarts underwriting and the pre-existing condition exclusion each term, so any condition that developed under the last policy is excluded going forward.

Not checking subsidy eligibility first. If your projected income lands between 100% and 400% of poverty for the 2026 plan year, a marketplace plan may well cost less and covers vastly more. Our subsidy guide shows how to run the number.

Assuming preventive care is included. ACA plans cover preventive services with no cost sharing. Short-term plans generally are not required to, and many do not.

Reading the maximum benefit instead of the limits. The number that matters is the per-benefit cap, not the headline.

Forgetting the tax and HSA angle. Short-term coverage is not HSA-qualified. Starting with the 2026 plan year, IRS guidance treats bronze and catastrophic exchange plans as HDHPs, which means a comprehensive marketplace plan can now come with an HSA deduction that a short-term plan cannot match. See our HSA comparison.