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Learn » Short-Term » 7 Situations When It Makes Sense to Buy Short-Term Health Plans

7 Situations When It Makes Sense to Buy Short-Term Health Plans

Waiting for new coverage to begin, or retiring too early to qualify for Medicare? Short-term plans could be a good healthcare option.

September 18, 2017 - By Colleen McGuire - read

No health insurance, no problem? Not quite. Going without a health insurance plan is a risky proposition. You may be healthy and free of medical conditions, but the unexpected doesn’t wait around for a more convenient time. Injuries and illnesses happen, and going without healthcare isn’t always an option. Are you prepared to pay for potential medical bills entirely out-of-pocket?

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Short-term health plans – more traditionally called “short-term health insurance” or “short-term medical” –  can help protect your finances when you don’t have an Obamacare health insurance plan. Current federal regulations limit short-term medical plans to 90 days of coverage under one certificate of insurance. However, some insurers will allow you to apply for up to three additional new certificates of insurance for 90 days of coverage at one time, thus allowing you to have coverage beyond 90 days. State rules may vary. Each 90-day coverage period you apply for will have an effective date that starts the next day after a previous 90-day period of coverage expires.

In the following situations, it may be better for you to buy short-term health plans instead of going the Obamacare route:

1. You Need to Fill a Gap Between Employer Coverage and Your Next Job

As the saying goes, hope for the best and prepare for the worst. Even if you think you’ll land a job with benefits right away, it is wise to secure temporary health insurance coverage. When you are unemployed and in between job-based health insurance plans, it’s often tempting to wait it out and remain uninsured. After all, the strain of household budgets and health insurance premiums can break the bank. So can unexpected medical bills.

Short-term health insurance premiums are often a fraction of major medical insurance premiums. Plans usually include benefits related to inpatient and outpatient hospital care, emergency room visits, surgical services, ambulatory services, and intensive care, among other things. If you reach the end of your policy and still need coverage, depending on your state’s laws, you can typically apply for and enroll in a new policy.

2. You’re in an Employer Waiting Period

The waiting period before new employees become eligible for employer-sponsored health insurance benefits may be as long as 90 days.1 It could also be as short as a few weeks. Depending on your circumstances, it may seem reasonable to coast through your orientation period uninsured. Why risk it?

A single month of short-term health insurance can be well worth the premium—often one-third of major medical health insurance. Plan details such as deductible and coinsurance can often be customized to your needs, and there is no waiting period—coverage typically begins within 24-hours after you apply, enroll and pay your premium.

3. You Missed Open Enrollment

Life gets busy. You may have put off making a decision or weren’t sure you could afford an Obamacare plan; then, before you knew it the Open Enrollment Period had ended. If you haven’t undergone a qualifying life event that makes you eligible for a special enrollment period (e.g., moving, getting married or divorced, adding a child to your family), you don’t have to spend the next several months uninsured.

Enroll in a short-term medical plan to get you by until 2017 or a change in circumstances allows you to secure major medical health insurance. Though short-term health insurance plans are not compliant with Obamacare’s requirements, and enrolling in one will not prevent you from owing an Obamacare tax penalty, this coverage can offer peace of mind should you wind up in the emergency room or need an unplanned surgery, it’s good to have help paying for covered medical expenses.

4. It’s Cheaper for You to Pay the Penalty and Have Short-Term Medical Instead of an Obamacare Plan

If you go without Obamacare-compliant health insurance in 2018, the shared responsibility payment is $695 per adult and $347.50 per child up to $2,185 for a family or 2.5 percent of family income. The penalty was increased in 2016. Some individuals and families may find it more affordable to pay the fine for going without Obamacare health insurance coverage. Those who are young and healthy may find it especially tempting.

Again, consider the unexpected. If you take this route, a short-term health insurance plan can help with major medical expenses that might arise. Plus, you are likely to find your short-term health insurance premium payments and the penalty will still save you money in the long term—that’s right, short-term medical may be cheaper than Obamacare.

5. You Qualify for a Special Enrollment Period but Are Waiting for Coverage to Begin

Turning age 26, getting married or divorced, adding a child to your family, moving and certain changes in income are a few qualifying life events that could make you eligible for a special enrollment period. This typically allows you 60 days to secure Obamacare health insurance on or away from state exchanges and the federal marketplace outside of open enrollment. Still, depending on when you enroll, your effective date could be a month out. Buy short-term health plans to keep you covered in the meantime.

6. You Retire Early and Don’t Yet Qualify for Medicare

Why risk your retirement savings on paying for major healthcare expenses 100 percent out-of-pocket? If there’s a little time between your early retirement and your Medicare eligibility, consider buying a short-term health insurance plan. Once you meet your deductible, your plan will help pay for additional covered expenses. It is important to note that temporary coverage may not be an option if you have preexisting conditions.

7. You Are Exempt from Obamacare

You may qualify for an exemption, meaning you’re not even required to buy health insurance. Still, don’t gamble with your future. Look into buying a short-term health insurance plan. While it will not cover preventive health care, it will help with serious illnesses, injuries, hospitalizations, surgeries and other potentially costly medical care.

Because short term health insurance plans don’t often require you to see network providers—though discounted care may be available when you do—you can choose your doctors. Plus, most doctors and hospitals accept short-term health insurance.

You can easily apply for and enroll in short term health insurance online; it takes only a few minutes. Depending on your needs, coverage can begin as soon as the next day.

Taking the Next Steps

It’s you’re in between major health plans, or looking for temporary health insurance to fill some immediate needs, it’s worth doing additional research.

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Editor’s Note: This article was updated August 23, 2017 to reflect changes in federal regulations for short-term medical plans.

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