If you’re experiencing a lapse in health insurance—perhaps because you lost employer-sponsored coverage or because you’re waiting for open enrollment to begin—short-term health insurance is one way to get temporary coverage. It’s intended to “bridge a short gap in coverage between other plans,” says Louise Norris, a licensed health insurance agent based in Colorado and author of The Insider’s Guide to Obamacare’s Open Enrollment.
But finding short-term health insurance on your own can be daunting. So we did the initial legwork to help you weigh your options and ranked the best short-term health insurance companies of 2021. Read on to see which providers made our list.
To determine the best short-term health insurance companies of 2021, the Forbes Health editorial team evaluated U.S. insurance companies that offer plans nationwide by how many states they provide coverage in; the sizes of their provider networks; their starting rates for physician copays and specialist copays, the benefits their plans include and their reputations among agencies like the Better Business Bureau (which focuses on customer satisfaction).
What Is Short-Term Health Insurance?
As it sounds, short-term health insurance is a policy that provides temporary coverage, usually from several months up to a year. Short-term health insurance isn’t regulated by the Affordable Care Act (ACA), which means plans don’t have to provide the minimum essential health benefits mandated by the ACA. (These benefits include inpatient and outpatient hospital care, mental health services and prescription drug coverage.) Short-term plans also don’t have to cover pre-existing conditions. The plans are designed for healthy people and generally have caps on how much they will pay for certain services or in total.
Short-term health insurance plans can have initial terms of up to 364 days and can be renewed for up to three years, though some states have stricter rules about duration. You can sign up for this temporary coverage at any time of the year, as opposed to just once a year like with the open enrollment period for marketplace plans.
Short-term plans often make sense for the following groups, according to Josh Archambault, founder of Presidents Lane Consulting in Massachusetts:
- The previously uninsured
- Individuals between jobs or waiting for employer-based coverage
- Those transitioning out of a welfare program
- Young adults leaving their parents’ plans
- Recent college graduates
- Veterans transitioning out of military service on their way to school or a job
- Individuals who missed the open enrollment period and are locked out of coverage
- Retirees who aren’t yet eligible for Medicare
Who Is Eligible for Short-Term Health Insurance?
Anyone who can pass an insurance company’s medical underwriting rules can buy a short-term health insurance plan, says Norris. “This usually means being under 65 years old and in fairly good health,” she notes. Underwriting refers to how an insurance company determines your health status to decide whether they’ll offer you coverage, at what price and with what exclusions.
There are 11 states in which short-term health insurance plans aren’t available “either because they’ve banned them or implemented rules that are strict enough that insurers have chosen to not sell plans there,” says Norris. As of 2021, short-term coverage isn’t available in California, Colorado, Connecticut, Hawaii, Maine, Massachusetts, New Jersey, New Mexico, New York, Rhode Island and Vermont.
How Do You Qualify?
“You don’t have to do anything to qualify, per se,” says Archambault. You just sign up and pay for coverage.
Most short-term health insurance plans use “very limited medical underwriting during the application process,” says Norris. “They usually just have a handful of yes/no questions about significant medical conditions and will offer coverage to anyone who can answer ‘no’ to all the questions.”
“Post-claims underwriting” is common with short-term plans, which means when you file a new claim, the insurer often combs through records to make sure it isn’t tied to a pre-existing condition, adds Norris. “If it is, they can reject the claim or even rescind the policy,” she says.
How Much Does Short-Term Health Insurance Cost?
Short-term health insurance tends to be cheaper than major medical plans. On average, these plans cost about 50% to 80% less than regular individual market coverage, says Archambault.
The cost of your short-term health insurance plan will vary based on your age, location and the level of coverage you select, says Norris. “Plans with more robust coverage cost more, but pricing for short-term plans can start well under $10 per month” she adds.
Affordability is one reason this type of health insurance appeals to some people.
What Does Short-Term Health Insurance Cover?
Short-term health insurance generally covers unexpected medical needs, including hospitalization and surgeries, says Norris. But she stresses that they are often stripped-down plans with restrictive maximum limits, which could leave you saddled with big bills. It’s important to pay close attention to your plan’s fine print and read about what it covers before you sign up.
How to Choose the Best Plan for You
If you’re considering short-term health insurance, be aware that if you had a qualifying life event, such as losing your job, you’re eligible to enroll in an ACA-compliant plan through the marketplace at any time, so you may have options beyond a short-term plan. “There are not that many circumstances in which you have to rely on short-term coverage,” says Norris.
If you’ve decided short-term health insurance is right for you, there are several factors to consider to ensure you’re choosing the best plan for your needs. Norris suggests asking yourself these questions:
- Does the plan have a provider network? “If it doesn’t, be aware that doctors and hospitals will be able to bill you for their full charges,” says Norris.
- How much is the deductible, and does the plan provide any coverage before the deductible is met? If not, consider whether you’re able to cover the cost of the deductible yourself if needed. Deductibles vary considerably from one plan to another. “There are short-term plans with $1,000 deductibles and short-term plans with $10,000 deductibles,” says Norris. (As of 2021, ACA-compliant plans are required to cap out-of-pocket costs at $8,550, but these rules don’t apply to short-term plans.) Also check your copay and make sure it fits into your budget.
- Does the plan cover prescriptions? If the answer is no, ask yourself if you have enough savings to pay for your medications out of pocket.
- How long will the plan last, and is it renewable? “Insurers can choose whether to make their plans renewable and can set shorter duration limits than those allowed by state or federal rules,” says Norris. “Make sure you have your bases covered in terms of what your coverage will be once the short-term plan ends.”
COBRA vs. Short-Term Health Insurance
If you lose health insurance coverage through your employer, you can enroll in the Consolidated Omnibus Budget Reconciliation Act (COBRA), which requires insurers to provide a temporary continuation of your same health insurance that would otherwise be terminated. You maintain the same medical, dental and vision benefits you had with your employer-provided coverage. However, your previous employer will no longer cover part of the monthly premium; instead, you have to pay the full premium, plus an administrative fee.
COBRA is more expensive than short-term health insurance, but it’s “typically a very good option,” says Joseph Torella, president of employee benefits with HUB International’s East Region, a global insurance brokerage. “If you have specific coverage needs and you’re not as concerned about the expense, you’re far better off in COBRA,” he says.