Short-term health insurance

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In the United States, short-term health insurance or "Short Term Medical" (STM) refers to health insurance plans with a limited duration, typically several months to a year.[1] These plans are geared toward people who need temporary medical insurance to bridge the gap between longer term plans. For instance, people who are switching employers, starting graduate school, or young adults who have become ineligible for coverage under their parents' plans and are searching for their own insurance might use a short-term insurance plan until obtaining a more permanent solution.[2]

Short-term health insurance plans are typically less expensive than traditional plans, but do not cover pre-existing conditions. This can cause problems for people who acquire a longer term illness, since the short-term plan is completely terminated at the end of the coverage period.[3] From 2010-2018 Short-term plans were not considered "adequate coverage" under the Affordable Care Act so customers would also be subject to the tax penalties of being uninsured.[4] The tax penalty was eliminated under Congressional Tax Reform Act starting in 2019.[5]

The length of short term plans was extended to up to 365 days in most states, lifting a prior 3-month term limit.[6]

In 2018 the Congressional Budget Office broadened its definition of health insurance to include short-term health insurance[7].

Starting in 2019 consumers will be able to purchase short-term plans for up to 3 years in some states.[8]