Short-Term Health Insurance: What You Need to Know About Why It’s On the Rise

November 1, 2018

Many middle-class Americans are stuck in a health-insurance quandary.

ACA-compliant policies may come with a high price tag, but the alternative is a lack of coverage.


This has put many consumers in a position to purchase short-term health insurance coverage.

Let’s take a closer look at the problem and how short-term insurance is making a difference for many Americans.

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What is affordable health insurance?

The ACA (Obamacare) deemed health insurance affordable if it costs less than 8% of a household’s annual income.

For example, a family earning the median amount of money, 8% would be approximately $376 per month.

The problem is that most consumers don’t consider that affordable.

Breaking down the difference

Let’s look at some real-life examples.

John and June are a married couple and they have one child. The lowest-priced ACA plan they could find would cost them $10,340 per year, which is $862 per month. This was well beyond their budget so they examined short-term plans. This only cost them $1,394 per year, or $116 per month – a much easier amount for them to handle.

Jim is a single 40-year-old. His ACA premium was going to cost him $4,164 per year. But then he found that he could get a short-term plan for only $721 for a year.

Jane is a 25-year-old single woman who was paying $3,035 per year for her Obamacare coverage until she discovered short-term health insurance. Now she pays $596 per year.

What does a short-term health insurance plan cover?

So, what is it that consumers are so happy about?

Let’s take a look at what a short-term plan can cover.

  • Doctor’s office visits.
  • Inpatient hospital care.
  • Lab work.
  • Some type of prescription drug coverage.

Keep in mind, the actual facts and figures for coverage will depend on the individual carrier and this list is a generalization.

The future of short-term health insurance

With the new regulations abolishing the 90-day limit and the penalty for not having an ACA-approved plan, it’s likely there will be a lot more people taking advantage of this health insurance alternative.

The attraction probably won’t decline until governmental reform takes place that makes health care truly affordable for middle-class Americans.

Get a professional opinion

Health insurance is confusing and trying to go it alone can further muddy the waters.

As the Marketplace Open Enrollment Period approaches (November 1, 2020, through December 15, 2020), there’s no better time to review your options.

Talk with an insurance expert who can look at your unique situation and advise you as to the best, most affordable option for you and your family.

Are you facing a situation in which short-term health insurance makes the most sense?