Jesse Smedley is the Principal Broker for iHealthBrokers and the founder, president, and CEO of Smedley Insurance Group, Inc. and iHealthBrokers.com. Since the inception of SIG in 2007, Jesse has been dedicated to helping people save money on their health insurance by providing them with resources to educate themselves on all their health insurance options, both under age 65 and Medicare beneficiaries. He is featured in many publications as well as writes regularly for expert columns regarding health insurance and Medicare.
Short-term medical plans have been heavily debated. In recent years, they have been dramatically reshaped and are now returning to prominence. This couldn’t come at a better time because marketplace premiums are expected to rise significantly in 2026. Short-term medical plans may save many people thousands of dollars.
What Are Short-Term Medical Plans?
Short-term medical plans were designed as temporary coverage offered by private carriers. They are not bound by ACA/Marketplace rules and may exclude prescription drugs, maternity, or other benefits. They also require medical underwriting. But can be cheaper than Marketplace plans (especially w/out subsidies).
The Rollercoaster of Term Limits
Although STM were really designed for short term use, how “short a term” has been in flux as of late. Before 2017, STMs were typically available for a period of up to 12 months.In 2018, that was expanded to 3 years. Then, in 2023, it was cut back to 3 months. And just now (2025) they are once again back to 3 years.
Benefits of Short-Term Medical Plans
Short term medical plans can offer many advantages to the right people. They can offer lower monthly premiums when compared to marketplace plans without subsidies. In fact, they could be 40–60% cheaper!
They also have much more flexible enrollment. You can apply anytime with no set enrollment window. The coverage is customizable with a wide variety of plan designs. Although medical underwriting is required, approval is fast, often less than 24 hours!
Most importantly, perhaps, is the nationwide PPO coverage. These types of plans offer much more flexibility than marketplace plans, which typically only offer HMOs and EPOs.
STM can be a great option for healthy individuals. You may also want to consider one if you are ineligible for a premium subsidy or if you missed your Marketplace enrollment.
Downsides of Short-Term Medical Plans
BUT, they are not for everyone. STM is not without disadvantages.
There is limited pre-existing condition coverage. You may be able to get coverage in later years of a multi-year plan, but only for the most basic of pre-exisiting conditions. There are also benefit caps. These maximum payout limits could leave large bills uncovered.
Unfortunately, no essential health benefits are guaranteed. Marketplace plans must include the 10 essential benefits (maternity, drugs, newborn care, etc.), but that is not the case with short term medical plans.
There are also no subsidies. Costs depend entirely on health status and medical underwriting, so there is the possibility of higher rates or denial
Even if these plans would work for you, they are just not available or renewable in all states.
Comparing Short-Term Plans vs. Marketplace Plans
So how do you decide if a marketplace plan or a short term medical plan is best for you?
Marketplace Plans
With Marketplace plans, coverage is guaranteed (no exclusions for pre-existing conditions). So, if you are someone with major medical concerns, this might be the better path. They must include the 10 essential benefits, so they can be better for people who are pregnant or looking to start a family. They can also be very cost friendly if you are eligible for premium subsidies available.
Short-Term Plans
Short term medical plans can be cheaper for younger, healthier individuals especially for those who are ineligible for premium subsidies. They are also much more flexible and offer broader networks. So, if you need PPO coverage or a frequent traveler, these plans might be best!
2026 Premium Increases
The resurgence of short term medical plans couldn’t come at a better time. At the end of 2025, premium tax credit expansions under the Inflation Reduction Act & American Rescue Plan Act are set to expire. Millions may lose subsidies or see smaller subsidies, likely making premiums unaffordable for many.
There are also additional factors contributing to the rising cost,s such as higher hospital costs & physician prices. There is has also been increased outpatient care and drug utilization. Specialty drug costs are also driving rates steadily upward.
These higher premiums may encourage healthier people to drop coverage. If the remaining pool is comprised mostly of sicker individuals more in need of health insurance, this will likely further drive the costs up. This is a vicious cycle that will lead to even higher premiums!
Who Should Consider Short-Term Medical Plans?
There is no one size fits all solution to health insurance. But they may be a good fit for healthy, younger individuals, people ineligible for subsidies, or those valuing nationwide PPO coverage.
However, they are not ideal for individuals with major medical needs, families planning pregnancies, or parents of young children with frequent doctor visits.
