Short-term health insurance refers to health insurance that you acquire for a limited duration. One example might be when you leave one employer’s health plan and are yet not covered by your new employer. You may need temporary coverage for a few days or weeks, while you await the effective date on your new health plan.
Another example might be if you are currently covered under your parent’s ACA-qualified health plan and you “age out” (reach age 26) and are no longer eligible. You may want to buy short-term coverage while you consider your other options – buying an individual policy through the Health Insurance Marketplace or go on to a group plan offered by your employer. One important caveat is that if you declined previous coverage under an employer plan, you may have to wait for Open Enrollment to be eligible again for insurance.
In many states, you may be able to buy short-term health insurance for a term of several month up to a year. You may also be able renew your short-term policy one or more times. However, there are about a dozen states (including California, Colorado, Hawaii, New Mexico, and more than a handful of states in the Northeastern U.S. where short-terms health plans are prohibited.
You typically pay premiums for private health insurance through a direct withdrawal from your financial institution or using a credit or debit card.