With health care costs spiraling upwards, many Americans are likely looking for ways to offset the extra financial burden.<\/p>\n
The expiration of enhanced Affordable Care Act (ACA) subsidies on January 1, 2026, will send premiums up for millions, but even those who get their health insurance through their employer can expect to see a price increase of up to 6.7% next year (1).<\/p>\n
Without clear relief in sight, the Trump administration is once again turning to a solution it first proposed in 2017: expand the availability of \u201cshort-term\u201d health insurance plans. But not everyone is a fan of this idea.<\/p>\n
\u201cThese policies are a horrible idea,\u201d said Ken Swindle, an Arkansas-based attorney, according to The Washington Post (2). \u201cPeople think they\u2019re getting comprehensive medical coverage, but they\u2019re not, and they often don\u2019t realize that until it\u2019s too late.\u201d<\/p>\n
Short-term health insurance plans, often called \u201cshort-term limited duration insurance,\u201d are temporary policies sold by private insurers that are meant to fill the gaps when someone is between other types of coverage, such as between jobs or waiting for employer or Medicare coverage to begin.<\/p>\n
These plans were defined by federal regulation in the late 1990s as coverage that expires in less than 12 months from the original effective date, including any extensions the policyholder might request. They were included as part of a push to make health insurance more portable, so people didn\u2019t feel chained to their jobs in order to keep their health care coverage (3).<\/p>\n
Because they are excluded from the federal definition of individual health insurance, short-term plans do not have to follow Affordable Care Act rules on essential health benefits, preexisting conditions or annual and lifetime limits (4).<\/p>\n
In 2018, the Trump administration relaxed the rules around short-term insurance with an executive order that directed agencies to expand access to the plans. These plans, which were previously limited to just four months, were then extended to last as long as three years.<\/p>\n
At the time, officials argued that ACA plans had become too expensive for many unsubsidized buyers and said longer short-term plans would provide cheaper options and more consumer choice.<\/p>\n
\u201cPresident Trump is bringing more affordable insurance options back to the market,\u201d said Alex Azar, Trump\u2019s former health secretary during the president\u2019s first term in office, according to The Washington Post (2). \u201cThese plans aren\u2019t for everyone, but they can provide a much more affordable option for millions of the forgotten men and women left out by the current system.\u201d<\/p>\n
Read More: This top market strategist reveals the market trends you can\u2019t ignore \u2014 and how to position your portfolio to stay ahead in 2026<\/a><\/p>\n Health insurance, like many kinds of insurance, is based on a simple economic mechanism: many people pay into the insurance pool, but only a small percentage of them actually ever use it. When the ACA was first passed, it included an \u201cindividual mandate\u201d that required most people \u2014 especially young, healthy people \u2014 to maintain individual insurance coverage or pay a penalty for noncompliance (5).<\/p>\n The provision was originally an idea from the conservative Heritage Foundation to preserve private insurance in preference to state-run medical systems (6), but its inclusion in \u201cObamacare\u201d made it a political football. When Congress failed to kill the ACA in 2017, Republicans and President Trump did the next best thing, which was to lower the individual mandate penalty to zero dollars.<\/p>\n The Biden administration tightened the rules around short-term insurance in 2024 to limit these policies to a maximum of four months, including renewals, and require clearer disclosures about what is not covered. But the current Trump administration has reversed that rule while going back to its 2018 playbook: advocate for expanded short-term insurance as a cost-saving measure.<\/p>\n Short-term insurance plans are typically cheaper than ACA coverage, costing about half as much as a plan sold on state-run marketplaces created by Obamacare. As The Washington Post notes, a 40-year-old nonsmoker in Florida can secure ACA coverage for about $500 a month, while a short-term plan would cost said person about $320.<\/p>\n But there\u2019s a reason why short-term insurance plans are cheap: there\u2019s no requirement for these plans to cover preexisting conditions, as well as basic health care needs like mental health and maternity care (2). In fact, their coverage is said to be so \u201cfull of holes\u201d that five states \u2014 including New York and California \u2014 have banned their sale.<\/p>\n \u201cEven some major insurers have questioned whether relying on the short-term plans is a good idea, warning that many consumers could mistake them for comprehensive coverage,\u201d The Washington Post reports. \u201cThe Biden administration referred to them as \u2018junk\u2019 plans.\u201d<\/p>\n Unfortunately, there\u2019s not a lot consumers can do to stem the tide of rising health care costs, short of voting for legislators who have realistic policy solutions. But buyers who have a clear-eyed understanding of their needs and risks can mitigate the costs somewhat.<\/p>\n Younger, healthier people \u2014 especially those who have not yet started a family \u2014 can opt for a high-deductible health insurance plan paired with a health savings account<\/a>. Health savings plans are tax-advantaged in three ways: you get a tax deduction when you contribute, the money in the account can be invested and grows tax-free, and when you take it out to pay for medical bills or health insurance deductibles, that\u2019s tax-free as well (7).<\/p>\n High-deductible health insurance accounts have minimum deductibles (the amount you pay before insurance kicks in). According to the IRS (8), these costs are, \u201cnot less than $1,700 for self-only coverage or $3,400 for family coverage, and for which the annual out-of-pocket expenses (deductibles, co-payments, and other amounts, but not premiums) do not exceed $8,500 for self-only coverage or $17,000 for family coverage.\u201d<\/p>\n That\u2019s a lot of money to pay out of pocket. But if you\u2019re young, healthy and don\u2019t have kids, it makes sense, especially if you\u2019re a high earner. However, if you\u2019re not any of those things, your next best bet is your tiered workplace-sponsored plan.<\/p>\n An honest risk assessment here is also necessary. Are you only worried about catastrophic emergencies, like a car crash, or do you have a chronic health problem like hypertension or diabetes? Your company\u2019s plan administrator can help you get an idea of which tier is best for you.<\/p>\n If you don\u2019t have access to a workplace plan because you\u2019re self-employed or a gig worker, the health care exchanges in your state and federally are still a good option, even if prices are going up. Short-term insurance plans are meant to be just that \u2014 short-term solutions \u2014 not a revolving fix for a larger problem.<\/p>\n We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines<\/a>.<\/p>\n Mercer (1<\/a>); The Washington Post (2<\/a>); Centers for Medicare & Medicaid Services (3<\/a>, 4<\/a>); Congress.gov (5<\/a>); The Atlantic (6<\/a>); HealthCare.gov (7<\/a>); IRS.gov (8<\/a>)<\/p>\n This article provides information only and should not be construed as advice. It is provided without warranty of any kind.<\/p>\n","protected":false},"excerpt":{"rendered":"With health care costs spiraling upwards, many Americans are likely looking for ways to offset the extra financial…\n","protected":false},"author":2,"featured_media":328733,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[59],"tags":[2139,155,97,252,9149,9041,157666,253,9042,34666],"class_list":["post-328732","post","type-post","status-publish","format-standard","has-post-thumbnail","category-health-care","tag-affordable-care-act","tag-dave-ramsey","tag-health","tag-health-care","tag-health-care-costs","tag-health-insurance","tag-health-insurance-plans","tag-healthcare","tag-insurance","tag-the-washington-post"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/328732","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/comments?post=328732"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/posts\/328732\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media\/328733"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/media?parent=328732"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/categories?post=328732"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us\/wp-json\/wp\/v2\/tags?post=328732"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}