Short-Term Health Plans Expand as ACA Costs and Coverage Gaps Widen

By Grace Kim

ACA marketplace enrollment fell 13% in 2026, according to federal data, after Republicans allowed enhanced premium tax credits to expire at the end of 2025. A Bipartisan Policy Center analysis says a 60-year-old couple with $85,000 in annual income faced $22,600 in premiums this year, up from roughly $7,225 with the credits.

The prior year’s ACA enrollment hit a record 24 million, according to Commonwealth Fund data. Enhanced credits under the 2021 American Rescue Plan, extended through 2025 by the Inflation Reduction Act, made coverage free or nearly free for some low-income people. The credits were designed as a temporary pandemic-era measure.

Why is demand for short-term plans rising?

Conservative state officials are widening access to limited-duration coverage as marketplace premiums climb. Millions stand to lose Medicaid coverage next year after federal changes, while some Republican state and federal officials call short-term plans a cheaper bridge to comprehensive ACA coverage.

The Georgetown University Center on Health Insurance Reforms ran a secret-shopper study earlier in 2026. Madison Harden-Stein and colleagues found that brokers and sales representatives often pushed limited-coverage plans and used misleading or inaccurate information. “It was very confusing to understand what they were even marketing,” said Harden-Stein, an assistant research professor.

KFF describes short-term plans as decades-old stopgaps for people between jobs or waiting for employer coverage. They generally charge lower premiums and copayments but cover fewer services, making them attractive as comprehensive coverage gets more expensive.

In plain terms, consumers gain a lower-cost entry point while taking on more risk.

What protections disappear?

• Excluded services: KFF says short-term plans need not cover maternity care, mental-health treatment or prescription drugs.
• Coverage limits: Under KFF’s review, insurers can drop coverage because of preexisting conditions and cap payments for each service.
• Pricing: Insurers can charge some people higher premiums. Research cited by KFF found that some plans charge women up to 19% more than men for the same coverage, a practice barred in ACA-compliant plans.

The 2010 Affordable Care Act bars compliant insurers from denying coverage, dropping policies or charging higher rates because of preexisting conditions. KFF says people with diabetes, high blood pressure or pregnancy cannot get coverage under these plans.

Jennifer Snow of the National Alliance on Mental Illness said her 18-year-old son, who lacks complex health needs, could be an ideal candidate. She also represents consumers with the National Association of Insurance Commissioners.

Snow said short-term plans rarely cover mental health, even though about half of people develop a mental-health condition over their lifetime. If healthier buyers move into cheaper plans, insurers face higher costs from sicker members left in comprehensive coverage, which can push marketplace premiums higher.

The risk-pool math is straightforward: separating low-cost users from high-cost users can make the remaining coverage more expensive.

How have the rules shifted?

Restrictions have seesawed across administrations. The Obama and Biden administrations limited plans to a few months; the Trump administration relaxed them. In August 2025, the Centers for Medicare & Medicaid Services said it would not enforce Biden-era duration limits and urged states to do the same.

Arkansas and Oklahoma soon said insurers could sell plans lasting less than one year and renew them for up to three years. That greatly extends the plans’ original stopgap role.

Mississippi Insurance Commissioner Mike Chaney announced plans to make short-term policies more accessible through a state-operated customer portal. UnitedHealthcare will offer a handful through that portal by early next year, potentially reaching some of the 200,000 Mississippians who left the ACA marketplace in the past year, Chaney said.

Chaney said some residents need broad coverage while others need a lower-cost option for temporary gaps. He and other officials consider some insurance better than none.

The practical result: a government portal can put cheaper, thinner policies directly in front of newly uninsured consumers.

Where are the plans available?

• 36-state footprint: KFF’s latest analysis found short-term plans sold in 36 states.
• Five bans: California, Illinois, Massachusetts, New Jersey and New York prohibit them.
• Stricter rules: Nine other states and the District of Columbia impose stronger consumer protections, and insurers do not currently offer these plans there.
• Other routes: Tennessee permits short-term plans on its state ACA marketplace when they meet minimum coverage requirements. Alabama, Florida, Missouri and Ohio have passed laws allowing similar farm bureau health plans.

A congressional committee’s 2020 report, based on a year-long investigation, found that most insurers dropped coverage when an enrollee disclosed a prior health condition or risk factor. Some insurers also denied claims for conditions diagnosed after enrollment.

Consumer advocates say brokers and agents have used misleading or false information to draw shoppers into these policies, only for buyers to face thousands of dollars in medical bills later.

Some states tightened rules against deceptive marketing, but Harden-Stein said enforcement remains a whack-a-mole because violators can resurface under another business name. She urged stricter ACA-like federal rules.

The availability takeaway: legal access now spans 36 states, though five bans remain.

Are lower premiums truly affordable?

According to ProPublica, federal law generally restricts how much of each ACA premium dollar insurers can keep to about 15 to 20 cents. Short-term plans face no comparable restriction. Insurers can retain more of each enrollee’s monthly premium and pay less toward medical claims, making the products lucrative.

The Commonwealth Fund found that 11% of adults ages 19 to 64 lacked insurance, up from 8.9% two years earlier. Its data show a widening coverage gap as federal assistance recedes.

Health-policy experts expect cheaper ACA alternatives to proliferate as federal restrictions continue to loosen, states relax their rules and federal appetite for insurance assistance remains limited. Harden-Stein cautioned: “It may not necessarily be the affordable option in the long run because it doesn’t offer that comprehensive coverage.”

The test arrives early next year, when Mississippi consumers can shop UnitedHealthcare’s short-term plans on the state portal and see whether lower premiums outweigh potentially thousands of dollars in uncovered bills.