For instance, people who are switching employers, starting graduate school, or young adults who have become ineligible for coverage under their parents' plans and are searching for their own insurance might use a short-term insurance plan until obtaining a more permanent solution.
[3] Short-term health insurance plans are exempt from most insurance regulations established by the Affordable Care Act, are not required to cover the full list of health benefits required by that legislation, and may offer lower premiums to individuals who enroll prior to developing pre-existing conditions.
[4] This caused problems for people who acquire a longer-term illness, since the short-term plan is completely terminated at the end of the coverage period.
[5] A 2019 federal rule extended the duration of short-term plans to 365 days, lifting a 3-month term limit established at the end of 2016.
[8] Short-term plans were not considered "adequate coverage" under the Affordable Care Act, and customers were subject to the individual mandate penalty from 2014 until its elimination by the Congressional Tax Cuts and Jobs Act at the end of 2018.