Written by Michael LaPick
Healthcare Writer
We want to help you make educated healthcare decisions. While this post may have links to lead generation forms, this won’t influence our writing. We adhere to strict editorial standards to provide the most accurate and unbiased information.
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Catastrophic plans are ACA-compliant, cover essential health benefits, and are available to adults under 30 or those who qualify for a hardship exemption, but they come with very high deductibles.
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Short-term plans offer temporary, budget-friendly coverage but often exclude preexisting conditions and key benefits like maternity, mental health, and prescriptions.
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Compare them against ACA bronze or silver plans, especially if you qualify for ACA plan subsidies that could lower costs.
Overview
If you’re a young adult shopping for health insurance on a budget, you’ve probably come across short-term health insurance and catastrophic health insurance plans. Both options promise lower premiums than traditional coverage, but they’re designed for very different situations. Choosing the wrong one could leave you paying thousands out-of-pocket if you need care.
In this article, we’ll compare short-term vs. catastrophic insurance, explain who qualifies, highlight what’s covered (and what’s not), and help you decide which option makes the most sense for your situation.
What Are These Plans?
Catastrophic Health Insurance
Catastrophic plans are Affordable Care Act (ACA)-compliant. They cover the same essential health benefits as other marketplace plans but come with:
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Very low monthly premiums
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Extremely high deductibles (over $9,000 in many cases)
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Coverage that kicks in after you’ve met the deductible
They’re designed for people under age 30, or those who qualify for a hardship exemption. Think of them as protection against worst-case scenarios—like accidents or major illnesses.
Short-Term Medical Health Insurance
Short-term medical (STM) plans are temporary insurance policies offered outside the ACA marketplace. They typically last up to 12 months (depending on your state), with the option to renew. These plans:
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Usually don’t cover preexisting conditions
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May exclude essential services like maternity, mental health, or prescriptions
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Have lower monthly premiums but limited benefits
Short-term plans appeal to people in transition periods—like between jobs, waiting for employer coverage, or missing ACA open enrollment.
Key Differences: Short-Term Medical vs. Catastrophic Insurance
| Feature | Catastrophic Plan | Short-Term Medical Plan |
|---|---|---|
| Eligibility | Under 30 or hardship exemption | Anyone who qualifies medically |
| Regulation | ACA-compliant | Non-ACA, state-regulated |
| Premiums | Low | Low to moderate |
| Deductibles | Very high (often $9,000+) | Varies; often lower than catastrophic |
| Preexisting Conditions | Covered | Typically not covered |
| Essential Benefits | Yes, same as ACA plans | Often excluded (maternity, mental health, RX) |
| Best For | Healthy young adults who want ACA safety net | People needing temporary coverage |
Who Should Consider Each Plan?
Catastrophic Plans Are Best For:
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Young, healthy adults who don’t expect routine care but want ACA protections
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People who qualify for an exemption but can’t afford higher-tier ACA plans
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Those who want coverage that satisfies ACA individual mandate requirements (where applicable)
Short-Term Plans Are Best For:
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People between jobs or waiting for new employer coverage
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Those who missed the ACA open enrollment deadline
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Adults who don’t qualify for ACA subsidies and want lower monthly costs
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Individuals who primarily want protection for sudden accidents or hospitalizations
Common Questions & Misconceptions
Q: Do catastrophic plans cover preventive care?
Yes. Even though deductibles are high, preventive services (like annual checkups or vaccines) are free under ACA rules.
Q: Can I renew a short-term medical plan indefinitely?
Not always. Some states limit renewals, and insurers may decline if you develop health issues.
Q: Which plan is cheaper overall?
Short-term premiums may be lower month-to-month, but catastrophic plans could save more in a serious medical emergency since they cover essential benefits.
Q: Do catastrophic plans cover prescriptions?
Yes, but you’ll likely pay full price until you hit the deductible.
Tips for Choosing Between Them
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Check your eligibility first: If you’re over 30 without a hardship exemption, catastrophic isn’t an option.
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Compare premiums + deductibles together: A lower monthly bill may not mean better protection.
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Think about your medical history: Preexisting conditions automatically rule out most short-term plans.
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Use subsidies if possible: Many ACA enrollees qualify for premium tax credits, which could make a regular bronze plan cheaper than either of these options.
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Ask yourself about risk tolerance: Catastrophic plans are for worst-case protection. Short-term plans are for stop-gap coverage. Neither is a full replacement for comprehensive insurance.
The Bottom Line
Choosing between short-term medical vs. catastrophic insurance comes down to your age, budget, and health needs. Catastrophic plans work best for young adults who want ACA protections at the lowest premium, while short-term plans can help if you’re temporarily uninsured and need flexible, budget-friendly coverage.
Whichever you choose, remember: these options aren’t designed for long-term comprehensive care. Always compare them against ACA bronze and silver plans—especially if you qualify for subsidies.
Next step: Explore your eligibility for ACA subsidies before committing to a short-term or catastrophic plan. You may find that a standard marketplace plan offers better value with more reliable coverage.
Check Eligibility: Use the ACA subsidy calculator to estimate your subsidy eligibility based on your income and household size.
A friendly team of licensed insurance agents is here to guide you.
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