Federal Short Term Health Insurance Rules: 2026 Update

Updated August 2026. This article previously described the April 2024 federal rule as current, enforced law. That is no longer accurate. The rule is still on the books, but the federal government stopped prioritizing enforcement in August 2025, and state law is what governs your plan today.

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Where things stand in 2026

• The 2024 rule was never repealed. It still formally limits short-term, limited-duration insurance (STLDI) to a 3-month initial term and 4 months total including renewals, for plans sold on or after September 1, 2024.
• It is not being enforced. On August 7, 2025, the Departments of Labor, Health and Human Services, and the Treasury said they do not intend to prioritize enforcement of that definition, including the notice requirement, while new rulemaking is pending. They also said they will not penalize states that apply their own definition of STLDI.
• So state law controls. Carriers re-filed the products they sold before September 2024. Where state law allows it, 364-day initial terms and total durations up to 36 months are available again.
• A replacement rule is still pending. Durations could change again with little notice.

The practical takeaway: do not buy based on a headline in either direction. What governs your coverage is the policy form your carrier has filed in your state. Ask what the initial term is, whether it renews, and what happens at the end.

See the current state-by-state duration table and availability →

What the 2024 rule actually said

Worth understanding, because it is still the law on paper and a future rule will likely start from it.

• New STLDI plans limited to 3-month initial terms.
• Total duration capped at 4 months, including any renewal or extension.
• A "renewal" counted any new policy from the same insurer, or another insurer in the same controlled group, issued to the same person within 12 months of the first policy's effective date. This was aimed at "stacking" consecutive policies.
• An expanded disclosure notice had to appear on the first page of the policy and on marketing and enrollment materials, spelling out how STLDI differs from ACA-compliant coverage.

Why the rule was written

The stated goal was to keep short-term coverage in its lane: a bridge between two comprehensive policies rather than a long-term substitute for one. Federal consumer protections for STLDI enrollees are thin, because STLDI is excluded from the definition of individual health insurance and therefore falls outside the Affordable Care Act, the No Surprises Act, and the Mental Health Parity and Addiction Equity Act.

The disclosure requirement had a second purpose: reducing the number of people who bought short-term coverage while believing they were buying comprehensive coverage.

Those concerns did not go away when enforcement stopped. They are the same reasons we walk every short-term client through what the plan does not cover before they enroll.

How federal and state rules interact

The long-standing principle still applies: states may be stricter than the federal government, never more lenient. A state can cap durations below the federal maximum, ban short-term plans outright, or prohibit a second policy within 12 months even from a different insurer.

What changed in August 2025 is that the Departments said they will not penalize states for applying their own STLDI definition. In practice that returned control to the states, which is why availability now varies so widely.

Short-term plans are unavailable in 15 jurisdictions in 2026, either by outright ban or because state benefit requirements drove every carrier out. Illinois is the most significant addition since this article was first written: it banned short-term plans entirely under Public Act 103-0649, effective January 1, 2025.

Rather than duplicate a list that changes, see the maintained table:

2026 short term rules by state, including the 15 with no coverage available →

Losing a short-term plan does not trigger a Special Enrollment Period

This has not changed, and it is the single most expensive misunderstanding in this product category.

There is a Special Enrollment Period for group health insurance when an STLDI policy terminates. There is no equivalent SEP for individual and family coverage. HealthCare.gov does not grant one when a short-term policy ends, and it has no plans to.

State-run Marketplaces may set their own SEP rules, so check your state exchange if you are in one. But assume the answer is no unless you have confirmed otherwise.

Two compounding traps:

• Short-term coverage is not minimum essential coverage. Some SEPs require that you had prior minimum essential coverage. A short-term plan does not satisfy that test.
• Term end dates rarely line up with Open Enrollment. A non-renewable plan that ends in February leaves you with no marketplace option until the following January unless you have a qualifying life event.

Plan the exit before you buy. Work backward from when your term ends and confirm what you will move to. If the end date falls outside Open Enrollment, know that going in.

Related: What is the Special Enrollment Period (SEP)?

What to do when your short-term policy ends

• Check whether your plan renews. The state maximum is a ceiling, not a promise. A carrier can offer a 3-month non-renewable plan in a state that permits 364 days.
• If you are healthy, you can usually buy again. You can generally purchase a new STLDI policy from a different insurer once yours ends, subject to state rules on waiting periods. The catch is medical underwriting: the new carrier can decline you.
• If you developed a condition during the term, this is where short-term coverage fails you. You may be uninsurable for another short-term plan and locked out of the marketplace until Open Enrollment. An ACA plan cannot decline you for health status.
• Check your subsidy eligibility first. If you qualify for a premium tax credit, run those numbers before renewing a short-term plan.

How many people have short-term coverage

Harder to pin down than you would expect, because STLDI reporting is inconsistent across states. The 2024 final rule cited a National Association of Insurance Commissioners report showing 235,775 people covered by short-term plans at the end of 2022.

That figure understates the market. It excludes people who held STLDI for only part of a year, and it excludes association-based short-term coverage, which is likely the majority of the market. The final rule also noted earlier Congressional Budget Office and Joint Committee on Taxation estimates of up to 1.5 million enrollees, though those predated the enhanced ACA subsidies that made marketplace coverage cheaper.

Compare against a marketplace plan first

The math changed for 2026. The enhanced premium tax credits created by the American Rescue Plan and extended by the Inflation Reduction Act expired at the end of 2025, and marketplace costs rose sharply as a result.

• 23.1 million people selected marketplace plans during the 2026 Open Enrollment Period, down about 1.2 million (5%) from 2025.
• 87% qualified for advance premium tax credits, down from 92% in 2025. That is the first decline in subsidy uptake since 2020.
• The average monthly premium after tax credits rose to $178, up from $113 in 2025, an increase of 58%.
• KFF projects effectuated enrollment could fall to roughly 17.5 million over the course of 2026, down from 22.3 million in 2025, as some enrollees drop coverage they can no longer afford.

That narrows a gap which used to make this an easy call, and it is the main reason more people are asking us about short-term and fixed indemnity coverage this year. Be careful what you conclude from it.

A marketplace plan still covers the ACA essential health benefits with no annual or lifetime caps on what the plan pays, caps your out-of-pocket costs, covers pre-existing conditions, and cannot price on gender or medical history. Short-term plans do none of those things. A lower premium on a plan that stops paying at a benefit cap is not the same product at a better price.

Run your own numbers before deciding. Subsidy eligibility depends on your income and household size, and the cliff above 400% of the federal poverty level is much sharper now that the enhanced credits are gone. If you still qualify for a meaningful credit, a marketplace plan usually wins. If you do not, short-term or indemnity coverage may be the realistic option for a defined gap, as long as you go in knowing its limits.

History of federal short-term insurance rules

• Late 1990s to October 2018. Contract length of "less than 12 months" allowed, unless a state was stricter.
• 2017. Durations limited to 90 days, renewals prohibited.
• 2018. Initial terms lengthened to 364 days, with renewals keeping a policy in force up to 36 months, subject to stricter state rules.
• April 2024. Largely a reversal of the 2018 rule: 3-month initial terms, 4 months total. Not a full return to 2017, since renewals remained permitted within the 4-month cap.
• August 7, 2025. Enforcement of the 2024 definition deprioritized pending new rulemaking. States free to apply their own definitions.
• 2026. A replacement STLDI rule remains on the federal regulatory agenda.

The pattern is worth noticing: these rules have swung with each administration since 2017. Treat any duration limit as current conditions rather than a settled fact.

Talk it through before you enroll

We are licensed in multiple states and we quote short-term, fixed indemnity, and ACA marketplace plans side by side. If short-term coverage is not sold in your state, there are usually alternatives worth comparing.

Compare plans and get a free quote
Illinois: 312.726.6565
Texas: (972) 666-0578
Email: help@ihealthagents.com

Sources

• Statement of the Departments of Labor, HHS and the Treasury regarding short-term, limited-duration insurance (August 7, 2025)
• CMS fact sheet: Short-Term, Limited-Duration Insurance final rule (CMS-9904-F)
• healthinsurance.org: short-term health insurance by state
• CMS: Health Insurance Exchanges 2026 Open Enrollment Report (March 27, 2026)
• KFF: What we know so far about 2026 ACA Marketplace enrollment, premiums and deductibles

This article is general information, not legal or tax advice. Federal STLDI regulation and state insurance law are both changing. Availability, durations and rates vary by state and carrier filing and are subject to change. Review the policy documents and outline of coverage before enrolling. Last reviewed: August 2026.