Availability of short-term health insurance in Alabama

Yes. At least five insurers offer short-term health insurance in Alabama in 2024.

Prior to October 2, 2018, federal rules limited short-term health plans to three months in duration, and prohibited renewal. But the Trump Administration relaxed those rules.¹

From late 2018 through August 2024, insurers were allowed to offer short-term plans with initial terms up to 364 days and the option to renew for a total duration of up to 36 months.

However, short-term policies sold or issued starting in September 2024 must comply with new, stricter federal rules. Under the new rules, short-term health plans are limited to maximum durations of no more than four months, including renewals. States can have stricter rules, but not more lenient rules, so plans in Alabama will be subject to the new federal rules.

Although short-term health insurance in Alabama has been allowed to follow the Trump administration’s 2018 federal regulations, the state’s bulletin reminds consumers that short-term plans are not considered minimum essential coverage, and that the termination of a short-term plan will not grant a person a special enrollment period for Affordable Care Act (ACA)-compliant coverage. The bulletin also notifies insurers that they must submit short-term plan rates and forms for review by state regulators, and reminds agents and brokers that short-term plans are not intended to be a replacement for regular health insurance, but are instead designed to fill in short gaps in coverage.

The Alabama Department of Insurance also has a general information page about short-term health plans, with a side-by-side comparison of the coverage requirements for ACA-compliant plans versus short-term medical plans.

Short-term health insurance in Alabama can be purchased by residents who can meet the underwriting guidelines of insurers.

In general, people can qualify for short-term health plans if they’re under 65 years old (some insurers will only issue plans to people who are under 64 years of age) and do not have any of the short list of medical conditions that will result in a declined application.² But the specific requirements vary from one insurance company to another.

Short-term health insurance plans tend to exclude coverage for pre-existing conditions, and they often use post-claims underwriting (meaning that they will go back through a person’s medical records after a claim is filed, to make sure it isn’t related to a pre-existing medical condition).³

Short-term health plans also generally exclude coverage for some of the ACA’s essential health benefits — most commonly, maternity care, prescription drugs, and mental health care.² They also tend to impose dollar limits on the coverage they provide. It’s important to double-check all of the plan information before purchasing a short-term policy, to make sure that you understand the limitations of the plan.

If you need health insurance in Alabama outside of the annual open enrollment period for ACA-compliant coverage (November 1 through January 15 in Alabama), your first step should be to check if you’re eligible for a special enrollment period that would allow you to purchase an ACA-compliant major medical plan.

There are a variety of qualifying life events that trigger a special enrollment period. The Marketplace plans are purchased on a month-to-month basis – meaning you can terminate the coverage at any time – so you can enroll even if you only need coverage for a few months before another policy takes effect (with a premium subsidy if you’re eligible).

Marketplace plans in Alabama are purchased via HealthCare.gov.

From Mobile to Birmingham, there may be times when it’s impossible to enroll in an ACA-compliant health plan. In those scenarios, a short-term health insurance could be an appropriate option for you, such as:

• If you missed open enrollment for ACA-compliant individual health plans or your employer’s healthcare plan, and do not have a qualifying life event that would trigger a special enrollment period.
• You’ve lost coverage from an employer and can’t afford COBRA or an ACA-compliant plan in the Marketplace to bridge the gap until you’re employed again at a job that will provide health benefits. The Alabama Department of Insurance notes that short-term plans are a potential temporary solutionin this situation, but they caution that the plans are not the same sort of coverage that’s provided by ACA-compliant plans available through HealthCare.gov.
• Because Alabama is one of the dwindling minority of states where Medicaid still has not been expanded under the ACA, most adults with income below the poverty level are not eligible for financial assistance with their health insurance in Alabama. People in the resulting coverage gap might be able to afford temporary coverage under a short-term health insurance policy.
• You’ll soon be enrolled in Medicare, don’t have other coverage in place until then, and do not qualify for a special enrollment period that would allow you to purchase an ACA-compliant plan to cover you until your Medicare takes effect. But if your Medicare coverage won’t take effect until after the start of the next year, you can switch to an ACA-compliant plan through HealthCare.gov during the fall/winter open enrollment period (November 1 – January 15 in Alabama), and keep that plan from January 1 until the month your Medicare takes effect.
• The average full-price (unsubsidized) cost of Marketplace coverage in Alabama was $706/month in 2024.⁴ Most Marketplace enrollees were eligible for subsidies that covered the majority of this cost. But if you’re not eligible for a premium subsidy in the Marketplace, the affordability of a Marketplace plan will depend on your budget. People ineligible for premium subsidies include:
  • Those who earn too much money to qualify for an ACA subsidy. Subsidy eligibility is based on how the cost of the second-lowest-cost Silver plan compares with an applicant’s household income. The percentage of income that you’re expected to pay for that plan varies depending on your income, but won’t be more than 8.5% of your household income.⁵ If the second-lowest-cost Silver plan is already considered affordable (as a percentage of your household income) without a subsidy, then you’re not eligible for a subsidy.
  • Those who earn less than the poverty level ($14,580 for a single person in 2024⁶) and are thus caught in the coverage gap that Alabama has created by refusing to accept federal funding to expand Medicaid.
  • People who are not lawfully present in the U.S. and thus not eligible to enroll in a plan through the Marketplace.

Alabama does not have state-specific regulations for short-term health insurance plans, so the state defaults to the federal regulations. Because Alabama does not limit short-term coverage, the federal rules apply in the state.