As Affordable Care Act (ACA) premiums reach historic highs in 2026, consumers are desperately seeking alternatives. This has fueled a major resurgence of Short-Term Limited Duration Insurance (STLDI) plans, creating a new focal point of regulatory conflict and consumer risk.
STLDI plans are not required to comply with ACA consumer protections. They can deny coverage for pre-existing conditions, cap benefits, and are not required to cover the ten essential health benefits, such as maternity care or prescription drugs.
The Federal Green Light
In a significant policy shift in August 2025, federal agencies announced a pause on enforcing Biden-era rules that had restricted STLDI plans to a 3-month duration. This move effectively gave a "green light" for insurers to offer plans lasting up to 36 months (including renewals) in states that permit them.
This deregulation is positioned by proponents as a "market-based" solution to the affordability crisis created by the expiration of enhanced ACA subsidies. For healthy individuals fleeing 30-60% premium hikes, these lower-cost, lower-coverage plans are becoming an attractive, if risky, alternative.
A Patchwork of State Regulations
Despite the permissive federal stance, the availability of STLDI is ultimately determined by state law. This has created a fractured landscape where consumer access to these plans depends entirely on their zip code.
Category A: Explicitly Banned The following five states have enacted statutes that strictly prohibit the sale of STLDI plans, regardless of federal guidance:
- California
- Illinois
- Massachusetts
- New Jersey
- New York
Category B: De Facto Unavailable In these nine jurisdictions, STLDI is not technically "banned," but state regulations make the product economically unviable for insurers. These rules may include requiring guaranteed issue (meaning they must accept all applicants) or banning pre-existing condition exclusions. As of 2026, no insurers offer STLDI here:
- Colorado
- Connecticut
- Hawaii
- Maine
- New Mexico
- Rhode Island
- Vermont
- Washington
- District of Columbia
Category C: The 36-Month States In stark contrast, states that have aligned with the federal deregulation are expected to see a boom in STLDI enrollment. States such as Florida, Indiana, Missouri, Georgia, Ohio, and Arkansas allow plans with durations up to 36 months. In these markets, STLDI will likely function as the primary "life raft" for healthy, middle-income consumers priced out of the ACA marketplace.
While offering a short-term solution for some, the rise of these plans risks creating a parallel insurance market that further destabilizes the ACA risk pool by siphoning off healthy individuals, potentially leading to even higher premiums for comprehensive coverage in the future.