Short-term coverage is not group coverage, and it does not meet the employer mandate.

Short-term, limited-duration insurance (STLDI) is a stopgap individual product, not a group plan. This guide covers the federal definition, why it does not meet the employer mandate and where the 2024 rule stands today.

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Where Things Stand.

Short-term, limited-duration insurance is a policy written to cover a gap, such as the weeks between jobs. It is cheap to issue because it is outside most of the Affordable Care Act’s individual market rules. For an employer, the key point is simple: it is not a group health plan, so putting it in front of employees does not count as offering coverage.

The federal definition changed in 2024. As of October 28, 2026, that 2024 rule is final, but the Departments of Labor, Health and Human Services and the Treasury said in August 2025 that they do not intend to prioritize enforcing it while they consider new rulemaking. The sections below separate what is final, what is not being enforced and what we could not confirm.

Why It Does Not Count for the Employer Mandate.

Section 4980H of the Internal Revenue Code, 26 U.S.C. 4980H, applies to large employers. Subsection (a)(1) addresses an employer that fails to offer its full-time employees and their dependents the opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan. Subsection (c)(4)(A) defines a full-time employee as one who averages at least 30 hours of service per week.

The terms come from the Treasury regulation at 26 CFR 54.4980H-1, which says an eligible employer-sponsored plan has the meaning given in section 5000A(f)(2). That paragraph describes a group health plan or group health insurance coverage offered by an employer that is a governmental plan or is offered in the small or large group market within a State. A short-term policy is individual coverage that the rule carves out of the individual market, so on our reading of these provisions it is neither.

The Federal Register preamble to the 2024 rule says that because STLDI is not individual health insurance coverage, it is generally exempt from the federal individual market protections. Michigan’s insurance regulator adds that these policies lack essential health benefits and do not have to cover preexisting conditions, and it states they are not minimum essential coverage. The practical risk for an employer is that a plan built around short-term coverage leaves full-time employees without a qualifying offer, and section 4980H assigns a monthly payment to employers in that position when its conditions are met. Our penalty example page shows how that adds up. We have not verified how any particular arrangement would be treated, so have counsel review it first.

What We Could and Could Not Confirm.

The Michigan Department of Insurance and Financial Services publishes a consumer FAQ on short-term coverage, last updated October 1, 2025. It describes a coverage period of 185 days out of any 365-day period with the same insurer, no renewal or extension beyond that, and none of the Affordable Care Act’s essential health benefits, annual or lifetime limits, or cost-sharing caps. The page is a summary and cites no Michigan statute, rule or bulletin, so we are not stating a Michigan legal citation or effective date.

If you are deciding how to treat a short-term policy for an employee who is between plans, the group plan route is usually cleaner. Special enrollment after loss of other coverage is covered in our guide above, and your plan documents control the timing.