Retiring Before 65? How To Cover Healthcare Until Medicare
You've finally saved enough to retire early. Congratulations. Now here's the part nobody wants to think about: health insurance. It's one of those adulting necessities that can seriously derail your early retirement dreams if you're not prepared.
Before Medicare eligibility kicks in at 65, you have multiple options to keep yourself covered. Here are the best strategies to navigate the coverage gap without draining your hard-earned nest egg.
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Calculate the Coverage Gap
The average retiree will spend $185,500 on healthcare during retirement, per Fidelity. But the real budget killer is the out-of-pocket maximum on your insurance plan.
If you purchase coverage through the ACA Marketplace, you could face up to $10,600 in individual out-of-pocket costs in 2026 (or $21,200 for other situations), according to the Department of Health and Human Services. That's nearly double the $6,850 that the Kaiser Family Foundation (KFF) reported as the average for employer plans.
Budgeting for premiums alone is rookie mistake. Factor in deductibles, prescriptions, co-pays and your worst-case medical scenario when shopping for coverage. Don't let a low premium seduce you into a plan that'll leave you bleeding money when you actually need care.
The ACA Marketplace: Your Most Flexible Option
If you're retiring before 65, the ACA Marketplace is a flexible option for getting insurance. Usually, you'd have to wait for Open Enrollment to buy coverage, but early retirement triggers a Special Enrollment Period — meaning you can purchase coverage when you actually need it, according to HealthCare.gov.
Even better? You may qualify for subsidies based on your modified adjusted gross income (MAGI). But keep in mind that these subsidies factor in income, not savings or investment balances. Smart retirees can strategically time stock sales, IRA withdrawals or Roth conversions to qualify for better subsidies. Before you make any moves, talk to a tax professional so you can avoid making any major missteps.
One heads-up for 2026: the enhanced COVID-era subsidies are gone. Even if you qualify for subsidies, HeathCare.gov said retirees should expect to pay more out of pocket as a result.
COBRA: Familiar, But Pricey
Purchasing COBRA is an alternative to the ACA Marketplace. COBRA lets you continue with the same plan you had through your employer. It also allows you to stay in the same provider network, receive the same prescription coverages and visit the same doctors.
There’s a cost to that benefit. Americans typically pay 102% of premium costs, per the Department of Labor (DOL). And unfortunately, coverage usually only lasts 18 months.
If you opt for COBRA and stop making payments, you won’t qualify for a Special Enrollment Period, per KFF. On the other hand, exhausting COBRA will qualify you for it if you’re not yet 65.
Piggyback on Your Spouse's Coverage
Is your spouse still working despite your early retirement? Joining their plan is possible, especially if they plan to work until 65. Losing coverage opens a special-enrollment window that must last at least 30 days, per the DOL. If you decide to join your spouse’s plan, coverage usually won’t begin until the first day of the following month.
Don’t make this decision without running the numbers. Compare premiums, out-of-pocket costs, network and deductibles. Your spouse’s plan isn’t guaranteed to be the most affordable option, so compare it against plans on the Marketplace.
Consider Part-Time Work
Some early retirees want to stay active anyway. Part-time work can keep you engaged and provide health insurance without forcing you to raid your retirement accounts. Staying with your current employer in a reduced capacity is one option. If that's not feasible, look for part-time gigs elsewhere.
Just remember that working part-time doesn’t guarantee you will receive benefits. Additionally, it’s not uncommon for companies that do extend benefits to part-time employees to have waiting periods before you can qualify.
The Bottom Line
Healthcare is the plot twist nobody plans for in early retirement. You've got solid options — subsidized marketplace plans, COBRA, your spouse's coverage or part-time work — but there's no one-size-fits-all answer. Your best bet is to run the numbers on all of them. Look beyond premiums to actual out-of-pocket costs and factor in your medical reality.
Do this work now, and you'll have coverage locked in until Medicare takes over at 65. Ignore it, and you're just throwing money away.
This article was provided by MoneyLion.com for informational purposes only and should not be construed as financial, legal or tax advice.
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