Retiring before age 65 can be exciting — more freedom, less stress, and time to enjoy what matters most. But one major question often stands in the way:
What do you do about health insurance before Medicare kicks in?
Since Medicare eligibility typically begins at age 65, early retirees must find coverage for the gap years. The good news? You have options. Here’s a breakdown of the most common health insurance solutions for early retirees and how to determine which one fits your needs.
1. Affordable Care Act (ACA) Marketplace Plans
For many early retirees, Marketplace (Obamacare) plans are the most practical option.
Why Consider an ACA Plan?
- Guaranteed coverage regardless of pre-existing conditions
- Access to premium tax credits (based on income)
- Multiple plan levels (Bronze, Silver, Gold)
- Essential health benefits included
If your income drops significantly after retirement, you may qualify for substantial premium subsidies, making coverage more affordable than expected.
Best for: Early retirees with lower to moderate post-retirement income.
2. COBRA Coverage
If you recently left an employer that provided health insurance, you may qualify for COBRA.
COBRA allows you to keep your former employer’s health plan for up to 18 months (sometimes longer in special cases). However, you’ll pay the full premium cost, including the portion your employer used to cover — plus a small administrative fee.
Pros:
- Same coverage you’re used to
- No need to switch doctors immediately
Cons:
- Often expensive
- Temporary solution
Best for: Short-term coverage while transitioning to another plan.
3. Spouse’s Employer Plan
If your spouse is still working and has employer-sponsored coverage, you may be able to join their plan.
This is often one of the most cost-effective and comprehensive options available.
Best for: Couples where one partner continues working with benefits.
4. Private Individual Plans
You can also purchase coverage directly from insurance carriers outside the Marketplace.
However, these plans:
- Do not qualify for ACA subsidies
- May not offer better pricing than Marketplace plans
They can sometimes provide alternative network options or plan designs.
Best for: Retirees who do not qualify for subsidies and want different carrier options.
5. Health Sharing Ministries (Alternative Option)
Some early retirees explore health sharing programs as a lower-cost alternative.
Important to note:
- These are not insurance
- Coverage is not guaranteed
- Pre-existing conditions may not be covered
Proceed carefully and review the fine print.
6. Short-Term Health Insurance
Short-term plans are designed as temporary coverage and typically:
- Have limited benefits
- May exclude pre-existing conditions
- Do not meet ACA requirements
These plans can be risky if you experience a major medical event.
Best for: Very short gaps in coverage — not long-term protection.
Key Factors to Consider Before Choosing a Plan
Before enrolling, ask yourself:
- What is my expected annual income?
- Do I qualify for Marketplace subsidies?
- Do I need specific doctors or prescriptions covered?
- What is my risk tolerance for out-of-pocket costs?
- How many years until I qualify for Medicare?
Healthcare expenses can be one of the largest costs in early retirement — planning strategically can protect your savings.
Planning Ahead for Medicare
As you approach age 65, start preparing at least 6 months before your Medicare eligibility date. Transitioning smoothly from an individual or Marketplace plan to Medicare helps avoid penalties and coverage gaps.
Final Thoughts
Early retirement is a major life milestone — but securing reliable health coverage is essential to fully enjoy it.
Whether you choose an ACA plan, COBRA, a spouse’s plan, or another option, the right strategy depends on your income, health needs, and retirement timeline.
If you’re retiring early and unsure which path makes the most financial sense, reviewing your options with a licensed professional can help you avoid costly mistakes and maximize available savings.
Your retirement should be about peace of mind — and that starts with the right coverage in place.
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