Retirement Planning
The Early Retiree's Health Insurance Bridge
You've saved enough to retire early. But what do you do for health insurance before Medicare kicks in at 65? Let's explore the options.
Option 1: The ACA Marketplace (Usually the Best Choice)
For most early retirees, the ACA marketplace is the clear winner. Why? Because your income is often low enough to qualify for substantial premium subsidies.
Income from Roth IRAs, cash savings, or the principal portion of brokerage account withdrawals doesn't count towards your MAGI. By carefully managing your taxable income (like traditional IRA withdrawals), you can often secure a high-quality health plan for a very low monthly premium. Use our calculator to see what you might pay.
Option 2: COBRA
Continuing your employer's coverage through COBRA is an option for the first 18 months. The main benefit is continuity of care. The massive downside is cost — you pay 100% of the premium plus a 2% administrative fee, with no chance of subsidies.
For a deep dive on this choice, read our COBRA vs. ACA comparison guide.
See How the 2026 Subsidy Cliff Affects You
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Calculate Your 2026 Premium Impact →Alternative Options: The Pros and Cons
Health Sharing Ministries
These are not insurance. They can have low monthly payments, but come with significant risks, like caps on coverage and denial of pre-existing conditions. They are not required to follow ACA rules. Buyer beware.
Part-Time Work for Benefits
Some early retirees choose to work part-time at a company that offers health benefits. This "barista-FI" approach can be a stable and affordable solution if you find the right employer.
Private, Non-Marketplace Plans
You can buy insurance directly from a carrier, but these plans are not eligible for ACA subsidies. This is almost always the most expensive option.
Frequently Asked Questions
Is COBRA a good option for early retirement?
COBRA can be a good temporary solution for 18 months after leaving your job, as it allows you to keep your same doctors and plan. However, it is often extremely expensive because you pay the full premium plus an administrative fee. It is almost always more expensive than an ACA marketplace plan, especially if you qualify for subsidies. See our COBRA vs. ACA guide.
How do early retirees qualify for ACA subsidies?
Early retirees often have low taxable income, making them ideal candidates for large ACA subsidies. Income sources like Roth IRA distributions or cash savings are not included in MAGI. By carefully managing income from traditional IRA withdrawals or capital gains, you can often qualify for significant premium tax credits.
What are health sharing ministries?
Health sharing ministries are organizations where members with common ethical or religious beliefs share medical expenses. They are NOT insurance. They often have lower monthly costs but can have significant limitations, such as not covering pre-existing conditions and having annual/lifetime caps on sharing. They do not have to comply with ACA regulations.
Can I get a part-time job just for health benefits?
Yes, this is a common strategy. Some large companies offer health benefits to part-time employees. If you take a part-time job with health insurance benefits, you would no longer be eligible for ACA subsidies, but the employer's contribution could make it a more affordable option.
Does leaving my job qualify me for a Special Enrollment Period?
Yes, losing your employer-sponsored health coverage is a Qualifying Life Event (QLE) that opens a 60-day Special Enrollment Period for you to sign up for an ACA marketplace plan. Check our FAQ page for more on QLEs.
Related Resources
⚠️ Disclaimer
This calculator provides estimates for educational purposes only. It is not a substitute for professional advice. Actual premiums, subsidies, and eligibility may vary based on your specific circumstances, location, and available plans. We are not licensed insurance agents or brokers. For official information, visit HealthCare.gov or contact a licensed insurance professional. This site is not affiliated with the U.S. government, CMS, or any insurance company.