Health Insurance Before Medicare:
Covering the Gap Before 65

Medicare starts at 65. Retire before then and you cover your own health insurance until it begins, and for many people that bridge is the single largest cost standing between them and an early exit from work.

This article lays out the four ways to cover the gap, what each one costs, and the income lever that decides how much help you get on the open market. That last piece is where health insurance and your withdrawal plan collide, because in 2026 the same taxable income that funds your budget can also erase your subsidy.

Four ways to bridge the gap to 65

You face a defined menu, not an open-ended problem. Four routes cover almost everyone who leaves work before 65, and most early retirees end up on the first two.

Route	How it works	Typical cost	Best when
ACA marketplace	Buy your own plan on the exchange; a tax credit scales to your income	$0 to full premium, by income	You have years to cover and can manage taxable income
COBRA	Continue the exact employer plan you had	Up to 102% of the full premium	You are within about 18 months of 65, or mid-treatment
Spouse's plan	Join a still-working spouse's employer coverage	Usually the cheapest	A spouse still works and has a plan
Job with benefits	Take part-time work that offers coverage	Employer-subsidized	You want some structure and income anyway

Two other options exist, but treat them as stopgaps. Short-term medical plans are cheap because they can exclude pre-existing conditions and cap what they pay. Health care sharing ministries are not insurance at all, so nothing legally obligates them to cover a claim. Either can span a short, healthy stretch. Neither is a plan for a multi-year gap.

The ACA marketplace: the default route

The Affordable Care Act marketplace at HealthCare.gov is where most early retirees land, because it does not depend on an employer and it cannot turn you down for health history. You buy a plan directly, and if your income is low enough, a premium tax credit pays part of the bill. The credit is tied to your modified adjusted gross income, so a retiree who controls how much income lands on the tax return controls the subsidy.

The 400% cliff is back for 2026

The enhanced subsidies that Congress passed in 2021 and extended through 2025 expired at the end of last year and were not renewed for 2026. Coverage this year reverts to the original ACA formula. Premium tax credits phase out completely above 400% of the federal poverty level, a threshold the industry calls the subsidy cliff. Below the line you pay a sliding share of income for a benchmark plan and the credit covers the rest. One dollar over it, and the credit drops to zero.

The cliff makes the marketplace route unusually sensitive to income. It rewards an early retiree who lives mostly on cash and taxable savings, whose reportable income can sit well under the line, and it punishes one who funds the year with a large traditional-IRA withdrawal that pushes MAGI over it. The number you report is partly a choice, which is the theme the rest of this article turns on.

COBRA: keep your plan, pay full freight

COBRA lets you keep the exact employer plan you had after you leave, same network and same doctors, for up to 18 months. The catch is price. Your employer stops covering its share of the premium, so you pay the whole cost, the part you used to pay plus the part the employer paid, plus up to a 2% administrative fee. A plan that cost you $200 a month at work can run $700 or more on COBRA.

COBRA earns its keep in two situations. If you retire within 18 months of turning 65, it can carry you straight to Medicare with no new plan to shop for. And if you are mid-treatment, keeping your existing network and your met deductible through the end of the year can be worth the premium. For a gap longer than 18 months, COBRA is a bridge to another bridge, not a destination.

A spouse's plan, and jobs that come with coverage

A working spouse's employer plan is usually the cheapest coverage available to an early retiree, since the employer still pays most of the premium. Adding a spouse to an existing family plan often costs a fraction of a marketplace or COBRA premium. When one partner keeps working even part-time at an employer that offers coverage, insuring the retired partner gets far easier.

Some employers still offer retiree medical coverage, though it has grown rare outside government and a few large firms. A part-time job taken for its benefits is the same idea from the other direction, where the paycheck matters less than the group health plan attached to it. Both routes keep you off the individual market entirely, which sidesteps the income sensitivity described above.

The income lever: your subsidy is partly a choice

Between your retirement date and 65, the account you draw from sets your taxable income, and your taxable income sets your marketplace subsidy. A retiree with a few years of spending held in cash and a taxable brokerage account can often keep reported income under the 400% line and still qualify for a meaningful credit, even while spending comfortably. The living standard and the tax return are two different numbers, and only the second one drives the subsidy.

The tension shows up with Roth conversions. Converting traditional money to Roth during your low-income sixties is usually smart tax planning, and our guide to Roth versus traditional accounts lays out why. Before 65, though, a conversion adds directly to MAGI, and a conversion large enough to clear the 400% cliff can cost you the entire premium subsidy for the year. The pre-65 window forces a real trade-off, lower income now for a bigger ACA credit, weighed against converting now to shrink future required distributions and the IRMAA surcharges that raise Medicare premiums later.

Which accounts you tap first therefore does double duty in these years, setting both your tax bill and your insurance cost. Holding money across account types, taxable, traditional, and Roth, is what gives you room to choose. A retiree with only a traditional IRA has little control over reported income. One who can blend a taxable brokerage withdrawal with a Roth distribution can steer MAGI toward the number that works.

Put the premium in the plan

Pre-65 coverage is a line item with a start date and an end date, which makes it straightforward to model. Enter the annual premium, plus a realistic estimate of deductibles and out-of-pocket costs, as an expense that runs from your retirement year until you turn 65, then drops as Medicare takes over. If you expect a marketplace subsidy, budget the net premium you would actually pay, but stress-test the plan against the unsubsidized cost as well, since the subsidy rules have already changed once and can change again.

The gap years often overlap the most fragile part of an early retirement, when the portfolio is largest and a bad early market does the most damage. Our guide to the 4% rule and early retirement covers why those first years carry outsized weight, and estimating your retirement number shows how a fixed extra expense for a decade lifts the total you need.

The bottom line

Health insurance before Medicare is a solvable problem with a short list of answers. Price out a marketplace plan first, since it flexes with the income you can control, then compare it against COBRA and a spouse's plan. Decide how much taxable income to report in the gap years, weighing the ACA subsidy you gain now against the Roth conversions you give up. For a stretch longer than 18 months, the marketplace and the income lever behind it usually carry the load.

The clearest way to size the cost is to put it in your own numbers. Add a pre-65 health insurance expense to the calculator, run it until age 65, and watch how the premium and its end date move your probability of success.