Health insurance is one of the biggest costs of retiring early. Medicare eligibility based on age generally begins at 65, even if your Social Security full retirement age is later. Until then, you’ll need coverage of your own. The good news is that you have several options, and planning ahead can make a real difference in what you pay.
Your main options
Retiree coverage from your employer
Some employers offer health benefits to early retirees. If yours does, compare the cost and coverage against the options below.
COBRA
COBRA lets you keep your employer’s plan, usually for up to 18 months. You keep the same doctors and your deductible progress for the year, but you typically pay the full premium plus up to a 2% administrative fee, which is often expensive. See our comparison of COBRA vs. Marketplace coverage.
A spouse’s employer plan
If your spouse is still working and has access to job-based coverage, joining their plan is often the simplest option. Leaving your own job coverage generally qualifies you to enroll.
ACA Marketplace plans
Marketplace plans can’t turn you down or charge more for pre-existing conditions, which matters more as you get older. Losing job-based coverage when you retire typically opens a 60-day special enrollment period. Depending on your household income, you may qualify for premium tax credits.
Off-exchange and other plans
ACA-compliant plans can also be bought directly from insurers or through an agent, though without tax credits. Short-term and other non-ACA plans may cost less but can exclude pre-existing conditions. Read more in our guide to private health insurance under 65.
How retirement income affects Marketplace costs
Marketplace premium tax credits are based on your household’s modified adjusted gross income (MAGI) for the year, not your savings. For early retirees, that means how you draw income can affect what you pay for coverage.
- Withdrawals from traditional IRAs and 401(k)s generally count as income.
- Qualified Roth IRA withdrawals generally don’t count toward MAGI.
- Capital gains, pensions, and interest count.
- Social Security benefits count for Marketplace purposes, including the portion that isn’t taxed.
2026 note: The temporary, enhanced premium tax credits expired at the end of 2025. For 2026 coverage, households with income above 400% of the federal poverty level generally don’t qualify for tax credits. For 2026 plans, that’s roughly $62,600 for a single person and $84,600 for a couple. For 2027 plans, it’s about $63,840 and $86,560. Rules can change, so confirm current figures at HealthCare.gov or with a licensed agent.
Because the cutoff is a cliff rather than a gradual phase-out, earning just over it can raise your premiums sharply. Many early retirees work with a tax professional to plan withdrawals.
Planning tips
- Price coverage before you set a retirement date. Health premiums can be one of your biggest monthly expenses until 65.
- Don’t miss your enrollment window. You generally have 60 days after losing job coverage to enroll in a Marketplace plan.
- Use your HSA. Health Savings Account funds can generally be used tax-free for COBRA premiums and other qualified medical costs.
- Mark your Medicare window. Your initial enrollment period generally runs for seven months around your 65th birthday: three months before, your birthday month, and three months after.
- Check networks. Make sure your doctors and prescriptions are covered before switching plans.
Already in your early 60s? See our guide to health insurance before Medicare, from 62 to 65.
Please note: LocalQuotes.online is not an insurance company, agency, or broker and is not affiliated with HealthCare.gov or any government agency. We connect you with licensed agents and marketing partners who may contact you about plans. Not all plans are available in all states, and plan details vary. We may be compensated by the agents and partners we connect you with. This page is general information, not insurance, legal, or tax advice.