Retiring before age 65 can feel like crossing the finish line — until one question stops the celebration cold.
We hear it all the time from people who have saved well, built a solid income plan, and are ready to walk away from work:
“What are we going to do for health insurance?”
It’s a fair question, and an important one. Once you retire, your employer’s contribution toward coverage disappears along with your paycheck. Suddenly you’re on the hook for finding — and fully funding — your own plan. That probably wasn’t on the retirement vision board.
Here’s the reassuring part: health insurance doesn’t have to keep you working until 65. It just means the years before Medicare need a plan of their own.
Know Your Coverage Options
The most common ways to bridge the gap:
- Joining a working spouse’s employer plan
- Using employer-sponsored retiree coverage, if you’re lucky enough to have it
- Continuing your current plan through COBRA
- Buying coverage on the Health Insurance Marketplace
- Purchasing a private plan outside the Marketplace
COBRA is tempting because it lets you keep your existing plan, doctors, and prescription benefits exactly as they are. It generally runs up to 18 months, but you’ll pay the full cost — up to 102% of the plan’s total premium, since your employer is no longer chipping in. COBRA looks great right up until that first bill arrives. [Learn more about COBRA coverage.]
Marketplace coverage is the other major path, and for most retirees, losing job-based insurance opens a Special Enrollment Period, so you’re not stuck waiting for the next open enrollment. [Learn more about Marketplace coverage for retirees.]
Which option wins depends on your health, your prescriptions, your preferred doctors, your expected income, and how long you actually need to bridge the gap. There’s no one-size-fits-all answer here.
Your Income Can Affect Your Insurance Cost
This is where health insurance and tax planning start to overlap — and it’s worth paying close attention to in 2026 specifically.
Marketplace premium tax credits are based on your household size and your modified adjusted gross income (MAGI). For 2026, credits are generally available to households between 100% and 400% of the federal poverty level (FPL). That range itself isn’t new — but the edges of it got sharper this year. The temporary enhancements that had softened the top end of that range expired at the end of 2025, so the old “subsidy cliff” is back: cross 400% of FPL by even a dollar, and your credit doesn’t shrink gradually — it disappears entirely. [Review the current premium tax credit rules.]
For retirees, MAGI can include pension and Social Security income, taxable withdrawals from retirement accounts, Roth conversions, capital gains, and other investment income.
Put simply: how you fund your retirement can change what you pay for health insurance. A large IRA withdrawal or a Roth conversion in the wrong year could push your income just over that 400% line and wipe out a subsidy you were counting on.
That doesn’t mean those moves are mistakes — a Roth conversion can still make excellent long-term sense. It just means your tax strategy and your health insurance strategy can’t be planned in separate rooms anymore. With the cliff back, the stakes for getting that timing right are higher than they were even a year ago.
Only in retirement planning can moving money from one account to another change your tax bill and your health insurance premium in the same afternoon. Nobody said the fun would stop just because the paychecks did.
Look Beyond the Premium
When you’re comparing plans, don’t stop at the monthly premium. Check the deductible, the copays, prescription costs, and the maximum out-of-pocket. Confirm your preferred doctors and hospitals are actually in network, and find out how the plan treats you if you’re traveling.
The cheapest premium isn’t always the cheapest plan — not if your doctor or a key prescription isn’t covered.
Build the Bridge Before You Retire
Before you pick a retirement date, nail down exactly when your employer coverage ends and how many months each spouse needs to cover before Medicare kicks in.
From there, compare your options and project your income for each of those gap years — paying close attention to where your withdrawals will come from and whether Roth conversions, capital gains, or other income could push you toward (or over) that 400% threshold.
Revisit the plan every year. Premiums change, deductibles change, and so does your income. Health insurance has never once volunteered to get simpler on its own.
The Bottom Line
Health insurance is a real expense when you retire before 65 — but it doesn’t have to be the thing that keeps you at your desk longer than you want to be there.
The key is coordinating your healthcare with your retirement income, your investments, and your taxes, all at once. Get those pieces working together, and you get to choose your retirement date based on what’s right for your life — not just on when your Medicare card shows up in the mail.
We help people work through exactly this kind of pre-Medicare planning every day. If you’re weighing retirement before 65, let’s talk through what it would look like for you.