Retiring before 65 is a big milestone. But there’s one problem a lot of early retirees don’t plan for: Medicare doesn’t start until 65. If you leave a job with health benefits at 60, 62, or 63, you need a way to cover the years in between.
Here’s how to bridge the gap.
Why this age group pays more
ACA plans can’t charge you more for health conditions, but they can charge more based on age. In most states, a 64-year-old can be charged up to three times what a 21-year-old pays for the same plan. That’s why the financial help available through the Marketplace matters so much for people in their late 50s and early 60s.
Your main options
1. Retiree coverage from your employer
Some employers still offer retiree health benefits. Ask HR before you retire. If it’s offered, compare the cost and coverage against a Marketplace plan.
2. COBRA
COBRA lets you keep your employer’s plan, usually for up to 18 months. You pay the full premium plus up to 2%. It can work as a short bridge if you retire at 63 or later, but it often won’t last all the way to 65, and it’s usually expensive. If you’re weighing it, read our guide on COBRA vs. ACA.
3. A spouse’s job-based plan
If your spouse is still working and has family coverage, joining their plan may be the simplest option.
4. An ACA Marketplace plan
For many early retirees, this is the main bridge to Medicare. Marketplace plans cover pre-existing conditions, which matters more as we age, and you may qualify for a premium tax credit based on your income.
Retiring and losing job-based coverage gives you a Special Enrollment Period. You can enroll up to 60 days before or after your coverage ends, so you don’t have to wait for Open Enrollment.
5. Private plans
Private options like fixed indemnity and dental plans can be useful add-ons. But short-term medical and limited medical plans are not ACA-compliant coverage. They may exclude pre-existing conditions, skip major benefits, and cap what they pay, and you can’t use a tax credit for them. At this stage of life, that’s a real risk to weigh carefully.
How retirement income affects your tax credit
This is the part worth planning ahead for. Your Marketplace tax credit is based on your expected household income for the year, using a figure called modified adjusted gross income (MAGI). For retirees, that generally includes:
- Withdrawals from a traditional IRA or 401(k)
- Taxable pension income
- All of your Social Security benefits, including the part that isn’t taxed
- Interest, dividends, and capital gains
- Any part-time or consulting income
It generally does not include:
- Qualified withdrawals from a Roth IRA or Roth 401(k)
- Money you take from regular savings (only the interest or gains count)
Watch the 400% line
For 2027, the extra tax credits from recent years have ended. Under the original ACA rules, households with income above four times the federal poverty level generally don’t qualify for any tax credit. For early retirees, crossing that line by even a small amount, say with one large IRA withdrawal or by selling investments, can mean losing all financial help for the year.
That’s why the timing of withdrawals can matter as much as the amount. Many early retirees work with a tax professional or financial advisor to plan which accounts to draw from in the years before Medicare.
Getting close to 65
When you’re turning 65, here’s what to keep in mind:
- Your Medicare Initial Enrollment Period is a 7-month window: the 3 months before your 65th birthday month, your birthday month, and the 3 months after.
- Once you’re eligible for premium-free Medicare Part A, you generally can’t keep getting a Marketplace tax credit. Plan to end your Marketplace plan when your Medicare coverage starts, so you don’t pay full price or overlap coverage.
- Don’t delay Medicare by staying on a Marketplace plan. Waiting can lead to late enrollment penalties that last for life.
- Taking Social Security early at 62 doesn’t start Medicare early. Medicare still begins at 65 for most people.
For Medicare enrollment itself, visit Medicare.gov or contact the Social Security Administration.
A simple plan for the gap years
- Ask HR about retiree coverage and your COBRA cost before your last day.
- Estimate your income for each year until 65, including withdrawals and Social Security.
- Compare COBRA, a spouse’s plan, and Marketplace options with real quotes.
- Enroll within 60 days of losing job-based coverage, or during Open Enrollment (November 1, 2026 to January 15, 2027 in most states).
- Review every year. Your income, prices, and plan options will change.
Compare your options in one place
Blue Liberty Health’s licensed agents help people in their 50s and early 60s compare ACA Marketplace and private plans side by side, at no cost. Tell us your ZIP code, age, and household, and we’ll show you what’s available to carry you to 65.
This article is for general information and isn’t tax, legal, financial, or medical advice. Plan availability, prices, and financial help depend on your state, income, and household. Blue Liberty Health is not affiliated with HealthCare.gov, Medicare, the Social Security Administration, or any government agency.