For many people, retiring before 65 feels like the ultimate reward after years of hard work. But there’s one big challenge that often gets overlooked: health insurance. Since Medicare doesn’t kick in until age 65, early retirees between 60 and 64 need to bridge the gap on their own. The right choice depends on your health needs, household income, and whether you’re leaving a job with benefits.
The good news? There are several reliable ways to stay protected during this transition. Let’s explore the most practical options.
Understanding the Gap Before Medicare
When you stop working, your employer coverage usually ends, and you won’t yet qualify for Medicare. That leaves a few years where you’ll need to secure coverage independently. Your options will vary depending on your income, previous insurance, and family situation. Planning ahead helps ensure you don’t face surprise costs or gaps in care.
Health Insurance Options for Ages 60–64
1. Affordable Care Act (ACA) Marketplace Plans
The ACA marketplace is often the first stop for early retirees. Plans are required to cover pre-existing conditions, preventive services, and essential care. Depending on your income, you may qualify for subsidies that make monthly premiums more affordable.
Best for retirees seeking comprehensive coverage and financial assistance through income-based subsidies.
2. COBRA Continuation Coverage
If you’re leaving a job that offered employer insurance, COBRA allows you to keep that plan for up to 18 months. The advantage is continuity—you keep your doctors, network, and deductible progress. The downside? You pay the full premium, which can be two or three times what you paid while employed.
Best for those who want to maintain their existing plan for a limited time and are close to Medicare eligibility.
3. Spouse’s Employer Plan
If your spouse is still working, joining their employer plan is often the most cost-effective solution. Group coverage typically offers robust benefits and lower costs than buying your own policy. Enrollment is usually tied to your spouse’s open enrollment window or triggered by a qualifying event like retirement.
Best for retirees with a spouse who has active job-based coverage.
4. Short-Term Health Insurance
Short-term policies provide temporary coverage and are easy to enroll in outside of open enrollment. They usually cost less than ACA plans but offer fewer protections, often excluding pre-existing conditions and preventive services.
Best for healthy retirees who need short-term coverage and understand the limitations.
5. Health Care Sharing Programs
Faith-based or community cost-sharing arrangements can be a lower-cost alternative to traditional insurance. Members contribute monthly amounts that go toward covering each other’s medical bills. While affordable, these programs are not regulated like insurance and may exclude many services.
Best for retirees in good health who are comfortable with a non-traditional approach to medical costs.
6. Part-Time Jobs With Benefits
Some companies offer health coverage to part-time staff. For retirees who want to stay active or supplement income, this option provides both group insurance and extra earnings.
Best for retirees open to light work in exchange for health benefits.
Common Questions
Can I skip coverage until Medicare?
You could, but it’s risky. A single medical emergency could derail your retirement savings.
What income counts for ACA subsidies?
Subsidy eligibility is based on your Modified Adjusted Gross Income (MAGI), which includes wages, retirement withdrawals (except Roth), Social Security, and other taxable income.
Can I use HSA funds during early retirement?
Yes. Health Savings Account funds can be used tax-free for qualified medical expenses and premiums. After age 55, you can contribute an additional $1,000 annually.
Steps to Take Now
- Estimate your retirement income to see if you qualify for ACA subsidies
- Explore COBRA if you’re leaving employer coverage
- Check your spouse’s employer plan for eligibility
- Consider short-term or sharing programs only as temporary solutions
- Look into part-time work if you want benefits plus extra income
- Use HSA funds or tax-efficient withdrawals to manage healthcare costs
- Mark the annual open enrollment dates on your calendar
Final Thoughts
Early retirement doesn’t mean going without health coverage. By weighing your options—whether that’s ACA subsidies, a spouse’s plan, COBRA, or even part-time work—you can create a solid bridge to Medicare. Planning ahead ensures you enjoy your retirement years with peace of mind, knowing your health and finances are protected.
