Health & Medicare
Health Insurance for Early Retirees
COBRA duration/cost rules from this site's own already-sourced COBRA data; ACA subsidy mechanics from IRS/HHS guidance already used by the ACA tools.
Retiring before 65 means bridging a real gap before Medicare kicks in. COBRA only covers part of it, and the ACA marketplace side of the bridge has a genuine upside most people miss.
Data sourced from CMS/DOL COBRA guidance, IRS
Two bridges, and only one of them covers the whole gap
Retiring at, say, 58 or 62 means covering 3 to 7 years before Medicare eligibility begins at 65. COBRA, continuing your employer's group plan after leaving the job, is available for up to 18 months (1.5 years) after a job-based qualifying event.
For most early retirees, that alone does not stretch all the way to 65. The ACA marketplace, by contrast, has no time limit at all, it remains available for exactly as long as the gap lasts, which makes it the more realistic long-term bridge for anyone retiring meaningfully earlier than 65.
To estimate your own COBRA cost for the portion of the gap it can cover, the COBRA insurance cost calculator runs the 102% premium rule directly from your own numbers.
The upside most early retirees never realize: retiring can raise your subsidy
ACA premium tax credits are based on Modified Adjusted Gross Income for the actual coverage year, not your prior salary while still working. An early retiree living on savings, a pension, or investment income, income sources that can look very different from a full-time salary on a tax return, may show a meaningfully lower MAGI the year after leaving a job than the year before.
A lower MAGI generally means a bigger premium tax credit for the identical marketplace plan, which is why comparing COBRA's flat, income-blind cost against an actual marketplace quote based on your real post-retirement income is worth doing carefully rather than assuming COBRA is simply "keeping the same coverage" at a comparable price.
To estimate that marketplace-side subsidy using your actual expected post-retirement income, the ACA premium tax credit estimator runs the current 2026 formula.
Timing the switch between the two
You can generally move from COBRA to an ACA marketplace plan, but the timing needs to line up with one of two windows. Voluntarily dropping COBRA outside of the annual open enrollment period does not typically create a special enrollment period on the marketplace side, so switching usually has to happen either during open enrollment or when COBRA coverage naturally runs out, which does trigger its own qualifying event.
Planning around one of those two windows, rather than assuming a switch can happen whenever it becomes financially convenient, avoids an unplanned coverage gap.
Frequently asked questions
How do I get health insurance if I retire before 65?
Two main bridges exist until Medicare eligibility at 65: COBRA continuation of your employer plan, and an ACA marketplace plan. COBRA is available for up to 18 months (1.5 years) after a job-based qualifying event, so on its own it does not cover a full multi-year gap to 65 for most early retirees.
The ACA marketplace, by contrast, has no time limit and remains available for as long as the gap lasts.
Is COBRA or an ACA marketplace plan cheaper for an early retiree?
It depends heavily on your post-retirement income, and the answer often surprises people. COBRA costs the full premium plus a 2% administrative fee, with no income-based discount at all.
An ACA marketplace plan's premium tax credit is based on your household income, and many early retirees see a significant, genuine drop in taxable income the moment a paycheck stops, which can make marketplace coverage meaningfully cheaper than COBRA even before accounting for COBRA's own higher sticker price.
Does retiring early actually help me qualify for a bigger ACA subsidy?
It can, and this is the single most valuable, least understood fact for this specific situation. ACA premium tax credits are based on your Modified Adjusted Gross Income for the year, not your prior salary.
An early retiree living on savings, a pension, or investment income, all of which can be structured very differently from a full-time salary, may show a much lower MAGI than while working, which increases the applicable subsidy for the exact same marketplace plan.
Can I switch from COBRA to an ACA marketplace plan later, or does it have to be one or the other for good?
You can generally switch, though the timing matters. Voluntarily dropping COBRA outside of open enrollment does not typically create a special enrollment period to join a marketplace plan, so switching usually needs to happen either during open enrollment or when your COBRA coverage naturally runs out, which does create a qualifying event of its own.
Plan the switch around one of those two windows rather than assuming you can move whenever it becomes financially convenient.