Retiring Before 65? Here’s What You Need to Know About Health Insurance Options
When you're planning to retire early—especially before age 65—one of the biggest questions you’ll face is this:
What do I do about health insurance?
If you're not yet eligible for Medicare, you need a plan to bridge the gap. And for many people in ministry, self-employment, or semi-retirement, this becomes one of the biggest financial decisions in the transition.
The good news is, you do have options. The key is knowing which ones apply to your situation and how to evaluate them wisely.
Let’s walk through a few of the most common early retirement healthcare options and how to approach the decision.
1. You're Not Eligible for Medicare (Yet)—Now What?
Medicare typically begins at age 65 unless you qualify earlier due to a disability. So, if you’re retiring at 55, 60, or even 64, you’ll need to secure coverage for that in-between period.
There’s no one-size-fits-all answer, but several pathways can help bridge the gap.
2. Spouse's Employer Coverage Could Be the Best Option
If your spouse is still working and has access to group health insurance, joining their plan may be your most cost-effective and comprehensive option.
Be sure to:
Compare the cost of adding a dependent to their plan
Review coverage networks to ensure your doctors are included
Consider whether this is your long-term solution or a short-term bridge
Some employers allow you to enroll as a dependent even after your retirement if it falls under a qualifying event. Timing is important here.
3. COBRA Coverage Is Available—But Can Be Costly
COBRA allows you to keep your previous employer’s group health coverage for up to 18 months (sometimes longer in special situations).
Here’s the catch: You’ll pay the entire premium yourself, plus a 2% administrative fee. That often makes COBRA more expensive than people expect.
That said, it can be a helpful bridge if you need coverage right away and want to avoid any gaps during your transition.
4. The Health Insurance Marketplace Might Offer Savings
For many early retirees, buying coverage through the Health Insurance Marketplace (Healthcare.gov or your state’s exchange) is a viable—and sometimes very affordable—option.
Depending on your income, you may qualify for the Premium Assistance Tax Credit, which can significantly reduce your monthly premium.
Some things to keep in mind:
Your subsidy is based on estimated annual income, not assets
You’ll want to structure income strategically to stay under certain thresholds
Always check if your preferred doctors and hospitals are in-network
If your income is low but steady, the Marketplace can provide quality coverage with minimal out-of-pocket costs.
5. Other Coverage Options May Be Worth Exploring
In some cases, you might be eligible for:
Retiree health benefits through your former employer
Private individual plans (outside the Marketplace)
Group policy conversion, where your group plan converts to individual coverage
These are less common, but it’s worth asking your employer or HR department about what's available as part of your retirement benefits.
Don't Guess—Plan With Clarity
Too many people enter retirement with uncertainty about their healthcare strategy. But this is one area where a little clarity can save you a lot of money, time, and stress.
If you’re married, thinking about part-time work, or planning to live off savings or taxable investments, your health insurance choices will affect more than just your premiums—they’ll impact your entire financial plan.
Want a Simple Way to Explore Your Options?
If you’re considering early retirement and want to compare health insurance choices side-by-side, I can help.
I have a simple flowchart that walks through the key questions and decision points. It’s an easy way to get clarity about what’s available to you based on your age, employment status, and income.
Just email me at todd@legacypathadvisors.com and I’ll send it your way.
