Healthcare before Medicare

Retiring Before Medicare? Build the Healthcare Bridge Before the Final Paycheck.

For people who retire before 65, healthcare is not just an insurance decision. Coverage, taxable income and retirement withdrawals can interact during the bridge years.

Get the Pre-65 Healthcare Checklist Medicare at 65

Retirement education with visible sources.Primary public sources checked October 7, 2026.How we review content →

Quick answer: If you retire before 65, you will usually need coverage from one of four places: COBRA, the ACA Marketplace, a spouse's employer plan or employer retiree coverage. Each has different costs, time limits and rules. Marketplace savings depend on household income, and for 2026 coverage the temporary enhanced subsidies have expired. So the way you draw retirement income can change what you pay for health insurance.

The four main coverage paths

Pre-65 coverage options at a glance (general rules; your plan documents control)
Option	How long	What drives the cost	Watch for
COBRA	Generally up to 18 months after job loss	You can be charged the full premium plus up to a 2% administrative fee	At least 60 days to elect. Coverage is the same plan you had, so doctors and deductibles carry over.
ACA Marketplace	Year to year until Medicare	Age, location, plan and household income (premium tax credits)	60-day Special Enrollment Period after losing job coverage. For 2026 coverage, credits are generally unavailable above 400% of the poverty level.
Spouse's employer plan	As long as the spouse is covered and the plan allows	Employer's contribution and plan design	Special enrollment window (generally at least 30 days) after you lose other coverage.
Retiree coverage	Set by the employer	Employer subsidy, if any	Can change or end. Ask how it works once you become eligible for Medicare.

Retiring at 62 leaves a three-year gap, but COBRA generally lasts 18 months. Many people who start on COBRA therefore need a second plan before 65. Our article on health insurance from 62 to 65 walks through that cash-flow problem year by year.

Why 2026 Marketplace rules matter for retirees

From 2021 through 2025, temporary federal law expanded premium tax credits and removed the upper income limit. Those enhancements expired at the end of 2025. As of this October 2026 review, Congress had not restored them. For 2026 coverage:

Households above 400% of the federal poverty level are generally not eligible for premium tax credits. For 2026 coverage, that is $62,600 for one person and $84,600 for a two-person household in the 48 contiguous states.
Below that line, the expected contribution toward the benchmark silver plan rises with income and reaches 9.96% of household income at the top of the eligible range.
There is no cap on repaying excess advance credits for 2026 coverage. If your income comes in higher than you estimated, you may have to repay the full difference when you file.

Rules can change. Check HealthCare.gov, or Get Covered Illinois if you live in Illinois, for the year you are buying coverage.

How withdrawals become “income” for the Marketplace

The Marketplace uses modified adjusted gross income (MAGI): your adjusted gross income plus non-taxable Social Security benefits, tax-exempt interest and excluded foreign income. Spending money is not the same as having MAGI.

How common cash sources generally count toward Marketplace MAGI
Cash source	Generally counts?
Traditional 401(k) or IRA withdrawal	Yes, the taxable amount
Roth conversion	Yes, the taxable amount
Qualified Roth IRA or Roth 401(k) distribution	Generally no
Sale of taxable investments	The realized gain counts, not the full sale proceeds
Spending from cash savings	No
Social Security benefits	Yes, including the non-taxable portion

Hypothetical A single 63-year-old needs $60,000 of spending. Option A: take all $60,000 from a traditional IRA, so MAGI is about $60,000, under the 400% line. Option B: take $45,000 from the IRA and $15,000 from cash savings, so MAGI is about $45,000. Option C: take $70,000 from the IRA to also cover taxes, so MAGI is about $70,000, over the line, and premium tax credits are generally lost. The figures are invented for illustration. A lower MAGI is not automatically better if it leaves larger pre-tax balances to be taxed later. See the retirement tax window.

Plan the handoff to Medicare at 65

Enroll on time. The Initial Enrollment Period runs from 3 months before to 3 months after your 65th-birthday month. Marketplace coverage, COBRA and retiree coverage do not create a Part B Special Enrollment Period. Missing your Initial Enrollment Period can mean a gap in coverage and a lifelong late penalty.
End Marketplace coverage deliberately. Once you are eligible for premium-free Part A, you generally can no longer receive Marketplace premium tax credits. Set the Marketplace plan to end when Medicare starts.
HSA contributions. Medicare.gov advises stopping HSA contributions 6 months before you apply for Medicare after 65, because premium-free Part A can be backdated up to 6 months. See Medicare and HSA timing.
A younger spouse. One spouse's Medicare does not cover the other. The younger spouse may need their own Marketplace or COBRA coverage. Losing coverage through the older spouse's plan can trigger a Special Enrollment Period.

Frequently asked questions

Can I have both COBRA and a Marketplace plan?

You generally choose one. Losing job-based coverage opens a 60-day Marketplace Special Enrollment Period whether or not you elect COBRA. If you voluntarily drop COBRA later, outside open enrollment, that usually does not create a new Special Enrollment Period.

Does my retirement savings balance affect Marketplace subsidies?

No. Marketplace premium tax credits are based on projected household income (MAGI), not assets. Withdrawals, conversions and realized gains can raise MAGI, depending on the type of account.

What happens if my income ends up higher than I estimated?

Advance premium tax credits are reconciled on your tax return using Form 8962. For 2026 coverage, there is no cap on repaying excess advance credits. Update your Marketplace application promptly when your income estimate changes.

Is COBRA a way to delay Medicare enrollment?

No. COBRA is not current-employment coverage for Medicare purposes. Medicare.gov advises not to wait for COBRA to end before signing up for Part B.

What to do next

Download the Retiring Before Medicare Checklist. It includes a coverage-bridge comparison worksheet and a MAGI planner.
Price at least two coverage paths for your ZIP code and your doctors.
Estimate household MAGI for each year until 65 before deciding which accounts fund spending.
If you would like help connecting coverage, withdrawals and taxes, schedule a conversation.

Sources

Health-coverage rules, subsidy amounts and enrollment windows change. This page is general education and does not recommend any insurance plan or coverage type.

Do not let healthcare be the unanswered retirement assumption.

Make the 62–65 coverage bridge part of the retirement-income plan before choosing the date.

Discuss the Healthcare Bridge

Content review

Prepared by Strong Tower Advisors for general retirement education. Rule-based content is linked to primary public sources where practical and is reviewed periodically because tax, retirement-plan, Social Security, healthcare and Medicare rules can change.

About Strong Tower Advisors · Editorial and sourcing standards · Last reviewed October 2026