When I was 60 and had been running Money Talks News for nearly 25 years, I had a long conversation with a guy I\u2019ll call Bob. He\u2019d just sold his small business at 58 with what he felt was enough to retire on.<\/p>\n
Bob had healthy savings, a paid-off house, and a clear plan.<\/p>\n
Then his wife pulled up the cost of family health insurance through the Affordable Care Act (ACA)\u00a0marketplace.<\/p>\n
\u201cStacy, this is a four-figure number,\u201d he told me on the phone. \u201cPer month. We hadn\u2019t even thought about it. We just assumed health insurance would be \u2026 I don\u2019t know, less than this.\u201d<\/p>\n
That conversation has been repeated millions of times. The gap between leaving an employer plan and turning 65 is one of the biggest blind spots in retirement planning. People obsess over their portfolios for decades, then run smack into a health care bill they never modeled.<\/p>\n
How big is this problem? According to Fidelity Institutional, citing U.S. Census Bureau data, the average retirement age in the United States is 63, but Medicare doesn\u2019t start until age 65.<\/p>\n
That\u2019s a two-year coverage gap on average \u2014 and a whole lot longer for people who retire at 55 or 60.<\/p>\n
It gets worse from there. According to Fidelity\u2019s 2025 Retiree Health Care Cost Estimate, a 65-year-old retiring in 2025 can expect to spend an average of $172,500 on health care and medical expenses throughout retirement.<\/p>\n
That\u2019s per person, after Medicare kicks in. Add a spouse and you\u2019re well over $300,000.<\/p>\n
But the years before Medicare are when things really sting. Here are six ways to bridge the gap.<\/p>\n
1. The ACA marketplace<\/p>\n
For most early retirees, this is the default option. Private insurers sell individual plans through the ACA marketplace at HealthCare.gov regardless of preexisting conditions, and subsidies based on your household income can dramatically lower the price.<\/p>\n
Here\u2019s the catch for 2026 and beyond. The enhanced premium tax credits that held down ACA costs since 2021 expired at the end of 2025.<\/p>\n
According to KFF<\/a>, a 60-year-old couple making $85,000 (or 402% of the federal poverty level) would see yearly premium payments rise by over $22,600 in 2026, after factoring in an annual premium increase of 18%. The \u201csubsidy cliff\u201d is back, and it hits early retirees hard.<\/p>\n Translation: If you can keep your taxable income below 400% of the federal poverty line, you may still qualify for substantial subsidies. Income management \u2014 drawing more from Roth accounts and less from traditional IRAs in those gap years \u2014 has become a serious planning consideration.<\/p>\n 2. COBRA from your former employer<\/p>\n If you leave a job that offered health insurance, federal law may allow you to stay on that exact plan for up to 18 months. The catch: You pay the full premium plus a 2% administrative fee, with no employer subsidy.<\/p>\n That usually means paying $700 to $2,000 a month or more for the same coverage that cost you $150 a month while you were working. It\u2019s expensive, but the coverage is identical, the doctors are the same, and there are no surprises.<\/p>\n COBRA tends to make the most sense as a short-term bridge \u2014 say, three to six months while you shop for a permanent option.<\/p>\n 3. A spouse\u2019s employer plan<\/p>\n If your spouse is still working and has good employer coverage, this is often the cheapest option by a mile. Leaving your job is typically a qualifying life event that lets you join your spouse\u2019s plan outside of open enrollment.<\/p>\n If you\u2019re still in the workforce and your spouse plans to retire first, factor this in. Their early retirement may be much more affordable than yours.<\/p>\n Quick aside \u2014 most internet financial advice comes from people who weren\u2019t alive during the last recession. I\u2019ve been writing about money for more than 40 years. Want rock-solid advice? Sign up for the free Money Talks Newsletter<\/a>. Takes 10 seconds. No fluff. No spam.<\/p>\n 4. Health-sharing ministries (with eyes wide open)<\/p>\n These aren\u2019t insurance. That\u2019s the most important thing to understand. They\u2019re cost-sharing arrangements typically organized around faith communities, where members pay monthly contributions and approved medical expenses get shared among the group.<\/p>\n The premiums look great compared to ACA marketplace prices \u2014 sometimes a third of the cost. That\u2019s because they\u2019re not insurance.<\/p>\n There\u2019s no legal requirement that the ministry actually pay your bill. Pre-existing conditions are usually excluded entirely. Mental health and prescription coverage tend to be limited or nonexistent. And most ministries require members to sign a statement of faith and follow a lifestyle code.<\/p>\n That code matters. Many ministries refuse to share costs for anyone who smokes, drinks more than moderately, uses recreational drugs, or engages in what they define as risky health behavior.<\/p>\n Some won\u2019t cover injuries from extreme sports. A few exclude pregnancies outside of marriage. Others restrict coverage if your weight or other health metrics fall outside their guidelines.<\/p>\n Read the bylaws before you sign up \u2014 not after. Some retirees have used these arrangements successfully for years. Others have been left holding catastrophic bills they thought were covered. If a stable, predictable safety net is what you need, this isn\u2019t it.<\/p>\n 5. A part-time job with benefits<\/p>\n A handful of employers \u2014 Starbucks, Costco, REI, UPS, and a few others \u2014 offer health insurance to part-time workers. For some early retirees, working 20 to 30 hours a week at a job they actually enjoy provides both health coverage and walking-around money.<\/p>\n It\u2019s not glamorous. But $2,000 a month in equivalent benefits, plus a paycheck, can change retirement math in a hurry.<\/p>\n 6. Plan your HSA bridge in advance<\/p>\n If you\u2019ve got a health savings account (HSA) from your working years, you\u2019ve got a tax-free pool of money you can spend on qualified medical expenses \u2014 including, in many cases, your ACA premiums if you receive unemployment compensation, plus your Medicare premiums starting at 65.<\/p>\n If you haven\u2019t been maxing out an HSA, and you have several years before retirement, fix that. The triple tax advantage \u2014 deductible going in, tax-free growth, tax-free withdrawal for medical \u2014 makes the HSA arguably the most powerful retirement account in the tax code for people who can use one.<\/p>\n We\u2019ve laid out the case in detail in \u201c6 Reasons This Is the Best Type of Retirement Account out There<\/a>.\u201d<\/p>\n A few things to factor into your planning. Once you turn 65, the standard 2026 Medicare Part B premium will be $202.90 per month, an increase of $17.90 from $185.00 in 2025, according to the Centers for Medicare & Medicaid Services<\/a>.<\/p>\n Higher earners pay more under the income-related monthly adjustment amount, or IRMAA<\/a>, rules. Add Part D, possibly a Medigap plan, and your monthly premium runs $300 to $500 a month even after Medicare kicks in.<\/p>\n The takeaway from Bob\u2019s story: Don\u2019t model your early retirement budget without a realistic, current-year quote on health coverage.<\/p>\n Get on HealthCare.gov, run a quote at the income level you actually expect, and add it to your spreadsheet. If the number changes your timeline, better to know now.<\/p>\n