Retire at 60 and you have five years to cover before Medicare. Those happen to be the five most expensive years to buy health insurance on your own: under federal rules, a 64-year-old can be charged three times what a 21-year-old pays for the same plan. And since 2026, the subsidy that softens that cost disappears entirely once household income passes 400% of the poverty level.
The good news is that early retirees control their income more than almost anyone else. Which accounts you draw from, and when, can make the difference between a subsidy worth tens of thousands of dollars and none at all. This guide walks through the bridge stage by stage, from the year before you leave work to your 65th birthday.
One to two years before you retire
Last reviewed October 2026 by the SmartCoverage Editorial Team (how we research). General information only, not tax or financial advice.
Start by asking your employer whether it offers retiree health coverage. Only a minority of employers still do, mostly large companies and public employers, but if yours does it is often the cheapest bridge available. Ask what it costs, whether it covers a spouse and whether it ends at 65 or continues alongside Medicare.
If you are in a high-deductible plan, fill your health savings account while you still have a paycheck. Money in an HSA can pay premiums for COBRA, and for any health coverage while you receive unemployment benefits, as well as out-of-pocket costs at any age, all tax-free. Our HSA vs FSA guide explains the rules.
Most important, sketch where your retirement income will come from each year until 65. The marketplace counts modified adjusted gross income: wages, pensions, taxable interest and dividends, capital gains, traditional IRA and 401(k) withdrawals, Roth conversions and, notably, all of your Social Security benefits, including the part that is not taxed. Withdrawals from Roth accounts and from cash savings generally do not count.
Ages 55 to 59: the longest bridge
Retiring in your mid to late fifties means up to ten years of private coverage, so the choices you make in the first year set the pattern. Most people leaving a job with health insurance have two immediate options.
COBRA keeps your workplace plan for up to 18 months, with the same doctors and the same network. You pay the full premium plus up to 2%, which for a couple in their late fifties commonly runs well over $1,500 a month. It is a reasonable short bridge if you are in the middle of treatment or have nearly met your deductible for the year.
The marketplace is usually cheaper if your income will be modest, and leaving a job gives you a 60-day special enrollment period. A couple aged 58 living mainly on savings in a taxable account, with little interest or capital gains, may have a low enough income to qualify for a large subsidy. Be careful with the “rule of 55,” which lets you take penalty-free withdrawals from a 401(k) if you leave your employer in or after the year you turn 55: every dollar you withdraw counts as income.
Ages 60 to 62: premiums near their peak
By 60, the age rating is about 2.7 times the base rate, and it reaches 3 times at 64. Without a subsidy, benchmark premiums for a couple in many areas pass $2,000 a month. This is where the 400% cliff matters most. For 2027 coverage, the cliff is $86,560 for a couple; a dollar above it can cost more than $15,000 a year in lost subsidy.
Two income decisions in this window deserve care. Claiming Social Security at 62 adds your entire benefit, including the untaxed part, to your marketplace income, which can push you over the cliff; delaying not only raises your lifetime benefit but can protect your subsidy. And Roth conversions, popular in the low-tax years between retirement and required withdrawals, also add to your income. Many retirees spread conversions out, or time them for years when they will not need a subsidy.
Ages 63 and 64: plan for Medicare, too
Income in these two years has a second effect. Medicare sets the premiums for Part B and Part D based on your income from two years earlier. If your income at 63 is high, you could pay an income-related surcharge, known as IRMAA, in your first year on Medicare. Keeping income moderate at 63 helps on both sides of the bridge.
Prepare for the switch. Your initial Medicare enrollment period runs for seven months, starting three months before the month you turn 65. Sign up on time to avoid late penalties, and cancel your marketplace plan so it ends the day Medicare starts. Once you can get premium-free Medicare Part A, you are no longer eligible for marketplace subsidies. If your spouse is younger, they keep their marketplace plan, and their subsidy is recalculated for one enrollee, although your whole household income still counts. Our Medicare Advantage vs Original Medicare guide covers the next decision.
Other routes worth checking
A working spouse’s employer plan can cover you until 65 and is often the best deal. Part-time work with health benefits is another option some early retirees use for a few years. Living in a different state for part of the year does not change your marketplace eligibility, but you must buy a plan where you live most of the time, and networks may not travel with you. Short-term plans and health care sharing ministries are cheaper but can exclude the conditions that become more common in your sixties; our short-term insurance guide explains the risks.
Whatever route you take, choose a plan for its network and drug coverage, not just its premium. Our guide to health insurance companies includes a calculator to compare metal levels over a full year, and the self-employed guide has a detailed subsidy estimator for a single year.
Put your own numbers on the bridge
The planner below adds up the benchmark Silver premium for each year until 65, applies the subsidy at your income and shows what you would pay. Try moving your income above and below the cliff to see what it is worth.
Map your bridge to Medicare
Year-by-year marketplace cost from retirement to 65, using the benchmark Silver plan. On HealthCare.gov, preview plans for a 40-year-old in your ZIP code to get the base premium.
Uses the federal default age curve (a 64-year-old pays three times the base rate of a 21-year-old), 2026 poverty guidelines and the 2027 IRS contribution percentages for every year, with income held steady. Some states use their own age curves, and the rules will change over time. A spouse younger than 65 still needs coverage after you start Medicare. For guidance only.
For many couples the result is the largest single expense of early retirement, often larger than any car they will buy. It deserves the same planning as the investment portfolio: a few thousand dollars of income moved from one year to another, or from a traditional account to a Roth or cash, can be worth more than any fund choice they make in those years.