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Retiring Before 65: How to Cover Health Insurance Until Medicare
Retiring at 60 or 62 can be an attractive goal, but there is a catch: Medicare generally begins at 65. If you leave work earlier and you were covered through your employer, you need another way to get health insurance until then. This gap is one of the biggest costs early retirees forget to plan for.
Why it matters
Health insurance costs money even when you are healthy, and a single serious illness without coverage can cost far more than most people have saved. Premiums for an individual or couple under 65 can be a significant part of your retirement budget, so include them in your desired monthly income.
Option 1: Keep your employer plan with COBRA
COBRA generally lets you continue your employer's group coverage for a limited time after leaving a job, typically up to 18 months. You pay the full premium yourself, plus a small administrative fee, so it can be expensive. It works well as a short bridge, and it keeps your current doctors and plan.
Option 2: A plan from the health insurance marketplace
You can buy an individual plan through the marketplace created under the Affordable Care Act. Losing job-based coverage generally opens a special enrollment period, often 60 days, so do not wait. Depending on your income, you may qualify for a premium tax credit that lowers the cost. Because the credit is based on your income, the way you take money out of your accounts in the early years of retirement can affect what you pay.
Option 3: A spouse or partner's plan
If your spouse or partner is still working and has employer coverage, you may be able to join their plan. Compare the premium, the deductible and the network with other options.
Option 4: Retiree coverage from a former employer
Some employers, especially public-sector ones, offer retiree health benefits. Ask your benefits office before you decide on a retirement date, because the rules often depend on your age and years of service.
What happens at 65
Medicare has an initial enrollment period around your 65th birthday: it begins three months before the month you turn 65 and ends three months after. If you miss it and you do not have other qualifying coverage, you may face late-enrollment penalties on some parts of Medicare, and those penalties can last for life. Mark the dates on your calendar well ahead of time and check medicare.gov.
Planning tips
- Get quotes for each option before choosing a retirement date.
- Add the monthly premium, plus a cushion for deductibles and out-of-pocket costs, to the income you want in the calculator.
- Compare plans by total yearly cost, not just the monthly premium.
- Check that your doctors and prescriptions are covered.
- Consider speaking with a licensed insurance counselor or a State Health Insurance Assistance Program (SHIP) volunteer, which offers free counseling for Medicare questions.
Use the free calculator to see whether you are on track.Open the retirement calculator
This article is for general educational purposes and is not financial, tax or legal advice. Rules and limits change; confirm details with official sources or a qualified professional. See our Disclaimer.