Healthcare before 65: the retirement planning question most people ignore until it's urgent

Medicare eligibility starts at 65. For anyone retiring before that age — and a meaningful share of people in the 5–10 year window are at least considering it — there’s a coverage gap that doesn’t close on its own. It’s one of the most consequential and most commonly underplanned pieces of an early retirement.

Why this gets overlooked

Healthcare costs while still employed are often handled automatically through payroll deductions, easy to not think much about. The moment employment ends, that default disappears, and the options that replace it — and their costs — aren’t always obvious until someone is actually comparing them. Unlike Social Security or RMDs, there’s no single age that triggers planning for this; it only becomes visible once a retirement date is actually on the calendar.

The main coverage options

COBRA continuation coverage lets someone keep their employer’s group health plan for up to 18 months after leaving a job, but at the full premium cost — the portion an employer previously subsidized is no longer covered, which often makes COBRA the most expensive of the available options. The Department of Labor’s COBRA overview explains eligibility and timing rules.

ACA marketplace plans are available regardless of employment status, and depending on income, may come with subsidies that reduce the premium significantly. Marketplace plans are sometimes overlooked by people who assume COBRA is the only option, but for many early retirees they end up being more affordable. Healthcare.gov’s guidance for retirees covers how this works — see the ACA marketplace, explained for how subsidies and plan tiers actually work, and how to make sure you’re on the real exchange rather than a lead-generation site.

A spouse’s employer coverage, if available, is often the lowest-cost option, since it usually carries an employer subsidy the way the retiree’s own former plan did.

Retiree health benefits from a former employer still exist in some cases, though they’ve become less common — worth checking directly with a former employer’s HR department rather than assuming they don’t exist or that they do.

What actually drives the cost comparison

The right option for a given person depends heavily on income (which affects ACA subsidy eligibility), health status, prescription needs, and how many years of bridge coverage are actually needed before Medicare kicks in. Someone retiring at 63 needs two years of bridge coverage; someone retiring at 60 needs five — a difference that meaningfully changes the total cost comparison between options.

It’s also worth factoring this cost into the broader retirement timeline. How to think about Social Security timing when retirement is 5–10 years away and this healthcare question are often weighed together, since both are affected by exactly when someone stops working.

Where to get personalized guidance

A licensed insurance broker (at no cost to you — brokers are typically paid by the insurer) can compare marketplace plans against COBRA for a specific situation. The Kaiser Family Foundation’s overview of retiree health benefits is a useful starting point for understanding the broader landscape before that conversation.

Related reading: Healthcare in retirement: what Medicare covers, what it doesn’t and How to think about Social Security timing when retirement is 5–10 years away.