Health insurance before 65
Guide · By Kevin Lan · Updated September 2026
Medicare starts at 65, so anyone retiring earlier has to cover the years in between. For most early retirees the ACA Marketplace is the anchor, and how much it costs depends heavily on the income you show.
The gap, and the main options
Between an early retirement and Medicare at 65, you are responsible for your own health coverage. The common routes:
- ACA Marketplace (HealthCare.gov or your state exchange). The usual anchor for early retirees: guaranteed coverage, and premium subsidies tied to your household income.
- COBRA. Continues your former employer's plan, typically for up to 18 months. Familiar coverage, but you pay the full premium, which is often expensive.
- A spouse's or partner's plan. If a partner still works and has coverage, joining their plan is frequently the simplest and cheapest option.
- A part-time job with benefits, which some early retirees use deliberately (a form of Barista FIRE).
Health-care sharing ministries are sometimes marketed to early retirees, but they are not insurance and carry no guarantee of payment; treat them with caution.
Marketplace subsidies follow your income
The premium tax credit that lowers Marketplace premiums is based on your modified adjusted gross income, not your net worth. An early retiree living partly on taxable savings or Roth basis can often show modest taxable income and qualify for a meaningful subsidy, even with a large portfolio. This is one of the underrated advantages of retiring early with money spread across account types. Subsidy formulas and income thresholds change with legislation, so confirm the current rules for your year on HealthCare.gov before you plan around a specific number.
It collides with Roth conversions
Here is the tension every early retiree runs into: a Roth conversion ladder deliberately raises your taxable income, while ACA subsidies reward lower income. Convert aggressively and you may shrink or lose your subsidy; keep income low for the subsidy and you convert less. There is no single right answer. The point is to plan health-insurance income and conversion income together, year by year, rather than optimizing one and being surprised by the other.
Build it into the number
Health coverage is a real early-retirement expense, so include a realistic premium-and-out-of-pocket estimate in the yearly spending you feed your FIRE number. Underestimating it is a common reason an early-retirement plan feels tighter than expected. This is educational information, not tax or insurance advice; coverage rules and subsidies vary by state and year, so verify the specifics for your situation.
References
- U.S. Centers for Medicare & Medicaid Services. HealthCare.gov: the Health Insurance Marketplace. healthcare.gov
- Internal Revenue Service. The Premium Tax Credit: the basics (how marketplace subsidies are set by household income). irs.gov
FIRE calculator
It runs in your browser. Nothing is sent anywhere.
Frequently asked questions
How do I get health insurance if I retire before 65?
The main options are the ACA Marketplace (HealthCare.gov or a state exchange), COBRA continuation of an employer plan for up to about 18 months, joining a working spouse's plan, or a part-time job with benefits. The Marketplace is the usual anchor because coverage is guaranteed and premiums are subsidized by income.
Can I get ACA subsidies if I have a large portfolio?
Often yes. The premium tax credit is based on your modified adjusted gross income, not your assets. An early retiree who lives partly on taxable savings or Roth basis can show modest taxable income and still qualify, though subsidy rules change with legislation, so verify the current year's thresholds.
How do Roth conversions affect my health-insurance subsidy?
Roth conversions add to your taxable income, which can reduce or eliminate an ACA premium subsidy for that year. Early retirees have to balance converting to a Roth against keeping income low enough for the subsidy, and plan both together year by year.
How much should I budget for health insurance before Medicare?
It varies widely by age, state, income, and plan, so get a real quote from HealthCare.gov for your situation rather than a rule of thumb. Whatever the figure, include the premium plus likely out-of-pocket costs in the annual spending behind your FIRE number.