You did the math on the house, the pension, the withdrawal rate. Then somebody asked what you were doing for health insurance until Medicare, and the number came back higher than your mortgage.
This is the part of early retirement that catches people. Not the savings. The three, five, sometimes ten years between the day you stop working and the day Medicare picks up at 65.
I work with people in this window constantly. The good news is that it's more manageable than the first quote suggests, and a lot of that comes down to one number most retirees have never heard of.
Your options, in the order I usually walk through them
COBRA
You keep the exact plan you had. Same doctors, same deductible, same everything. You just pay all of it now, including the share your employer was quietly covering, plus up to 2% on top. For most people that's the moment the number stops looking abstract. COBRA runs 18 months after you leave, which is rarely long enough to reach 65 anyway. I've written the full comparison in the COBRA guide.
A marketplace plan
You buy your own coverage. This is where most of my retired clients land, and the reason is the subsidy math below.
A medically underwritten plan
You apply, the application asks about your health, and you get offered a plan and a price based on the answers. No subsidy applies to these, so they only make sense in specific situations. For retirees over the income line below, this is frequently the right door, and it's the one most people don't know exists.
Your spouse's plan
If your husband or wife is still working and their employer offers coverage, losing your own coverage opens a window for you to join theirs. Check this first. It's often the cheapest answer and it takes one phone call to their HR.
One warning on that window, because it catches people. The window into a spouse's employer plan is only 30 days, not 60. The marketplace gives you 60. Group plans give you 30. If you're counting on your spouse's plan as the backup while you shop, you can lose that option a full month before you'd expect to.
Part-time work that carries benefits
Less common, but I've had clients take a twenty-hour job at a hospital or a school district specifically for the insurance, and the math worked.
The number that decides almost everything
For 2027 coverage, a married couple's premium tax credit disappears entirely above $86,560 in household income. That's 400% of the federal poverty level for a household of two. For a single person the line is $63,840.
One dollar over and the subsidy doesn't shrink. It goes to zero.
Below that line, what you pay for a benchmark plan is capped as a percentage of your income, and at the top of the range that cap is 10.22%. Above the line you pay the full sticker price. For two 62-year-olds in Florida that starts around $2,100 a month.
Here's why this matters more for you than for almost anyone else I work with: retirees have unusual control over the income number.
The marketplace counts modified adjusted gross income, and for a retired household that often means IRA and 401(k) withdrawals, pension income, interest, dividends, and capital gains. Which accounts you draw from, and when, is largely your decision. A traditional IRA withdrawal counts. A qualified withdrawal from a Roth generally doesn't. Selling an appreciated position in December instead of January moves income between years.
I'm not your CPA and I don't give tax advice. What I can tell you is where the line sits and what crossing it costs, so you and your tax person can plan around it instead of finding out in April.
To put a number on it: a couple sitting just under the line who take an extra $4,000 out of a traditional IRA in December can cross it and lose the entire credit for that year, which for a couple in their sixties can run well into five figures. Nothing about the withdrawal was wrong. It was just made in the wrong month, without anyone checking. That's a conversation I'd rather have with you in October than after the fact.
If you're over the line anyway
Plenty of retired households are, and there's nothing to be done about it. A pension and a required withdrawal can put you past $86,560 without any choice on your part.
If that's you, the marketplace is still open, you just pay full price there, and full price for a couple in their early sixties is the number that made you open this page in the first place.
So the door I usually try next is a medically underwritten plan. The application asks about your health, and the carrier decides whether to offer you coverage and at what price. Because they can price for risk, a healthy couple over the subsidy line often pays quite a bit less than sticker price on a marketplace plan. I've written about how the two compare on the private plans versus the marketplace guide.
The feature that makes this work as a bridge, and the reason I recommend the plan I do: it's guaranteed renewable until you turn 65.
That matters more than the premium does. Guaranteed renewable means once you're approved, the carrier can't drop you and can't single you out for a rate increase because your health changed. Get diagnosed with something at 63 and you keep your plan. You ride it right up to Medicare.
Be clear on what that promise covers, though. It doesn't lock your rate. Carriers can still raise prices across a whole class of policyholders, and they do. What it protects you from is being singled out, which is the thing that would actually wreck you.
Now the part a broker who wanted the sale would skip.
All the risk here sits at the front door. Underwriting cuts both ways, and it cuts harder at your age. At 62, the odds something turns up on that application are higher than at 32. An underwritten plan can price you up, exclude a condition you already have, or decline you outright.
Which leads to the one bit of timing advice I'd give anyone thinking about retiring early: apply while you're healthy. Applying at 62 is a better bet than applying at 64, and the day after a new diagnosis is the worst day to start. That's not a sales line, it's just how underwriting works.
My rule is the same one I apply to everybody, and it matters more here: I won't put you in an underwritten plan that excludes the thing you actually need covered. If your application comes back with a rider on the exact condition you're managing, that's a marketplace situation and I'll tell you so, even though the marketplace plan pays me less and costs you more.
The honest summary: you get one hurdle instead of an ongoing one. Clear it and you're set until Medicare. We find out by applying, and applying costs you nothing.
The COBRA trap that catches retirees
This one costs people real money, and it's the most common mistake I see in this group.
When you retire and lose your employer coverage, you get a 60-day special enrollment period. It runs from 60 days before your separation date to 60 days after. During that window you can enroll in a marketplace plan.
Plenty of people elect COBRA instead, because it's the default, the paperwork is right there, and keeping the same doctors feels safe. Then two months later the first full premium hits the bank account and they want out.
Voluntarily dropping COBRA does not open a new enrollment window. It's not a qualifying event. You're on it until one of three things happens: you run out the full COBRA period, which does count as a qualifying event; you hit another qualifying event; or open enrollment comes around.
So if you took COBRA in March and it's now July, the marketplace door is generally closed to you until November 1.
One important exception, and it's the reason this isn't as bad as it sounds. Medically underwritten plans enroll year-round. They don't run on the open enrollment calendar and they don't need a qualifying event. So if you're stuck on COBRA in July and the premium is bleeding you, there's still something to look at, provided you can get through the application.
If you're inside your 60 days right now, don't let them run out while you think about it. Having both doors open is worth more than having one.
The dates you actually need
Open enrollment for 2027 coverage runs November 1 through January 15. The date that actually matters is December 15, because that's the deadline for coverage that starts January 1. Enroll after it and you have a gap in January.
Your retirement window is 60 days on either side of your separation date. Sixty before, sixty after.
A spouse's employer plan gives you 30 days, not 60. Different rule, shorter clock.
Exhausting COBRA opens a window. Cancelling it does not.
When you get to 65
I don't sell Medicare. I'd rather tell you that plainly than take a meeting I can't help you with.
What I'll tell you is the timing, because getting it wrong is expensive. Your initial enrollment period is seven months long. It starts three months before the month you turn 65 and ends three months after it. If you miss it and don't qualify for a special enrollment period, you can owe a late penalty every month for as long as you have Part B, and it grows the longer you wait.
Mark it now. When you get close, call me and I'll hand you to someone I trust with it.
Questions I get from people in this window
Is COBRA ever the right answer for a retiree?
Sometimes. If you're mid-treatment, or you've already met your deductible for the year, staying put can be worth it. If it's only about keeping the same card in your wallet, run the numbers first.
Does my 401(k) balance count against me?
No. The marketplace looks at income, not assets. A large balance doesn't disqualify you. What you withdraw from it in a given year does count.
If I get sick after I sign up, can they drop me?
Not on the plan I recommend. It's guaranteed renewable until you turn 65, so once you're approved the carrier can't cancel you or raise your rate because of a diagnosis. They can raise rates across everyone in your class, which is normal, but they can't come after you specifically. The health questions are a one-time hurdle at the application, not something you re-clear every year.
I retired in March and I'm on COBRA. Am I stuck?
On the marketplace side, usually until open enrollment or COBRA exhaustion. Open enrollment starts November 1, so bring me your numbers in October and we'll have the new plan ready for January 1. An underwritten plan is a different story, because those enroll year-round. If COBRA is hurting right now, call me and we'll see whether that door opens.
I'm over the income limit. Is there anything for me?
Usually yes, and it's generally an underwritten plan rather than a marketplace one. Healthy households over the line often do better there than at full marketplace price. It depends on what the application turns up, and I won't place you somewhere that excludes a condition you're actively managing.
Can I keep my doctors?
Often, but never assume it. Networks are narrower on individual plans than on a large employer plan. Give me the names of the doctors you actually intend to keep and I'll check each one before you enroll, not after.
My spouse is still working. What should I do first?
Call their HR this week, not next month. Ask what it costs to add you and confirm the enrollment deadline, because a group plan only has to give you 30 days from the day you lose your own coverage. Get the real number, then call me and we'll compare it honestly against what you'd pay on your own.
What if I go back to work part-time?
Tell me, because it changes your income projection, and your income projection is what your subsidy is built on. Mid-year changes are fixable if I hear about them. They get expensive if I find out at tax time.
The bottom line
The years between retiring and turning 65 are the most expensive stretch of health insurance most people ever buy, and they're also the stretch where planning changes the number the most.
Two things decide almost everything: where your income lands against $86,560, and whether you use your 60 days before they're gone. If you land over the line, there's usually still a door, and it's an underwritten plan that carries you to 65 without the carrier being able to drop you along the way.
Bring me your projected income for next year and the doctors you want to keep. I'll show you what you actually qualify for and what it really costs, including the cases where staying on COBRA is the right call and I don't make a dime.