Are you thinking about retiring at 62 or 63 — and then stopping short at one practical question: what do I do about health insurance until Medicare starts at 65? You are not alone. This stretch of time, sometimes called the "gap years," catches many careful planners by surprise.
The good news is that you have real options. The less good news is that they differ a lot in price and in how long they last. Here are the four main bridges across the gap, and how to choose between them.
1. Why the Gap Years Need a Plan of Their Own
Medicare eligibility begins at 65 for most people, no matter when you retire. Retire at 62, and you face roughly three years of covering yourself. Going without insurance in your early sixties is a gamble most advisors warn against: one accident or new diagnosis can produce bills that dwarf years of premiums. So the real question is not whether to have coverage, but which kind fits your health, your budget, and the number of years you need to cover.
2. Option One: ACA Marketplace Plans
The Health Insurance Marketplace (HealthCare.gov, or your state's own exchange) sells individual plans that cannot turn you down or charge you more because of your health. Plans come in metal tiers — Bronze, Silver, Gold, and Platinum — that trade lower monthly premiums for higher costs when you use care, or the reverse.
You normally enroll during the annual open enrollment period, which generally runs from November 1 to January 15 in most states, with a mid-December deadline if you want coverage to start January 1. Some states run their own exchanges with different dates, so check your state's site. For most early retirees, the Marketplace is the default long-term bridge, because unlike COBRA it can cover you for as many years as you need until 65.
3. Option Two: COBRA — Familiar, but Expensive
COBRA lets you keep the exact health plan you had at work, usually for up to 18 months after you leave a job at an employer with 20 or more employees. Your doctors, your network, and your deductible progress all stay the same.
The catch is the price. You pay the full premium — your share plus the share your employer used to pay — plus up to a 2 percent administrative charge. People are often startled to learn their "affordable" work plan actually cost $700 or more per person each month all along.
COBRA can still be the right choice in specific situations: you are mid-treatment and want to keep your doctors, you have already met your deductible for the year, or you are within 18 months of turning 65 and want the simplest possible bridge. Just go in knowing it is usually the most expensive option on the list.
4. Option Three: Joining a Spouse's Plan
If your spouse is still working and has employer coverage, joining their plan is often the simplest and cheapest bridge. Losing your own coverage when you retire usually counts as a life event that lets your spouse add you outside their employer's open enrollment — but the window is short, commonly 30 days, so put it on the calendar before your last day of work, not after.
5. The Subsidy That Changes the Math: Premium Tax Credits
Here is the feature that surprises many early retirees. Marketplace savings are based on your household income in the year you are covered — not on what you earned while working. When a salary stops, your income may drop sharply, and that can qualify you for a premium tax credit that lowers your monthly Marketplace premium, sometimes by a great deal. People with lower incomes may also qualify for extra savings on deductibles and copays, available only on Silver plans.
A few honest cautions. The credit is based on an estimate: if your income turns out higher than expected (a part-time job, a big investment sale, a Roth conversion), you may have to repay some of it at tax time. The detailed rules have changed more than once in recent years, so run your own numbers at HealthCare.gov with your best income estimate, and update the Marketplace if your income changes mid-year.
6. Special Enrollment: When Life Changes Mid-Year
You do not always have to wait for November. Certain qualifying life events open a special enrollment period, usually lasting about 60 days. Retiring and losing job-based coverage is one of the most common triggers. Marriage, moving, and losing other coverage can also qualify. If you are retiring mid-year, this window — not the fall open enrollment — is likely the one that matters for you, and it starts counting down from the day your work coverage ends.
One option you will see advertised deserves a caution flag. Short-term health plans can look inexpensive, but they are not ACA plans: they can refuse you or exclude conditions you already have, often cap what they pay out, and do not have to cover the essential benefits Marketplace plans must include. For a healthy person buying a few months of bare-bones protection they may have a place, but they are a risky foundation for the gap years, when the odds of actually needing care are not small.
7. How to Choose: Compare the Total Cost, Not Just the Premium
- Count the years. More than 18 months to 65? COBRA alone cannot get you there; the Marketplace or a spouse's plan can.
- Add it all up. Premiums plus deductible plus the out-of-pocket maximum — the cheapest premium is not always the cheapest year.
- Check your doctors and prescriptions. Confirm your providers are in-network and your medications are covered before you enroll.
- Estimate your retirement income honestly. It drives your subsidy, and the subsidy drives everything else.
Key Takeaway
Retiring before 65 leaves a gap, but it is a bridgeable one. Marketplace plans can cover the whole distance and may come with income-based premium tax credits that make them far more affordable than expected; COBRA preserves your work plan for up to 18 months at full price; a spouse's plan is often simplest when available. Compare total yearly cost and your doctors' networks — and mind the enrollment windows, because they are short and strict.
This article was written with the help of generative AI.
For general information only, not medical advice.
Consult a qualified professional for your situation.
