Ask About Your Bridge Coverage Options
Tell the AI your situation — age, retirement date, income, family size — and it’ll help you figure out which bridge coverage option makes sense for you.
The Coverage Gap: Why This Is a Real Problem
Medicare kicks in at 65. If you retire before 65 — whether at 62, 58, or earlier — you’re responsible for your own health coverage. This is the gap that surprises most early retirees and the single biggest financial variable in early retirement planning.
The cost swings are dramatic. The average employer pays $7,000–$14,000 per year toward employee health insurance. The moment you retire, you absorb all of that cost yourself. A 58-year-old couple going from employer coverage to COBRA or ACA can see their annual healthcare spend jump by $20,000 or more overnight.
The “healthcare cliff” is the abrupt cost increase when early retirees lose employer-sponsored health benefits. It’s one of the most underestimated variables in FIRE planning. Portfolios sized assuming low healthcare costs can be severely underfunded once actual insurance costs hit. Always model full bridge coverage costs in your retirement budget — not Medicare premiums.
Your 5 Bridge Coverage Options
[SEEK EXPERT ADVICE] Cost estimates are national averages for 2026 and vary significantly by age, family size, state, income, and health status. ACA subsidies depend on your specific Modified Adjusted Gross Income. Consult a licensed health insurance broker or certified financial planner before making coverage decisions.
Side-by-Side Comparison
| Option | Duration | Pre-existing Conditions | Cost Level | Best For |
|---|---|---|---|---|
| COBRA | Up to 18 months | Fully covered | High ($600–$1,200/mo) | Ongoing treatments; retiring 12–18 mo before Medicare |
| ACA Marketplace | Annual (renew each year) | Fully covered | Low–medium with subsidies | Most early retirees, especially those with managed income |
| Spouse’s Plan | As long as spouse works | Fully covered | Best deal available | Anyone whose spouse has employer benefits |
| Health Sharing | Month-to-month | Usually excluded | Low ($200–$600/mo) | Healthy individuals as supplement or last resort |
| Short-Term Plan | Up to 12 months | Excluded | Low ($150–$400/mo) | Very short gaps only; catastrophic backstop |
The ACA Subsidy Strategy for Early Retirees
ACA premium tax credits are based on your Modified Adjusted Gross Income (MAGI). Many early retirees — especially those in the FIRE community — have the ability to manage their MAGI to qualify for significant subsidies. This is legitimate tax planning, not evasion.
If you withdraw primarily from Roth accounts or live off taxable account gains below the capital gains threshold, your reportable MAGI can be very low — potentially qualifying you for premium tax credits worth thousands per year. Many FIRE practitioners plan their entire withdrawal sequence around maintaining ACA subsidy eligibility until Medicare at 65.
2026 ACA Subsidy Reference (Single Person)
- 100–150% FPL ($15,060–$22,590): Benchmark plan premium capped at 0–3% of income — effectively free or near-free.
- 150–250% FPL ($22,590–$37,650): Strong subsidies; premiums capped at 3–8% of income.
- 250–400% FPL ($37,650–$60,240): Moderate subsidies; premiums capped at 8–9.06% of income.
- Above 400% FPL ($60,240+): Subsidies phase out; full premium cost.
If your MAGI falls below 100% FPL, you may be ineligible for ACA subsidies and directed to Medicaid instead. In states that expanded Medicaid this is often fine, but in non-expansion states, you may fall into a coverage gap. If you’re managing income for ACA subsidies, keep MAGI above 100% FPL.
Special Case: Federal Employees Retiring Early
Federal employees who retire with at least 5 years of federal service can keep their Federal Employees Health Benefits (FEHB) coverage in retirement — with the same employer contributions as active employees. This is one of the best retirement health insurance situations in existence.
Unlike private-sector employees who must COBRA or ACA their way to Medicare, federal retirees maintain FEHB continuously. Most FEHB plans also provide worldwide coverage, making it excellent for those who want to travel or live abroad in retirement.
If you’re a federal employee considering early retirement, FEHB continuity is a major financial argument for doing it — the health insurance situation is dramatically better than the private sector equivalent.
Budgeting for Bridge Coverage
Healthcare is often the largest variable expense in early retirement. Here’s how to build it into your plan:
- Worst-case scenario: Budget $1,500–$2,500/month for a couple on COBRA or full-cost ACA (age 58–64). This is a real number.
- Best-case scenario: Highly subsidized ACA can bring couples to $200–$400/month with income management.
- Middle scenario: $600–$1,200/month for a couple with modest subsidies is a common realistic estimate.
- Don’t forget: Deductibles, out-of-pocket maximums, dental, and vision are separate costs even with health insurance.
- Model multiple years: Premiums increase as you age. A 55-year-old’s ACA premium will be ~40% higher by the time they hit 64.
[SEEK EXPERT ADVICE] Healthcare cost projections are highly individual and depend on your age, location, health status, income management strategy, and state Medicaid expansion status. Work with a fee-only financial planner and a licensed health insurance broker to build an accurate healthcare budget for your specific retirement plan.