Health Insurance Navigator

Medicare doesn't start until age 65, so retiring before then creates a coverage gap you need to fill. Your main options are: COBRA (continues your employer plan for up to 18 months, but you pay 100% of the premium plus a 2% admin fee — typically $600–$1,200/mo for a family), ACA Marketplace plans (subsidies available if your income is under 400% of the federal poverty level, roughly $62,900 single / $85,100 couple in 2025), a spouse's employer plan, or short-term health insurance. Planning this gap is one of the most important financial decisions in early retirement.

ACA premium tax credits reduce your monthly marketplace premium based on your income relative to the federal poverty level (FPL). If your income is between 100% and 400% FPL ($15,060–$60,240 for a single person in 2025), you qualify for subsidies. The Inflation Reduction Act extended enhanced subsidies through 2025, so even above 400% FPL you may pay no more than 8.5% of your income for a benchmark plan. Early retirees with no paycheck income can often structure their withdrawals to land in a favorable subsidy range.

Medicare has several parts. Part A (hospital) is free if you worked 40+ quarters (10 years). Part B (outpatient/doctor) costs $185/month in 2025 for most retirees (higher if income is above $106,000). Part D (prescriptions) varies by plan, averaging $40–$60/month. Most retirees add a Medigap supplement (Plan G is popular: $150–$300/month depending on age/state) to cover Part A/B gaps, or enroll in a Medicare Advantage plan instead (~$0–$50/month with $0 premium options in many markets). Total Medicare cost for a typical retiree: $300–$550/month.

If you itemize deductions, health insurance premiums paid out-of-pocket may be deductible as medical expenses exceeding 7.5% of your adjusted gross income. This applies to ACA marketplace premiums, Medicare supplements, and long-term care insurance. For a full guide on how healthcare and LTC costs factor into your retirement tax picture, see the tax optimization guide on TaxStack.

Medicare doesn't cover long-term care — it's one of the biggest uninsured retirement risks. Planning for LTC (home care, assisted living, nursing home) should be part of your retirement health strategy alongside health insurance. Use the LTC Cost Projector on RetireStack to see what your potential LTC costs could be at 5, 10, 15, and 20 years.

Health insurance decisions in retirement go hand-in-hand with legal planning: healthcare proxies, living wills, durable power of attorney, and HIPAA authorizations ensure your coverage decisions are carried out as intended. See estate planning and elder law tools on LegalStack to understand what documents protect you and your family.

Yes, significantly. ACA marketplace premiums, Medicare Advantage plan availability, and Medicaid eligibility all vary by state and county. Some retirees choose to relocate specifically to lower their cost of living and healthcare expenses. Explore retirement community options by state on RealEstateStack to compare how location affects your overall retirement budget.