COBRA continuation
Keeps the exact plan, the exact network and any deductible you have already met this year — at the full premium plus a 2% administration fee. Strong if you are mid-treatment or close to 65. Rarely the cheapest.
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Retirement & Pre-Medicare CoverageRetiring before 65? Mind the gap.
Medicare starts at 65. If you stop working before that, every month in between is yours to cover — and for most people it is the single largest unbudgeted expense in the retirement plan.
Why it matters
Why early retirees are quoted far too high
Most people approaching retirement price this by looking at what their employer plan costs in total, or by taking a COBRA quote at face value, and conclude that retiring at 62 is unaffordable. Then they work three more years they did not want to work.
That conclusion is frequently wrong, and it is wrong for a specific reason: Marketplace subsidies are based on taxable income, not on wealth. A retiree with a substantial portfolio and modest taxable withdrawals can look, to the Marketplace, like a low-income household — and be priced accordingly.
- Premium tax credits are assessed on MAGI — taxable income — not on savings or net worth
- Qualified Roth withdrawals do not count toward MAGI; traditional IRA and 401(k) withdrawals do
- Return of your own basis in a taxable account is not income — only the gain is
- Social Security counts toward MAGI in full for Marketplace purposes, even the untaxed portion
- A large Roth conversion in the wrong year can erase an entire year's premium credit
- COBRA lasts 18 months — it only reaches 65 if you retire at 63 and a half or later
- Missing your Part B window creates a premium penalty that lasts the rest of your life
What makes this hard
What makes the pre-65 years hard.
- The gap is longer than people thinkRetiring at 62 is three full years of self-funded coverage. At 60 it is five. It is usually the largest single line item in an early retirement plan and the one least often costed properly.
- COBRA looks easy and runs outEighteen months is the standard maximum. Retire before 63 and a half and COBRA cannot carry you to Medicare, which means arranging a second plan anyway — after your options have narrowed.
- Your income is now a choiceWhich account you draw from decides your MAGI, and your MAGI decides your subsidy. Almost nobody is told that these two decisions are connected until after the year is over.
- One deadline with permanent consequencesA Marketplace plan does not protect you from the Part B late-enrollment penalty. Miss the seven-month window around your 65th birthday and the surcharge follows you for life.
Coverage options
What is actually available in the gap
Four routes between your last day of work and your Medicare card. Most people are only ever shown the first one.
ACA Marketplace with credits
Leaving a job is a qualifying life event, opening a 60-day special enrollment period. For a retiree whose taxable income has just dropped sharply, this is very often dramatically cheaper than COBRA for comparable coverage.
Usually the best valuePrivate off-Marketplace plans
Priced outside the exchange on different factors and never listed on HealthCare.gov. Worth comparing if your withdrawals put you above the subsidy line, where the credit is now zero rather than merely reduced.
Above 400% FPLEmployer retiree coverage
If your employer offers it, compare it rather than assuming it wins. Some retiree plans are excellent. Some cost more than a Marketplace Gold plan for a narrower network, and accepting one can affect your subsidy eligibility.
Compare, do not assume
Why Saintellus
Why people planning retirement work with Saintellus
The coverage decision and the withdrawal decision are the same decision. Handled separately, they cost people thousands a year without anyone noticing.
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We cost the whole gap, not one year
Sixty to sixty-five is a plan, not a purchase. We map every year to your 65th birthday, and your spouse's, so there are no surprises in year three.
We show you where the cliff sits
You get the actual dollar figure at which your household loses the entire premium credit, before you decide which account to draw from in January.
We coordinate with your advisor
Withdrawal sequencing belongs to your financial planner and your CPA. We give them the number that matters and let them work around it rather than guessing at it.
We hand you off to Medicare cleanly
We track your Part B window, tell you when to act, and make sure the bridge plan ends the day Medicare begins — with no gap and no overlap you paid for twice.
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What would coverage cost until Medicare starts?
Tell us your ZIP and your age and we will show you what the gap actually costs — including the credits most retirees are certain they earn too much to receive. About 60 seconds.
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Situations we see
Situations we see with retirees
Recurring situations from this line of work — described as patterns, not as client quotes. Verified client reviews appear further down.
Three more years than they wanted
A couple prices retirement at 62 using the full cost of the employer plan, concludes it is unaffordable, and works to 65 — without ever checking what their post-paycheck income would have qualified for.
The January withdrawal
A retiree takes a single large IRA distribution to fund a home repair, crosses 400% of the poverty level for the year, and repays the entire premium credit at filing.
COBRA that stopped short
Someone retiring at 61 elects COBRA assuming it bridges to Medicare. It ends at 62 and a half, and a second plan has to be arranged mid-year with fewer options than before.
The younger spouse
A 65-year-old moves to Medicare and the household plan ends with it, leaving a 59-year-old spouse uninsured in the same month nobody had planned for.
Assets mistaken for income
A retiree with a substantial portfolio assumes savings disqualify them from any credit. Marketplace eligibility looks at realised income, not net worth, and they had been eligible for years.
The Part B surcharge
A Marketplace plan felt like adequate coverage, so Part B was left until later. The late-enrollment penalty is now attached to the premium permanently.
Access to major U.S. carriers
Carrier names are trademarks of their respective owners. Saintellus Health Advisory is an independent advisor.
The number that decides everything
For everyone under 65 buying their own coverage, one figure determines the premium: modified adjusted gross income, as a percentage of the federal poverty level. For a worker it is simply salary and there is nothing to decide. For a retiree it is mostly a choice — which account you draw from, and how much you realise this year.
That makes the pre-65 years unusual. You have more influence over your health insurance premium than at any other point in your life, and the lever is not the plan. It is the withdrawal.
- Traditional IRA and 401(k) withdrawals are ordinary income and count in full.
- Qualified Roth withdrawals do not count toward MAGI at all.
- Taxable brokerage sales count only for the capital gain. Returning your own basis is not income.
- Social Security counts in full for Marketplace purposes — including the portion that is not taxable on your return.
- Roth conversions count as income in the year you convert. A large conversion and a Marketplace subsidy rarely coexist.
The cliff is back, and it matters most here. The enhanced credits that ran from 2021 through 2025 expired on January 1, 2026. There is now a hard edge at 400% of the federal poverty level: one dollar over and the entire year's credit disappears, with no cap on repayment. For a retiree, a single year-end IRA withdrawal can be the dollar that does it. Find your cliff figure before you decide what to draw.
Counting the gap properly
Medicare eligibility begins the first day of the month you turn 65 — earlier if your birthday falls on the first. Count backwards from that date to your intended last day of work and you have the length of the gap. Then count your spouse's separately, because theirs almost never ends on the same day as yours.
COBRA runs a maximum of 18 months in most circumstances. The arithmetic is simple and it surprises people: it only carries you to Medicare if you retire at roughly 63 and a half or later. Retire at 62 and COBRA covers the first eighteen months of a thirty-six month gap, leaving you to arrange a second plan anyway — at 63, on a mid-year timeline, with fewer options than you had on your last day of work.
The Part B deadline
Your Initial Enrollment Period for Medicare runs seven months: the three months before the month you turn 65, that month, and the three months after. Enrol in Part B during that window and there is no penalty.
Miss it, and the premium surcharge is 10% for every full twelve months you were eligible and not enrolled — charged for as long as you have Part B, which is the rest of your life. The trap is specific and worth stating plainly: only coverage from current employment defers Part B penalty-free. A Marketplace plan does not. COBRA does not. Retiree coverage does not. People who bridged the gap successfully sometimes stumble at the very end because the bridge felt like insurance and Medicare felt optional.
Find out what the gap actually costs Tell us your ZIP, your age and your spouse's, and roughly what you expect to draw this year. We will show you the real plans, the real credit, and the income figure that would cost you all of it.Common questions
What happens to my health insurance when I retire before 65?
Employer coverage normally ends on your last day or at the end of that month. Retiring is a qualifying life event, which opens a 60-day special enrollment period on the Marketplace, and you are separately offered COBRA. You are not required to take COBRA to keep coverage, and taking it is not always the cheaper route. Do not cancel anything until a replacement plan is approved with a confirmed effective date.
Do I qualify for an ACA subsidy if I have savings but little income?
Very possibly. Premium tax credits are calculated on modified adjusted gross income, not on assets. Savings, home equity and the balance of a retirement account are not counted — only what you actually realise as taxable income in the year. This is why retirees with substantial portfolios and modest withdrawals frequently qualify for meaningful credits, and why so many never apply.
Do IRA and 401(k) withdrawals count against my subsidy?
Traditional IRA and 401(k) withdrawals are taxable income and count toward MAGI, so they reduce your credit. Qualified Roth withdrawals do not count. Selling from a taxable brokerage account counts only for the capital gain, not for the return of your own basis. Which account you draw from therefore changes your premium, which is a conversation worth having with your financial advisor before January rather than in April.
Is COBRA or the Marketplace better when I retire?
It depends on three things: how close you are to 65, whether you are mid-treatment, and how much taxable income you expect this year. COBRA preserves your exact plan, network and deductible progress but charges the full premium with no subsidy. A Marketplace plan can be substantially cheaper for a retiree whose income has just dropped. Compare the total annual cost, not the monthly premium.
Does having a Marketplace plan let me delay Medicare Part B?
No, and this catches people out. Only active employer coverage, from your own or a spouse's current employment, lets you delay Part B without penalty. A Marketplace plan, COBRA and retiree coverage do not. Enrol during the seven-month window around your 65th birthday or you face a premium surcharge for the rest of your life.
What about my spouse if they are younger than me?
This is the most commonly missed part of the plan. When you turn 65 and move to Medicare, a younger spouse loses whatever household coverage you were both on and needs their own plan until they reach 65. Their coverage should be arranged before your Medicare start date, not after, and their income figure is calculated on the household.
Can I keep my doctors?
Sometimes, and it is worth checking before you choose rather than afterward. Networks differ between the exchange and private plans, and a plan that is cheaper on premium may not include the specialist you have seen for a decade. Give us the list of doctors and prescriptions and we will check them against each plan before you commit to anything.
When should I start planning this?
Six to twelve months before your last working day. The subsidy question depends on income for the calendar year you retire, which means a December retirement and a January retirement can produce very different first-year costs. That choice is still open to you until you make it.
Saintellus Health Advisory is an independent insurance agency licensed in 31+ states. Plan availability, pricing and eligibility vary by state, county, age and household. This page is general education and is not medical, tax or legal advice.
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