When I was 60 and had been running Money Talks News for nearly 25 years, I had a long conversation with a guy I’ll call Bob. He’d just sold his small business at 58 with what he felt was enough to retire on.
Bob had healthy savings, a paid-off house, and a clear plan.
Then his wife pulled up the cost of family health insurance through the Affordable Care Act (ACA) marketplace.
“Stacy, this is a four-figure number,” he told me on the phone. “Per month. We hadn’t even thought about it. We just assumed health insurance would be … I don’t know, less than this.”
That conversation has been repeated millions of times. The gap between leaving an employer plan and turning 65 is one of the biggest blind spots in retirement planning. People obsess over their portfolios for decades, then run smack into a health care bill they never modeled.
How big is this problem? According to Fidelity Institutional, citing U.S. Census Bureau data, the average retirement age in the United States is 63, but Medicare doesn’t start until age 65.
That’s a two-year coverage gap on average — and a whole lot longer for people who retire at 55 or 60.
It gets worse from there. According to Fidelity’s 2025 Retiree Health Care Cost Estimate, a 65-year-old retiring in 2025 can expect to spend an average of $172,500 on health care and medical expenses throughout retirement.
That’s per person, after Medicare kicks in. Add a spouse and you’re well over $300,000.
But the years before Medicare are when things really sting. Here are six ways to bridge the gap.
1. The ACA marketplace
For most early retirees, this is the default option. Private insurers sell individual plans through the ACA marketplace at HealthCare.gov regardless of preexisting conditions, and subsidies based on your household income can dramatically lower the price.
Here’s the catch for 2026 and beyond. The enhanced premium tax credits that held down ACA costs since 2021 expired at the end of 2025.
According to KFF, a 60-year-old couple making $85,000 (or 402% of the federal poverty level) would see yearly premium payments rise by over $22,600 in 2026, after factoring in an annual premium increase of 18%. The “subsidy cliff” is back, and it hits early retirees hard.
Translation: If you can keep your taxable income below 400% of the federal poverty line, you may still qualify for substantial subsidies. Income management — drawing more from Roth accounts and less from traditional IRAs in those gap years — has become a serious planning consideration.
2. COBRA from your former employer
If you leave a job that offered health insurance, federal law may allow you to stay on that exact plan for up to 18 months. The catch: You pay the full premium plus a 2% administrative fee, with no employer subsidy.
That usually means paying $700 to $2,000 a month or more for the same coverage that cost you $150 a month while you were working. It’s expensive, but the coverage is identical, the doctors are the same, and there are no surprises.
COBRA tends to make the most sense as a short-term bridge — say, three to six months while you shop for a permanent option.
3. A spouse’s employer plan
If your spouse is still working and has good employer coverage, this is often the cheapest option by a mile. Leaving your job is typically a qualifying life event that lets you join your spouse’s plan outside of open enrollment.
If you’re still in the workforce and your spouse plans to retire first, factor this in. Their early retirement may be much more affordable than yours.
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4. Health-sharing ministries (with eyes wide open)
These aren’t insurance. That’s the most important thing to understand. They’re cost-sharing arrangements typically organized around faith communities, where members pay monthly contributions and approved medical expenses get shared among the group.
The premiums look great compared to ACA marketplace prices — sometimes a third of the cost. That’s because they’re not insurance.
There’s no legal requirement that the ministry actually pay your bill. Pre-existing conditions are usually excluded entirely. Mental health and prescription coverage tend to be limited or nonexistent. And most ministries require members to sign a statement of faith and follow a lifestyle code.
That code matters. Many ministries refuse to share costs for anyone who smokes, drinks more than moderately, uses recreational drugs, or engages in what they define as risky health behavior.
Some won’t cover injuries from extreme sports. A few exclude pregnancies outside of marriage. Others restrict coverage if your weight or other health metrics fall outside their guidelines.
Read the bylaws before you sign up — not after. Some retirees have used these arrangements successfully for years. Others have been left holding catastrophic bills they thought were covered. If a stable, predictable safety net is what you need, this isn’t it.
5. A part-time job with benefits
A handful of employers — Starbucks, Costco, REI, UPS, and a few others — offer health insurance to part-time workers. For some early retirees, working 20 to 30 hours a week at a job they actually enjoy provides both health coverage and walking-around money.
It’s not glamorous. But $2,000 a month in equivalent benefits, plus a paycheck, can change retirement math in a hurry.
6. Plan your HSA bridge in advance
If you’ve got a health savings account (HSA) from your working years, you’ve got a tax-free pool of money you can spend on qualified medical expenses — including, in many cases, your ACA premiums if you receive unemployment compensation, plus your Medicare premiums starting at 65.
If you haven’t been maxing out an HSA, and you have several years before retirement, fix that. The triple tax advantage — deductible going in, tax-free growth, tax-free withdrawal for medical — makes the HSA arguably the most powerful retirement account in the tax code for people who can use one.
We’ve laid out the case in detail in “6 Reasons This Is the Best Type of Retirement Account out There.”
A few things to factor into your planning. Once you turn 65, the standard 2026 Medicare Part B premium will be $202.90 per month, an increase of $17.90 from $185.00 in 2025, according to the Centers for Medicare & Medicaid Services.
Higher earners pay more under the income-related monthly adjustment amount, or IRMAA, rules. Add Part D, possibly a Medigap plan, and your monthly premium runs $300 to $500 a month even after Medicare kicks in.
The takeaway from Bob’s story: Don’t model your early retirement budget without a realistic, current-year quote on health coverage.
Get on HealthCare.gov, run a quote at the income level you actually expect, and add it to your spreadsheet. If the number changes your timeline, better to know now.
For more on what Medicare actually covers — and the gaps that surprise people — check out retirement planning rules you might want to break, including the myth that Medicare handles everything.
