June 11, 2020 · Financial Planning, Insurance, Retirement

Health Insurance Before Medicare: Options

Retiring before 65? Compare health insurance options after retirement and before Medicare, and how bridge-year income may affect Marketplace subsidies.

If you leave work before 65, you generally have several ways to cover the gap until Medicare starts: employer, retiree or spouse coverage, COBRA, a Marketplace plan, or part-time work that offers benefits. Cost, networks and eligibility vary by situation, and each option has trade-offs worth comparing before your current coverage ends.

Last updated October 29, 2026. This guide is educational and is not a recommendation of any plan, insurer or product. Rules, prices and enrollment dates change, so confirm current details with the official sources listed at the end and with a licensed insurance or tax professional.

How Long Is the Gap Between Retirement and Medicare?

Medicare generally starts at 65. Medicare.gov says your Initial Enrollment Period lasts 7 months: it starts 3 months before the month you turn 65 and ends 3 months after that month.[1] If you leave work at 62, you may need to arrange your own coverage for roughly three years, while a retirement at 64 may leave a much shorter gap.

The trade-off of waiting to sign up is a possible cost. If you miss your Initial Enrollment Period, you may have to wait and pay a monthly late enrollment penalty for as long as you have Part B, so it helps to put the dates on your calendar early.[1] Our guide to Medicare open enrollment covers what to review once you are enrolled.

What Are the Options Before Medicare? A Quick Comparison

Option	Typical cost pattern	Main limitation
Employer or retiree coverage	Often shares the premium with a former employer; availability and cost vary widely	Offered by a minority of large employers, and plan terms can change
Spouse's employer plan	Depends on the employee premium share and whether spouses are covered	Tied to your spouse's job and plan rules
COBRA	Generally the full plan cost plus an administrative fee	Temporary, and can cost much more than active-employee rates
Marketplace plan	Premiums vary by plan; a premium tax credit may lower them based on income	Credit depends on household income; networks and deductibles vary
Part-time work with benefits	Usually an employee share of the premium, if offered	Many part-time jobs do not offer coverage, and earnings count as income
Health sharing arrangement	Monthly contributions vary by program	Generally not insurance, and payment of a bill is not guaranteed
Self-insuring	Paying for care as it comes up	A large, unexpected bill could affect your retirement assets

Can You Keep Employer, Retiree or Spouse Coverage?

Start by learning exactly what your employer offers before you separate from service. Retiree health benefits are not common: KFF reports that 25% of large firms (200 or more workers) that offer health benefits also offered retiree health benefits in 2026, compared with 27% in 2025.[2] Where retiree coverage exists, ask how long it lasts, what it costs, and whether the employer can change it.

If you do not have retiree coverage, check whether your spouse is still working and whether their plan covers spouses. A spouse's plan can be a practical bridge. The trade-offs are that you may pay a share of the premium, the network and deductible may differ from what you are used to, and your coverage depends on your spouse's job staying in place.

How Does COBRA Work, and What Does It Cost?

COBRA lets you continue the group coverage you had at work for a limited time. For a termination of employment, the Department of Labor lists the maximum period as 18 months.[3] The benefit is continuity: you may keep the same plan and, in many cases, the same doctors. The cost is the catch. You generally pay the full premium, including the share your employer used to pay, plus an administrative fee, and the plan may charge up to 102 percent of its cost.[3][4]

COBRA is also temporary, so it often fills only part of the gap. If you drop COBRA voluntarily outside Open Enrollment, HealthCare.gov says you generally cannot use a Special Enrollment Period to join a Marketplace plan instead, although one applies when your COBRA coverage runs out.[5]

How Does Marketplace Coverage Work in New York?

Losing job-based coverage when you retire qualifies you for a Special Enrollment Period. HealthCare.gov says you can apply any time from 60 days before to 60 days after your separation date.[5] NY State of Health lists loss of health insurance as a qualifying life event and says you generally must report it within 60 days.[8] New York residents shop through NY State of Health, the state's marketplace, while residents of states without their own marketplace use HealthCare.gov.

Outside a Special Enrollment Period, you enroll during Open Enrollment. As of October 29, 2026, HealthCare.gov lists Open Enrollment as November 1 to January 15, with December 15 as the last day to enroll for coverage that starts January 1.[6] The New York State Department of Health announced on October 28, 2026 that Open Enrollment for 2027 coverage in New York runs from November 1, 2026, through January 31, 2027, and encourages enrolling by December 15, 2026 for coverage that begins January 1, 2027.[7]

A Marketplace plan can serve as a bridge, and HealthCare.gov says you can cancel it once your Medicare coverage starts.[5] The trade-offs are that networks, deductibles and out-of-pocket costs differ by plan, and a premium tax credit depends on income and may not be available once you are eligible for Medicare.[10]

Is Part-Time Work Worth It for the Health Benefits?

Some retirees pick up part-time work they enjoy more than their old career, and some employers offer health insurance to part-time staff. If one does, the coverage may be worth weighing alongside the pay. The limitations are that many part-time roles do not include benefits, eligibility rules vary by employer, and the income you earn counts toward the household income figure discussed below. Our article on working in retirement looks at other considerations.

What About Health Sharing Plans and Self-Insuring?

Two alternatives come up less often, and both carry more risk than the options above.

Health sharing plans: Members contribute toward one another's medical costs. These arrangements are generally not insurance, so the rules, exclusions and limits are set by each program, and payment of a particular bill may not be guaranteed. By comparison, every Marketplace plan covers a defined set of essential health benefits.[12] Read the program's rules carefully before relying on it.
Self-insuring: Paying for care as it arises avoids premiums, but one illness or accident could affect the retirement you have planned for, even over a short period. If you are considering it, ask an attorney how your state treats your assets if a large bill goes unpaid.

How Could Bridge-Year Income Affect Marketplace Subsidies and Roth Conversions?

For households with large pre-tax balances, the years between retirement and required distributions often have lower earned income, and that can make them a time to look at Roth conversions. The same years are when Marketplace subsidies may depend on the income you report, so the two decisions can pull against each other.

The Marketplace looks forward. HealthCare.gov says savings are based on your expected household income for the year you want coverage, not last year's income, using modified adjusted gross income (MAGI).[9]
Retirement withdrawals can count. HealthCare.gov says to include most IRA and 401(k) withdrawals, but not qualified distributions from a designated Roth account.[9]
A conversion adds taxable income. IRS Publication 590-B says conversion distributions are generally included in gross income, which means a conversion could raise your MAGI for that year.[11]
There is an income limit. As of October 29, 2026, the IRS says a household may be eligible for the premium tax credit if its income is at least 100 percent but not more than 400 percent of the federal poverty line for its family size. Above 400 percent, no credit is allowed and any advance payments made for you must be repaid. Congress temporarily removed the upper limit for tax years 2021 through 2025.[10] The rules could change again, so check the year you are enrolling for.
Estimates can be wrong. The IRS says advance credit payments are reconciled on your tax return, so a difference between your estimate and your actual income can affect your tax bill, and it cautions households near the 400 percent limit to choose their advance payments carefully.[10]

The trade-off runs both ways. Converting in a lower-income year may let you fill lower tax brackets before required distributions begin, but the added income could reduce or eliminate a premium tax credit for that year. Spacing conversions or coordinating them with coverage timing may be worth a closer look. This is educational information, not a recommendation to convert, and a tax professional can review your return. Our guide to Roth conversion pros and cons explains the tax side, and our services page describes how retirement income and tax planning are coordinated.

Quick Answers on Health Insurance Before Medicare

How long can I keep COBRA?

For a termination of employment such as retirement, the U.S. Department of Labor lists the maximum COBRA period as 18 months.[3] You generally pay the full premium, including the share your employer used to pay, plus an administrative fee, and the plan may charge up to 102 percent of its cost.[3][4] If you drop COBRA voluntarily outside Open Enrollment, you generally cannot use a Special Enrollment Period to join a Marketplace plan, although one applies when your COBRA coverage runs out.[5]

What happens if I retire at 62?

Medicare generally begins at 65, so retiring at 62 may leave a gap of about three years in which you arrange your own coverage.[1] Common choices include a spouse's employer plan, COBRA for up to 18 months, or a Marketplace plan, and some households use more than one in sequence. Because COBRA is temporary, it can help to map the whole period before you retire rather than month by month.[3]

Can I get a Marketplace plan if I retire in the middle of the year?

Generally yes. Losing job-based coverage qualifies you for a Special Enrollment Period, and HealthCare.gov says you can apply any time from 60 days before to 60 days after your separation date.[5] New York residents apply through NY State of Health, which generally asks you to report a qualifying life event within 60 days.[8] The plans available and any premium tax credit depend on your location and household income.

Do Roth conversions affect Marketplace premiums?

They may. HealthCare.gov bases savings on your expected household income for the coverage year and counts most IRA withdrawals, and a Roth conversion generally adds taxable income for that year.[9][11] Because the premium tax credit is not allowed when household income is above 400 percent of the federal poverty line, a conversion could change the credit you receive.[10] This is not a recommendation to convert, and a tax professional can review your situation.

Questions to Bring to a Planning Conversation

What date will my current coverage end, and which options are open to me before and after that date?
Does my spouse's employer plan cover me, and for how long?
What household income do I expect for each year until Medicare begins, and which sources will count toward it?
Would a Roth conversion in one of those years change my Marketplace premium tax credit, and what are the other tax trade-offs?
When does my Medicare Initial Enrollment Period begin, and when should I cancel any bridge coverage?

Talk It Through

Choosing bridge coverage is one piece of turning savings into retirement income, and it is easier to compare the options before a paycheck stops. If you would like to talk through how coverage and income fit together, start with a 30-minute introductory conversation. You can read about who I help and how the firm charges on the fees page beforehand.

Sources

All sources accessed October 29, 2026.