What Is the Best Strategy for Health Insurance When Retiring Before 65?

Retiring before you turn 65 can create a health insurance coverage gap, as your work-based health insurance plan may end before you become eligible for Medicare. You may have options for extending your employer-sponsored coverage, or you may need to find health insurance for early retirement from another source, such as Medicaid or the Health Insurance Marketplace.

Read on to learn more about early retirement and health insurance, including which coverage options are likely to be the most affordable in the early phases of your retirement.

On This Page

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  What Happens to My Health Insurance After I Retire?

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  Should I Start Shopping for Health Insurance Before Retiring?

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  What Types of Health Insurance Should I Look For if I Plan To Retire Early?

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  Health Insurance Options for Early Retirees

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  What Health Insurance Options Are There for Retirees Over 65?

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  How To Find Out if I Qualify for Financial Help

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  Health Insurance for Early Retirement FAQs

What Happens to My Health Insurance After I Retire?

What happens to your health insurance after you retire depends on the type of coverage you have. If you are covered by a group health insurance plan through your employer, then your coverage will usually end upon your retirement. However, if you have a separate health plan that isn’t linked to your employment — such as a plan purchased through the Marketplace — then your coverage will continue even after you retire.

If you lose your job-based insurance after retiring, you will qualify for a special enrollment period, allowing you to sign up for Marketplace coverage outside of the annual open enrollment period.^[1]

What Happens to My Health Insurance if I Retire Early?

Retiring early can be particularly problematic because it may create a health insurance gap, during which you are not eligible for employer-sponsored health insurance or Medicare. The exception to this is if your employer continues to offer you health insurance benefits after you retire. However, only about 20% of large employers offer retiree health coverage as of 2023.^[2]

Meanwhile, many of the companies that do provide retiree health benefits choose to do so through Medicare Advantage plans, which combine Original Medicare with prescription drug coverage and often other optional benefits.^[2] As a result, it’s possible that you can’t qualify for your employer’s retiree health plan unless you are eligible for Medicare.

Should I Start Shopping for Health Insurance Before Retiring?

While not technically mandatory, it’s generally beneficial to shop for and purchase health insurance before retiring. Once your work-based coverage ends, you have 60 days to enroll in a new Marketplace plan, which may give you plenty of time to shop around. However, your new coverage won’t take effect until the first day of the month after you select a plan, so it’s best to start shopping around before your current plan ends to avoid a lapse in coverage.^[1]

What Types of Health Insurance Should I Look For if I Plan To Retire Early?

When you retire early, it’s best to look for major medical insurance, which refers to plans that comprehensively cover both preventive and curative health care services. These differ from supplemental health insurance plans — like critical illness or hospital indemnity insurance — which may provide limited coverage for certain medical expenses but can’t ensure complete protection against all of the diseases and injuries covered by traditional health plans.

Health Insurance Options for Early Retirees

There are several different types of health care insurance for early retirees to consider, depending on their circumstances. Keep reading to learn about some of the best health insurance options for retirees.

Insurance Through a Spouse or Significant Other

If your spouse or domestic partner is still employed, it’s worth checking whether you are eligible for coverage through their employer after you retire. On average, businesses cover about 70% of the premiums for health insurance plans covering employees and their families, so staying on an employer-sponsored plan — if possible — is often the most affordable option.^[3]

Marketplace

Upon retiring, you can shop for insurance coverage through the federal Affordable Care Act (ACA) Marketplace or your state’s equivalent health exchange. While you won’t experience any employer contributions toward your premiums, you may qualify for other income-based subsidies, such as premium tax credits that lower your monthly premium payments or cost-sharing reductions that lower your out-of-pocket costs when you receive care.^[4]

Keep in mind that the fact that you are no longer working doesn’t necessarily mean you have no income, which means you won’t necessarily qualify for generous subsidies on the Marketplace. For example, Social Security benefits and payments from many types of pensions or other retirement accounts count as income when determining eligibility for Marketplace subsidies.^[5]

Other Private Health Insurance

Alternatively, you may be able to purchase private health insurance directly from an insurance company rather than shopping through the Marketplace. That said, you can’t use premium tax credits or cost-sharing reductions to lower the costs associated with an off-Marketplace plan. In addition, plans sold outside of open enrollment usually don’t meet the ACA’s minimum essential coverage standards.^[6]

Medicaid

You can sign up for free or low-cost health care coverage through Medicaid at any time if you meet your state’s eligibility requirements — which generally involves having little income or being elderly or disabled. Even if your income is too high to qualify for Medicaid, any dependents you have under the age of 19 may qualify for comparable coverage through the Children’s Health Insurance Program (CHIP) if you can’t afford private insurance for them.^[7]

COBRA

The Consolidated Omnibus Budget Reconciliation Act (COBRA) enables you to stay on your employer-sponsored health plan for up to 18 months after retiring. However, COBRA coverage can be very expensive because your employer generally won’t contribute toward your premium payments, leaving you on the hook for your entire health insurance bill.^[8]

Also, you may have to pay an additional administrative fee equal to 2% of your COBRA health insurance premium.^[8]

Part-Time Employment

Rather than keeping your full-time job until age 65 to avoid going uninsured, one possible compromise is to retire and find a part-time job that offers health insurance, allowing you to stay covered while taking on a less stressful workload. That said, this option may not always be available, as less than 20% of part-time employees receive health insurance benefits through their own employers.^[9]

Health-Share Plans

Another way to receive coverage for medical expenses after you retire is to participate in a health-share plan — also known as a health care sharing ministry. Health-share plans function similarly to traditional health insurance plans in some ways, such as requiring you to cover a portion of your own health care costs out of pocket each year before qualifying for coverage.^[10]

Nevertheless, health-share plans are not officially classified as insurance, so they are not required to cover preexisting conditions or any other services that ACA-compliant health plans must cover. Additionally, health care sharing ministries are often religious organizations, so you may only be able to enroll if you are willing to sign a statement of faith.^[11]

What Health Insurance Options Are There for Retirees Over 65?

Individuals who wait to retire until age 65 or later can qualify for government-funded health care coverage through Medicare. Medicare Part A is free if you or your spouse spent at least 10 years working and paying Medicare taxes. Meanwhile, optional Medicare Part B coverage costs between $185 and $628.90 per month in 2025, depending on your income in 2023.^[12]

Certain other coverage types may also be available after you retire, including Medicaid. In fact, some insurance carriers offer both Medicare and Medicaid benefits through Dual Eligible Special Needs Plans (D-SNPs).^[13] Conversely, you generally cannot buy a Marketplace plan if you are eligible for Medicare unless you have to pay a premium for Medicare Part A.^[14]

How To Find Out if I Qualify for Financial Help

By entering your state, household information and annual income on the federal Marketplace website at HealthCare.gov, you can find out whether you are eligible for subsidized coverage on the Marketplace or publicly funded health insurance.[15] You may also be able to check your state’s Medicaid website for specific guidance on how you or your loved ones can qualify for Medicaid or CHIP coverage.