Early retirement · ages 55 to 64 Health Coverage for Early Retirees
Bridge the years between your last job and Medicare without overpaying, and without missing a deadline.
The Quick Answer: If you retire before 65, you can keep your job-based plan through COBRA, buy a Marketplace plan, or join a spouse's plan until Medicare starts. Leaving your job opens a Special Enrollment Period for a Marketplace plan, and your income may qualify you for tax credits [3]. Plan your Medicare start before you turn 65.
Your options before Medicare
- COBRA. You can usually keep your former employer's plan for up to 18 months, but you pay up to 102% of the full group rate [4]. If you drop COBRA early, outside open enrollment, that alone doesn't open a Special Enrollment Period for a Marketplace plan; one opens only when your COBRA coverage runs out [3].
- A Marketplace plan. Losing job-based coverage qualifies you for a Special Enrollment Period. You can apply from 60 days before to 60 days after your coverage ends [3]. Whether you qualify for premium tax credits depends on your income and household size [3].
- Retiree coverage or a spouse's plan. If your former employer offers retiree coverage, or your spouse has job-based coverage, compare it with the options above.
- Direct Primary Care with another layer. Some early retirees pair a Direct Primary Care membership with a Marketplace plan or a health sharing program for larger medical events.
Important: Direct Primary Care is a membership arrangement with a doctor for primary care services. It is not insurance and doesn't meet ACA minimum coverage requirements on its own. Health sharing plans are not insurance. Sharing of medical costs among members is voluntary and is not guaranteed the way payment is under an insurance contract.
State availability: Health sharing programs are not available in every state. The program we most often recommend to individuals and families, which may pay us a referral fee, is not currently accepting new members in California, New Mexico, Pennsylvania, Vermont, or Washington. Ask an advisor about options where you live.
Medicare: plan your start date
Plan your Medicare start before you turn 65. Your first chance to sign up starts 3 months before the month you turn 65 and ends 3 months after it. If you miss it, you may wait months for coverage and pay a lifelong penalty: an extra 10% on Part B for each full year you could have enrolled but didn't [1]. A separate Part D drug penalty can apply if you go 63 days or more without creditable drug coverage [1]. COBRA and health sharing don't delay these deadlines. If you stop working and choose COBRA, your window to sign up for Part B still starts when you stop working [2]. Health sharing isn't insurance, so it generally doesn't count as job-based coverage for delaying Part B, or as creditable drug coverage for Part D. For Medicare plan choices, visit Medicare.gov or call 1-800-MEDICARE, or contact your State Health Insurance Assistance Program (SHIP) for free, unbiased counseling.
Frequently asked questions
Can I buy a Marketplace plan if I retire before 65?
Yes. Losing job-based coverage qualifies you for a Special Enrollment Period, and you can apply from 60 days before to 60 days after your coverage ends. Your income and household size decide whether you qualify for tax credits.
Should I take COBRA or a Marketplace plan?
It depends on your health needs, your doctors and your income. COBRA keeps your current plan but can cost up to 102% of the full group rate. If you drop COBRA early outside open enrollment, that doesn’t open a Special Enrollment Period, so compare both before you choose.
Does health sharing count for delaying Medicare Part B?
No. Health sharing isn’t insurance, so it generally doesn’t count as job-based coverage for delaying Part B, or as creditable drug coverage for Part D.
When should I sign up for Medicare?
Your first chance to sign up starts 3 months before the month you turn 65 and ends 3 months after it. For Medicare plan choices, visit Medicare.gov, call 1-800-MEDICARE, or contact your State Health Insurance Assistance Program (SHIP).
REFERENCES
[1] Medicare.gov. "Avoid late enrollment penalties." https://www.medicare.gov/basics/costs/medicare-costs/avoid-penalties
[2] Medicare.gov. "When can I sign up for Medicare?" https://www.medicare.gov/basics/get-started-with-medicare/sign-up/when-can-i-sign-up-for-medicare
[3] HealthCare.gov. "Health coverage for retirees." U.S. Centers for Medicare & Medicaid Services. https://www.healthcare.gov/retirees/
[4] U.S. Department of Labor. "COBRA Continuation Coverage." DOL Employee Benefits Security Administration. https://www.dol.gov/agencies/ebsa/laws-and-regulations/laws/cobra