Retiring early? Here’s what you need to know about health care

How to plan for the period before Medicare.

Article published: October 16, 2023

In this article:

  • Retiring before you’re eligible for Medicare means you need to find other health insurance
  • Investigate health insurance options from your employer, including COBRA, before you retire
  • If you’re married and your spouse is still working, consider joining their plan
  • Part-time work at some major employers may be a good option for getting health care benefits

If you’re considering an early retirement, congratulations! You’ve been working and planning for this moment for a long time – but have you considered your health care coverage between retirement and Medicare eligibility? We’ll look at some of your options to make sure you have the coverage you need before you turn 65.


If there are expensive procedures you know you’ll need (common examples include knee and hip replacements), it could be a good idea to use sick leave for those while you are still working and have robust insurance coverage. What’s more, you’ll have more flexibility to pivot and adjust your plans if there are complications or unexpected developments compared to after you have already retired.


Most employers no longer offer health care coverage options to early retirees – but some still do. Check with your company to find out what it provides for its retiring employees.


One of the options your employer may be able to offer you is coverage under the Consolidated Omnibus Budget Reconciliation Act. COBRA allows you to keep your employer-provided health insurance, but you usually need to cover 100% of the cost of the coverage (employee and employer), plus an additional 2% administrative charge. Coverage under COBRA is generally available for 18 months, but some exceptions may be available to extend the period.

While COBRA is likely to be among the most expensive coverage options, it’s also the only one discussed here that allows you to pay for premiums using Health Savings Account money. So, if you have a large HSA balance, it might be a good choice for you.


If you’re married and your spouse is still working, one of your easiest (and often lowest-cost) options may be to join their plan. Most employers have an enrollment period during which you can sign up and select your insurance options. Contact your spouse’s benefits department to find out more about spousal coverage at retirement.


The Affordable Care Act established a public marketplace to provide options for those who are not yet eligible for Medicare. According to the KFF (formerly known as the Kaiser Family Foundation), nearly 27% of those aged 55 to 64 selected public marketplace plans for 2023 enrollment. Costs can vary widely, but the public marketplace may be worth investigating if you have a medical situation that may prevent you from getting coverage. (Under ACA, no one can be rejected for coverage, even with preexisting conditions.) Some people may qualify for government subsidies through premium tax credits under the 2022 Inflation Reduction Act. To see what plans may be available to you, visit or reach out to your planner for help with your health care options.


The private marketplace is also an option, albeit likely a more costly one. One possibility is to purchase a high-deductible plan that allows you to set up an HSA. Contributions to the HSA are tax-deductible and can be used to cover out-of-pocket expenses not covered by the insurance plan. Once you’re 65 and eligible for Medicare, you can no longer contribute to the HSA but you can still withdraw from the account to cover certain premiums and expenses. (The rules get more complicated if you don’t start Medicare until after age 65, so be sure to check the HSA contribution guidelines for your plan.)


Many retirees look to part-time work as a way to keep busy and active in a lower-stress environment. An added benefit? They are often able to access employer-provided health insurance. Many major retail companies offer coverage to part-time workers, including Starbucks, Costco, CVS and Staples. Some professional association memberships also offer coverage options, so that’s another option to investigate.

Of course, keeping active and fit is a key part of enjoying good health – and that’s the best insurance plan of them all.



If you're considering early retirement, a financial planner can help you identify the best options for your situation.

Neither Financial Engines Advisors, L.L.C. nor any of its advisors sell insurance products. Edelman Financial Engines affiliates may receive insurance- related compensation for the referral of insurance opportunities to third parties if individuals elect to purchase insurance through those third parties. You are encouraged to review this information with your insurance agent or broker to determine the best options for your particular circumstances.

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