Retiring before 65: how to bridge healthcare coverage until Medicare
Medicare doesn’t start until 65. Retire even a few years earlier and you have to cover the gap yourself — and in 2026 that got harder, because the enhanced ACA subsidies expired and the old income cliff came roaring back. The good news for federal retirees: FEHB just keeps going, so the “gap” that terrifies private-sector early retirees often doesn’t apply to you. Here’s every bridge option, ranked, with the 2026 rules that now govern them.
1. The pre-65 problem
Medicare eligibility begins at 65 for almost everyone. That single fact shapes early retirement, because if you stop working at 58, 60, or 62, you have a stretch of years — sometimes many — where you’re too young for Medicare and no longer covered by a job. Going uninsured isn’t a real option at this age, when a single hospital stay can cost more than a year of premiums. So the question becomes: what bridges the gap, and what does it cost?
The answer depends enormously on who you are. Federal retirees have a built-in solution most people would envy. Private-sector early retirees face a tougher, more expensive puzzle — and in 2026 it got tougher still. We’ll cover both, because even federal retirees often have a spouse, a second career, or family members whose coverage runs through these same rules.
2. The federal superpower: FEHB has no gap
If you’re a federal retiree, here’s the headline: you probably don’t have a gap at all. Federal Employees Health Benefits coverage continues into retirement and for the rest of your life, with the government still paying its roughly 70–75% share of the premium — provided you meet the FEHB five-year rule (enrolled in FEHB for the five years immediately before you retire). A fed who retires at 57 simply keeps the same plan, same doctors, and same premium structure straight through to 65 and beyond.
This is genuinely rare. Only about 27% of large private employers offer any pre-65 retiree health coverage, and that share keeps shrinking. So while the rest of this guide spends a lot of time on COBRA and the ACA Marketplace, federal retirees should understand those mainly for a spouse or family member who isn’t covered by FEHB. For you, the bridge is usually just… staying enrolled.
The one way feds lose this advantage is by dropping FEHB in the five years before retirement. If you’re thinking of switching to a spouse’s plan late in your career, confirm you can still meet the five-year rule first — or you could forfeit lifetime FEHB.
3. The 2026 ACA cliff is back
For anyone bridging the gap with a Marketplace plan, 2026 brought a hard change. From 2021 through 2025, “enhanced” premium tax credits made ACA coverage dramatically cheaper and, crucially, removed the old income cap on subsidies. Those enhancements expired on January 1, 2026, after Congress failed to extend them. Two things happened at once: subsidies shrank, and the 400% of federal poverty level cliff returned.
The cliff is brutal in its simplicity. Earn one dollar over the threshold — roughly $62,600 for a single person or $84,600 for a couple in 2026 — and you lose all premium tax credit, not a reduced amount. For an older couple, crossing that line can swing a premium from a few hundred dollars a month to well over a thousand. Average premium payments for subsidized enrollees more than doubled for 2026. For early retirees, this turns income management from a nice-to-have into the central task of bridging to Medicare.
Just below the cliff, you may get thousands in subsidy. One dollar above it, you get nothing. That makes a Roth conversion or a capital gain that nudges you over the line extraordinarily expensive in a year you’re buying Marketplace coverage.
4. Your five bridge options
| Option | Best for | Watch for |
|---|---|---|
| FEHB continuation | Federal retirees who meet the five-year rule | No gap, government keeps paying its share — the gold standard. |
| Spouse’s employer plan | Anyone with a still-working spouse | Often the cheapest option; check whether the plan accepts you and the added cost. |
| COBRA | Short gaps (retiring within ~18 months of 65) | Keeps your exact plan, but you pay up to 102% of the full premium. |
| ACA Marketplace | Multi-year gaps without retiree coverage | Subsidies are income-tested; the 400% cliff is back in 2026. |
| Part-time / bridge job | Those who want coverage plus income | A job with benefits can carry you to 65; even a spouse’s part-time role may qualify. |
Short-term “limited duration” plans exist too, but they skip many protections and can deny coverage for pre-existing conditions, so they’re a last resort, not a real bridge. For most people the choice is FEHB (if you’re federal), a spouse’s plan, COBRA for short gaps, or the Marketplace for long ones.
5. Bridge calculator
Enter your planned retirement age, household size, estimated retirement income, and whether you have FEHB. The tool shows how long a gap you’re bridging, which options can span it, and whether your income keeps you under the 2026 ACA subsidy cliff.
Your situation
Gap length is exact; the ACA cliff uses 2026 thresholds (~400% of the federal poverty level). It doesn’t estimate actual premiums, which depend on age, location, and plan. Not insurance or tax advice — confirm at HealthCare.gov and with a professional.
6. Managing income to keep subsidies
If the Marketplace is your bridge, your modified adjusted gross income becomes a number you actively manage, not just report. Because the 2026 cliff cuts off all subsidy above roughly $62,600 (single) or $84,600 (couple), and early retirees often control where their income comes from, you have more levers than a working person does:
You can choose to spend from taxable savings or Roth accounts (which add little or nothing to MAGI) rather than pulling large pre-tax IRA distributions. You can time capital gains to land in years you’re not on a Marketplace plan. And you can scale back Roth conversions during your Marketplace years. The hard part is that these moves directly conflict with the other big gap-year plays — Roth conversions and harvesting gains at 0% both raise income, which can blow your subsidy. You usually can’t do both in the same year, so the decision is which is worth more: the subsidy you’d keep, or the conversion or gain you’d capture.
Low income protects your ACA subsidy; higher income lets you convert to Roth and harvest gains cheaply. Both are valuable, and they pull in opposite directions. Plan the bridge years deliberately — subsidy years and conversion years may need to be different years.
7. COBRA: the short bridge
COBRA lets you keep your former employer’s exact group plan for up to 18 months after you leave. Nothing about your coverage changes — same network, same doctors, same deductible — which makes it the smoothest option when it fits. The cost is the catch: you pay the entire premium, your old share plus what the employer used to pay, plus up to a 2% administrative fee, for as much as 102% of the full premium. That’s often a shock, because you never saw the employer’s share before.
Because of both the 18-month limit and the cost, COBRA shines as a short bridge — ideal if you retire within about a year and a half of turning 65, where it can carry you cleanly to Medicare. You generally have 60 days to elect it, and the election is retroactive, so some people wait and only activate COBRA if they actually incur claims. For a multi-year gap, though, the Marketplace is usually the cheaper path despite the 2026 subsidy cuts.
8. Common mistakes
| Mistake | The fix |
|---|---|
| Feds dropping FEHB before retiring | Breaking the five-year rule can cost you lifetime FEHB. Confirm eligibility before switching plans late in your career. |
| Ignoring the ACA cliff | A Roth conversion or gain that pushes MAGI $1 over 400% of poverty can erase thousands in subsidy. Model income before acting. |
| Treating COBRA as a long-term plan | It caps at 18 months and costs full freight. Use it for short gaps; price the Marketplace for longer ones. |
| Going uninsured to “save” | One serious illness can dwarf years of premiums. A bridge is non-negotiable at this age. |
| Missing the Medicare sign-up at 65 | Whatever bridge you use, enroll in Medicare on time at 65 to avoid permanent late penalties. |
9. Frequently asked questions
How do I get health insurance if I retire before 65?
Medicare doesn’t start until 65, so if you retire earlier you need to bridge the gap. The main options are: continuing employer or federal retiree coverage (federal retirees can keep FEHB for life if they meet the five-year rule), joining a working spouse’s employer plan, electing COBRA to continue your former employer’s plan for up to 18 months, or buying an individual plan on the ACA Marketplace. Federal retirees are in the best position because FEHB simply continues into retirement with no gap. For everyone else, the ACA Marketplace is usually the long-term bridge, while COBRA fits shorter gaps.
Do federal retirees have a gap before Medicare?
Usually not. This is one of the biggest advantages of federal employment. If you meet the FEHB five-year rule — being enrolled in FEHB for the five years immediately before retirement — your FEHB coverage continues seamlessly into retirement and for the rest of your life, with the government still paying its share of the premium. That means a federal retiree who leaves at 58 simply keeps the same FEHB plan until 65 and beyond, with no coverage gap and no need for COBRA or the ACA Marketplace. Private-sector early retirees rarely have anything comparable, which is why bridging the gap is mainly their problem, not yours.
What happened to ACA subsidies in 2026?
The enhanced premium tax credits that made Marketplace coverage much cheaper from 2021 through 2025 expired on January 1, 2026, after Congress did not extend them. Two things changed: subsidies became less generous, and the 400% of federal poverty level income cliff returned. Under the cliff, earning even one dollar over the threshold — roughly $62,600 for a single person or $84,600 for a couple in 2026 — means losing all premium tax credit. As a result, average premium payments for subsidized enrollees more than doubled for 2026. For early retirees on Marketplace plans, managing income to stay under the cliff is now a central planning task.
How long does COBRA last and what does it cost?
COBRA lets you continue your former employer’s group health plan for up to 18 months after leaving a job (sometimes longer in specific circumstances). The catch is cost: you pay the full premium — both your old share and the employer’s share — plus up to a 2% administrative fee, so up to 102% of the total premium. That makes COBRA expensive, but it keeps your exact plan, doctors, and deductible intact. It works best as a short bridge — for example, if you retire within 18 months of turning 65 — rather than as a multi-year solution, where the ACA Marketplace is usually cheaper.
How can I lower my ACA premiums as an early retiree?
The biggest lever is managing your modified adjusted gross income, because Marketplace subsidies are income-tested and, in 2026, cut off entirely above 400% of the federal poverty level. Early retirees often have flexibility over their income — choosing which accounts to draw from, how much to convert to Roth, and when to realize capital gains. Keeping taxable income under the cliff can mean the difference between a large subsidy and none at all. This creates real tension with other gap-year strategies like Roth conversions and harvesting gains, which raise income; you generally can’t maximize both at once, so you have to choose which is worth more in a given year.
- KFF, “How Will the Loss of Enhanced Premium Tax Credits Affect Older Adults?” (2026)
- Congressional Research Service, “Enhanced Premium Tax Credit and 2026 Exchange Premiums”
- Kitces, “Reducing ACA Premiums After the Enhanced PTC Expiration” (2026)
- Fidelity, “What to Do After ACA Premiums Go Up” (2026)
- U.S. Department of Labor, “Continuation of Health Coverage (COBRA)”
- HealthCare.gov, the federal ACA Marketplace