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March 26, 2025 • 13 minutes
Updated April 2026 to reflect the expiration of enhanced ACA subsidies.
If you’re thinking about retiring at 62, health insurance is probably the expense that’s giving you the most pause. Health insurance at 62 in early retirement costs more than most people expect. Medicare doesn’t start until 65, which means three years of coverage you’ll need to figure out on your own. If that hasn’t been built into your financial plan, it can push back a retirement date that was otherwise within reach.
Here’s what healthy coverage costs in 2026, what changed with ACA subsidies, and how to plan around this so that it doesn’t throw off your early retirement timeline.
What you pay in health costs at 62 in early retirement depends on your coverage type, income, and where you live. The numbers below are 2026 figures.
ACA premiums at 62 are age-rated, so they run higher than what a 40-year-old pays for comparable coverage. The bigger issue for 2026 is what happened to subsidies.
From 2021 through 2025, enhanced premium tax credits reduced costs for Marketplace enrollees across most income levels. Those credits expired at the end of 2025. The “subsidy cliff” is back: federal help cuts off above 400% of the federal poverty level (FPL), which is roughly $62,600 for a single person seeking coverage in 2026 (based on 2025 FPL guidelines).
Early retirees drawing from investment accounts can land just above that line without much effort, and if they do, their annual premiums could more than double compared to 2025. Below that 400% FPL cutoff, subsidies are still available, but smaller than they were.
This puts more pressure on managing your Modified Adjusted Gross Income than at any point in the last four years. The strategies section below covers how to do that.
For a number you can actually use, run a scenario in the Boldin Planner to see how healthcare costs fit into your budget across the pre-Medicare years.
For most people retiring at 62, the choice for health insurance comes down to the ACA Marketplace, COBRA, or a spouse’s employer plan. Private insurance is available but typically the most expensive. The path that makes sense for you depends on your income, your health history, and how long you need to bridge the gap.
The Affordable Care Act is the most practical coverage path for most early retirees. Pre-existing conditions can’t be used to deny you coverage or raise your premiums, which matters when you’re 62 and have probably dealt with at least one health issue.
Your subsidy is based on your Modified Adjusted Gross Income. In most states that expanded Medicaid, eligibility runs from 138% to 400% of the federal poverty level. The 2026 Marketplace uses 2025 FPL guidelines for these calculations.
In states that didn’t expand Medicaid, the floor drops to 100% FPL. Use the KFF Health Insurance Marketplace Calculator to find your actual threshold by zip code.
The account sequencing question is where this gets interesting. Roth IRA distributions don’t count toward MAGI. Withdrawals from a traditional 401(k) or IRA do. If you have both, drawing from Roth accounts first can keep your MAGI below the thresholds that shrink or eliminate your subsidy. The difference between $55,000 and $65,000 in MAGI can be several hundred dollars a month in premiums. That’s worth the planning.
Below 250% FPL, you may also qualify for cost-sharing reductions on Silver plans, which cut your deductibles and out-of-pocket costs on top of the premium discount. Run different income scenarios for your zip code at the KFF Health Insurance Marketplace Calculator.
Leaving a job with group health coverage lets you stay on that plan through COBRA, typically for 18 months. Under COBRA, you’ll pay the full cost of the plan plus a 2% admin fee. Covered dependents (spouses and children) can qualify for up to 36 months if a second qualifying event occurs, such as the employee’s death, a divorce, or a dependent child aging off the plan.
Employees who get a Social Security disability determination before or within the first 60 days of COBRA can extend coverage to a total of 29 months. That term replaces the 18-month maximum, it doesn’t add to it. You’ll need to notify the plan within 60 days of the SSA ruling and before the 18-month period ends.
COBRA is expensive, but Boldin’s lead educator and financial wellness coach Nancy Gates points to a few situations where it’s useful.
“If you’re retiring mid-year and you’ve already met your deductible, or you’re dealing with high medical expenses and want to stay on a plan you know, COBRA can make real sense,” she says. “It’s a solid short-term option, just not a low-cost or long-term one.” Outside of those windows, the full-premium price tag is hard to justify.
COBRA works as a short-term setup. Retire at 63, use COBRA for 18 months while you sort out your ACA options, and transition from there. As a three-year solution, the cost is hard to defend.
If your spouse is still employed, their employer plan is likely your lowest-cost option. Adding a spouse to a group plan almost always undercuts individual ACA pricing, even at the family rate.
A lot of couples sequence early retirement around this: one person retires, the other stays employed a few more years partly for the health benefits. Running the actual numbers before you both leave is worth doing.
Private individual plans outside the ACA Marketplace offer year-round enrollment and no income requirements, but they’re more expensive than ACA plans for equivalent coverage and don’t have to follow ACA rules on pre-existing conditions. Short-term health plans fall into this bucket too. Price them as a reference point, but for most early retirees, ACA or COBRA will come out ahead.
Two strategies do most of the work: building a Health Savings Account (HSA) while you’re still employed and managing your MAGI to stay within ACA subsidy range. Together, they can reduce what you actually pay for health insurance at 62 and beyond by several hundred dollars a month.
If you’re still employed and have access to a high-deductible health plan, contributing to your Health Savings Account now is one of the best things you can do for your healthcare budget in retirement.
The tax structure is what makes it work. Contributions are deductible, growth is tax-free, and withdrawals for qualified medical expenses (deductibles, copays, prescriptions, dental, vision) are also tax-free. No other account gets that treatment on all three sides.
For 2026, the IRS limits are:
If both you and your spouse qualify for the catch-up, each of you needs a separate HSA to use it.
Once you’re retired, HSA funds cover out-of-pocket medical costs, COBRA premiums, and insurance premiums while on unemployment. ACA Marketplace premiums are the one thing you can’t pay directly from an HSA. Everything else qualifies, which substantially lightens your out-of-pocket load.
One timing point worth flagging: HSA contributions stop when you enroll in Medicare. Be deliberate about when you sign up, because enrolling a few months early can create contribution complications.
This gets glossed over in a lot of retirement content, but the dollar difference is large enough to take it seriously.
Your ACA subsidy is calculated from your MAGI. What drives it up: traditional IRA and 401(k) distributions, taxable interest and dividends, capital gains, and a portion of Social Security income. What doesn’t count: Roth IRA distributions and return of basis from after-tax brokerage accounts.
If you can cover living expenses in the early retirement years by drawing from Roth accounts or selling assets with low embedded gains, you can stay below the thresholds that cut your subsidy, qualifying for lower premiums and potentially cost-sharing reductions on Silver plans. It takes some up-front work on account sequencing. The Boldin Planner lets you model different drawdown paths and see how each one changes your income, taxes, and healthcare costs together.
Staying active as you age reduces the odds of chronic conditions that push up out-of-pocket costs over time, and physical activity correlates with lower dementia risk. But healthy habits don’t stop there.
Nancy Gates frames this broadly. “Retirement health isn’t just about the gym,” she says. “Physical activity, mental stimulation, meaningful relationships, and a sense of purpose all work together to help keep health care costs low. The retirees who stay engaged and healthy generally spend less.”
Those habits will pay dividends that compound across a retirement that could last 30 years or more.
Part-time work and health sharing ministries are both real options for some early retirees. They come with meaningful tradeoffs and neither is a substitute for a comprehensive coverage plan.
Some early retirees take a part-time job for one reason: the health benefits. A handful of companies extend coverage to part-timers, typically with a 20-hours-a-week floor and a probationary period:
If you’re considering some kind of part-time role in early retirement anyway, checking the benefits package before you accept an offer is worth doing.
Health care sharing ministries pool member contributions to cover each other’s medical expenses. Most are Christian-based. They operate outside standard insurance regulation, enrollment is open year-round, and monthly contributions tend to run lower than ACA premiums.
Some tradeoffs to note: these programs aren’t classified as insurance and have no legal obligation to pay any claim. Contributions are voluntary. There’s no regulatory backstop. They can work for people who are healthy and willing to accept the uncertainty, with the option to move to an ACA plan if something serious develops.
Before signing up, check member reviews, payment history, and the organization’s current financial standing. What’s “eligible for sharing” in the guidelines can be a lot narrower than you’d expect from something called health coverage.
The more established faith-based options:
It’s always a good idea to check the health insurance marketplace calculator as a cost baseline before committing to these options.
Health insurance at 62 is a real cost, and it’s a bigger planning variable than it’s been in years. But it’s also manageable.
Accounting for it properly means knowing your likely premiums at different income levels, building out the pre-Medicare years as their own budget phase, and sequencing withdrawals to stay within subsidy range.
The Boldin Planner helps you work through all of that. You can model the gap between retirement and Medicare with real cost assumptions, and see whether your plan holds before you commit to a date.
Many people who run these numbers find that retiring at 62 is more achievable than they thought. The question around healthcare costs tends to loom largest before you’ve worked through it.
Without a subsidy, ACA Marketplace premiums for a 62-year-old typically run $1,000-$1,800 per month in 2026. That’s the full-price number. If your income falls below 400% of the federal poverty level (roughly $62,600 for a single person in 2026), you may qualify for subsidies that bring it down. Run your actual zip code and income through the KFF Health Insurance Marketplace Calculator for a real figure.
Health insurance at 62 is available through the ACA Marketplace when you retire. Leaving a job is a qualifying life event that opens a 60-day special enrollment window. Insurers can’t use pre-existing conditions to deny coverage or raise your premiums.
For 2026 Marketplace coverage, subsidy eligibility uses 2025 FPL guidelines and cuts off at 400% of the federal poverty level (roughly $62,600 for a single person in 2026). In most states that expanded Medicaid, people below about $21,597 (138% FPL) qualify for Medicaid instead and aren’t eligible for Marketplace subsidies. In states that did not expand Medicaid, subsidy eligibility begins at 100% FPL (roughly $15,650), since there is no Medicaid coverage below that threshold.
HSA funds can’t be applied directly to ACA Marketplace premiums before Medicare. The exceptions are COBRA premiums and premiums paid while receiving unemployment benefits. Once you’re on Medicare, your HSA balance can cover Part B, Part D, and Medicare Advantage premiums tax-free.
Standard COBRA lasts 18 months. A second qualifying event during that period, like a divorce or a dependent aging off the plan, can push it to 36 months for dependents (spouses and children). Some states have mini-COBRA laws that extend similar rights to employees of smaller companies.
At the end of 2025, the enhanced premium tax credits that had held down ACA costs since 2021 expired and haven’t been renewed. For early retirees, that means the subsidy cliff at 400% of the federal poverty level (roughly $62,600 for a single person in 2026) is back in place. Anyone earning above that level pays full-price premiums, which for a 62-year-old can exceed $1,500 a month.
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