Healthcare in Early Retirement Calculator
Estimate your monthly health insurance cost from early retirement to Medicare at 65 — comparing COBRA continuation coverage to ACA marketplace plans with subsidy estimates.
Total Bridge-to-Medicare Cost Estimate
Why Healthcare Is the Biggest Early Retirement Expense Most People Miss
Most people planning for early retirement underestimate healthcare costs by using their current paycheck deduction as a benchmark. What they pay as an employee is a fraction of the full premium — their employer was silently covering 70%–80% of the actual cost. The full employer-sponsored family plan premium in 2024 averaged approximately $23,000/year. Employees saw maybe $5,000 of that. Early retirees see all of it.
For a couple retiring at 55, the bridge to Medicare at 65 can easily total $200,000–$400,000 in healthcare premiums alone — more than most people have saved in their entire career by age 35. This is not a reason to avoid early retirement, but it must be a central planning input, not an afterthought.
COBRA vs. ACA: Which Is Right for You?
COBRA lets you continue your employer's health plan for up to 18 months after leaving employment. You pay the full premium (employer + employee share) plus a 2% administrative fee. The advantage: network and coverage continuity; you keep your existing doctors and any in-progress treatments without disruption. The disadvantage: it's almost always more expensive than ACA plans.
ACA marketplace plans are the typical long-term solution for early retirees. Premiums are age-rated (older enrollees pay more) and are available regardless of health status. Premium Tax Credits (subsidies) dramatically reduce costs for early retirees who can manage their Modified Adjusted Gross Income (MAGI).
The ACA Subsidy Strategy for Early Retirees
ACA subsidies are income-based. A couple retiring at 55 with $60,000 in MAGI faces a benchmark silver plan premium cap of approximately $5,100/year (8.5% of income at the 400% FPL ceiling). Above $60,000, the premium cap slides to 8.5% of income with no cliff cutoff (the ARP extended this through 2025). Below $40,000, the cap drops to 3%–6% of income.
The key insight: not all income counts equally for ACA MAGI. Roth IRA withdrawals are not counted. Health Savings Account (HSA) distributions for qualified medical expenses are not counted. Municipal bond interest is not counted. Social Security benefits are only partially counted. Early retirees who front-loaded Roth conversions before retiring can live well while reporting relatively low MAGI — qualifying for substantial subsidies. This is one of the highest-value planning opportunities in the entire early retirement playbook.
Once you understand the healthcare cost, planning the income strategy to fund it becomes the next step. The 72(t) SEPP calculator can show whether penalty-free IRA distributions can cover healthcare costs before 59½. And part-time work — even a small amount — can cover the healthcare premium entirely while leaving the portfolio untouched, as the part-time work calculator demonstrates.
Frequently Asked Questions
How much does health insurance cost in early retirement?
COBRA runs $700–$2,000+/month for an individual, $1,800–$4,500+/month for a family. ACA silver plans for a 55-year-old average $600–$1,400/month before subsidies. After subsidies, an early retiree couple at $55,000 income might pay $300–$500/month. The difference between subsidized and unsubsidized ACA costs can exceed $1,000/month — income management is the single biggest lever.
Should I use COBRA or ACA?
ACA is almost always less expensive for early retirees, especially with subsidies. The main reason to start with COBRA: preserving your current medical team and coverage for in-progress treatments during the 18-month COBRA period. After COBRA expires, ACA is the only option until Medicare at 65.
How do ACA subsidies work?
Subsidies cap your benchmark silver plan premium at a percentage of income (0%–8.5%, depending on income relative to the Federal Poverty Level). Your subsidy equals the benchmark silver plan premium minus your cap. Early retirees who manage MAGI carefully — using Roth withdrawals, keeping capital gains in low-bracket years — can dramatically reduce the premium owed.
What does Medicare cost at 65?
Part A: free for most (those with 40+ work quarters). Part B: $185/month (2025 standard premium). Part D (drugs): $40–$80/month average. Medigap (Plan G): ~$150–$250/month at age 65. Total with Medigap: roughly $375–$500/month per person — significantly less than the ACA bridge years, especially without subsidies.
What if I have a health condition?
ACA plans cannot deny coverage or charge more based on health status (pre-existing conditions). This makes ACA particularly valuable for early retirees with health conditions — you pay the same premium as a healthy person of the same age, income, and location. This was not true before 2014, and it's one of the most consequential protections for the early retirement community.