Retirement is a milestone many Americans work toward, but it doesn’t always arrive on schedule. In fact, a recent Transamerica study found that 58% of workers retire earlier than expected—often due to circumstances beyond their control.
Whether your early retirement is by choice or chance, securing the right healthcare coverage is a top priority, especially if you’re not yet eligible for Medicare at age 65. The good news is you have several coverage options to consider, each with its own set of benefits and trade-offs.
#1: Workplace Insurance Options
If you’re retiring early, continuing health coverage through your (or your spouse’s) employer can be one of the most affordable and straightforward options—if it’s available. Group plans typically offer better rates thanks to economies of scale, and you won’t have to navigate the complexities of shopping for individual insurance.
That said, eligibility isn’t always guaranteed immediately, so you may still need interim coverage to bridge the gap.
Join Your Spouse’s Employer Plan
If your spouse is still working, joining their employer-sponsored health insurance may be a practical solution. Keep in mind that each employer has different rules around eligibility, enrollment windows, and plan costs.
Adding you to the plan could also increase your spouse’s premiums or result in higher out-of-pocket expenses, so it’s wise to evaluate how this might impact your overall retirement budget.
Work Part-Time or Full-Time for Benefits
More retirees are returning to work than ever before. In fact, nearly 1.5 million people who retired during the COVID-19 pandemic had rejoined the workforce by March 2022, according to research from the Federal Reserve Bank of St. Louis.
Taking on part-time or full-time work after retirement could grant you access to employer-sponsored health insurance. Some companies offer benefits to part-time employees, though you may need to meet minimum hour requirements or complete a probationary period before coverage begins.
This option can be a good fit if you’re open to staying active in the workforce while maintaining access to quality healthcare.
Leverage Retiree Health Benefits
Some employers—especially larger ones—offer health benefits to retired employees as part of their overall benefits package. According to 2024 data from KFF, 24% of large companies that provide health coverage also offer retiree health plans to eligible former workers.
These plans may cover a portion of your premiums and, in some cases, continue to supplement Medicare once you’re eligible. If your employer offers this benefit, it can be an excellent way to reduce your healthcare costs in early retirement.
#2: COBRA and Short-Term Health Insurance
If you only need coverage for a few years before becoming eligible for Medicare, COBRA or short-term health insurance may help bridge the gap.
COBRA Continuation Coverage
The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows certain retirees to temporarily continue their employer-sponsored health insurance after leaving their job. To qualify, your former employer must have had at least 20 employees on more than half of its typical business days in the prior calendar year—and you must have been enrolled in the health plan when you were employed.
If you’re eligible, you can usually extend your existing coverage for 18 to 36 months. You’ll receive a COBRA election notice shortly after your employment ends and have 60 days to decide whether to continue coverage. Covered family members may also qualify for continued benefits, even if you opt out.
While COBRA can be convenient, it’s not cheap. You’re responsible for the full premium plus a potential administrative fee, which typically totals $400 to $700 per month for individual coverage.
Short-Term Health Insurance
If COBRA isn’t available or doesn’t make sense for your situation, short-term health insurance may be a viable alternative. These plans are designed to fill temporary gaps and can provide coverage for up to 12 months, with the possibility of renewal for up to three years in some states.
However, short-term insurance isn’t available everywhere, and some states have banned its sale altogether. These plans also come with restrictions—for instance, eligibility may depend on your health and income, and coverage is often limited compared to ACA-compliant plans.
That said, short-term policies can be a lower-cost option for healthy individuals who only need coverage for a brief period. Just be sure to review the fine print so you understand what is and isn’t covered.
#3: ACA Marketplace Coverage
For many early retirees, the Affordable Care Act (ACA) marketplace is one of the most accessible and flexible options for securing health insurance before Medicare kicks in at age 65.
All ACA-compliant plans are required to cover 10 essential health benefits, including preventive care, mental health services, and prescription drug coverage. This ensures you’re not sacrificing quality or comprehensiveness, even with a temporary plan.
Open enrollment typically runs from November through January, though specific dates vary by state. If you retire outside of this window, you may still qualify for a Special Enrollment Period due to life changes such as:
- Losing your existing health coverage
- Marriage, divorce, or other household changes
- Relocating to a different state or region
In 2025, the average monthly premium for a Silver plan for a 60-year-old is around $1,231, while catastrophic plans average about $726 per month. Your total cost will depend on the level of coverage you choose, ranging from high-deductible, lower-premium options to more comprehensive plans with higher premiums.
You may also qualify for the premium tax credit, which can significantly reduce your monthly premium. While this subsidy is income-based and primarily benefits lower-income households, early retirees with modest taxable income may still qualify.
TrueNorth Wealth Is Here to Help
Retiring before age 65 can offer freedom and flexibility, but it also requires thoughtful planning, especially when it comes to healthcare. By exploring your options and building a strategy that fits your life, you can safeguard both your health and your finances, setting the stage for a more secure and fulfilling retirement.
At TrueNorth Wealth, our team of fiduciary CFP® professionals is here to help you navigate every step of this transition. We’ll work with you to create a personalized plan that supports your goals, reflects your values, and empowers you to thrive now and in the years ahead.
TrueNorth Wealth is among the top Wealth Management firms in Utah and Idaho, with offices in Salt Lake City, Logan, St. George, and Boise. At TrueNorth Wealth, we focus on helping our clients build long-term wealth while maximizing the enjoyment they receive from their money. We do this by pairing our clients with a dedicated CFP® professional backed by an incredible team.
For our team at TrueNorth, it’s about so much more than money. It’s about serving families all across Utah and helping them achieve freedom and flexibility in their lives. To learn more or schedule a no-cost consultation, visit our website at TrueNorth Wealth or call (801) 316-1875.
