Filling the gap between early retirement and qualifying for Medicare.
Health insurance is one of the biggest concerns for people considering retirement before age 65. Many hesitate to leave work because employer-sponsored coverage ends, and Medicare hasn’t yet begun. While this gap can feel intimidating, it doesn’t have to prevent you from moving forward with your retirement plans. Several coverage options are available to bridge the transition. Let’s explore the most common choices for health insurance after retirement but before Medicare.
Spouse Health Insurance Plan
Transferring to your spouse’s employer health insurance plan is the first option. Many people are familiar with this option, and while adding a family member to the plan may raise the premiums and/or deductibles, it is a popular option when one spouse retires and the other continues to work. Employer plans can differ in policy, so reviewing your spouse’s policy carefully before choosing this option is important.
| Pros | Cons |
|---|---|
| Often, the most seamless option—coverage continues under an employer-sponsored plan.
Typically provides comprehensive coverage, including major medical services and prescriptions.
May keep healthcare providers and networks consistent if the same carrier is used. |
Premiums and deductibles may increase when adding a spouse.
Not all employers allow spousal coverage (some have “spousal carve-out” rules).
Coverage terms depend on your spouse’s employer’s plan—less control over choices. |
Continuation of Health Coverage (COBRA)
The Consolidated Omnibus Budget Reconciliation Act, more commonly known as COBRA:
“gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events.”
This option allows you to stay on your previous health plan (which means keeping your providers and pharmacies), at least for a short time. However, qualified individuals will be required to pay the entire premium, which would have been partially covered by the employer prior to the individual applying for continuing coverage.
COBRA requires that continuing coverage be provided under the group plan for a limited period of 18 or 36 months. The coverage time period depends on the qualifying life event that led to the need for continuing coverage. In the case of retirement, the coverage time period is 18 months.
COBRA insurance is retroactive to the day after the end of the original health insurance, given these two conditions are met: any required premiums are paid, and an election is made within 60 days of your qualifying event, or within 60 days of receipt of the election notice, whichever is later.
| Pros | Cons |
|---|---|
| You keep your existing health plan (same doctors, pharmacies, and network).
Provides continuous coverage without gaps.
Retroactive if elected within 60 days, protecting against unexpected medical costs. |
Very expensive—you may pay the full premium plus a 2% administrative fee.
Coverage is limited to 18 or 36 months, depending on circumstances.
Not a long-term solution for those retiring several years before Medicare. |
Marketplace Coverage
Another option for coverage between retirement and Medicare is finding a plan through the marketplace. The marketplace is a network of health insurance providers for people who do not qualify for employer health insurance, Medicare, Medicaid, or other programs. Enrollment is generally limited to the annual open enrollment period, unless you experience a qualifying life event. Importantly, there are no income restrictions for enrolling in Marketplace coverage.
For 2026 coverage, open enrollment runs from November 1, 2025, through January 15, 2026. Starting with the 2027 plan year, the enrollment window will be shortened to November 1 through December 15, 2026, as mandated by the “One Big Beautiful Bill.”
Outside of open enrollment, you can enroll if you experience a qualifying life event, such as losing employer-sponsored coverage (including retiring before age 65), moving, getting married, having a baby, or adopting a child. Premiums are based on age and plan type, while subsidies—designed to reduce monthly costs—are calculated using your household income for the year.
Though the plans offered by the marketplace differ in some ways, they all cover prescription medications, emergency services, hospitalization, mental health services, laboratory services, free preventative care when seen by an in-network provider, and more.
Health Insurance Brokers
Working with a licensed health insurance broker may be beneficial when choosing a marketplace plan. Health insurance brokers act as intermediaries between individuals seeking health coverage and the health insurance providers. They do a lot of the heavy lifting by researching and comparing plans to present you with the best options for your circumstances. They are generally paid by commission from the providers, so there is no additional cost for consumers to utilize them.
Another option is to purchase a plan directly with a provider rather than through the marketplace. Some believe there is better coverage and attention from the provider by going this route, but it is likely more costly.
| Pros | Cons |
|---|---|
| Guaranteed coverage regardless of health status or pre-existing conditions.
Subsidies available based on household income can significantly lower costs.
Comprehensive coverage required (hospitalization, prescriptions, preventive care, etc.).
Flexibility to choose between different tiers (Bronze, Silver, Gold, Platinum). |
Premiums can be high without subsidies.
Networks may be more limited than employer plans.
Must enroll during open enrollment or after a qualifying life event.
Comparing plans can be confusing without professional help. |
Short-term Plans
Short-term, limited-duration insurance (STLDI) plans can also cover the gap. These plans are used during transition periods, such as a job transition, when one employer’s coverage ends and the other begins several months later. These plans offer coverage for a maximum of 3 months per policy (maximum 4 months inclusive of extensions or renewals).
Because these plans are not considered “individual health insurance coverage” under the Public Health Service Act, they are not subject to federal individual market consumer protections or requirements for comprehensive coverage. They can discriminate based on an individual’s health status and/or pre-existing conditions and may not cover prescription medications, hospitalizations, and other healthcare services. They are typically significantly cheaper, but the trade-off is often minimal coverage and no limits on out-of-pocket costs. Despite limitations, they may be a good option to consider if you retire shortly before you are able to qualify for Medicare.
| Pros | Cons |
|---|---|
| Usually, monthly premiums are lower than those of ACA or COBRA plans.
Can provide temporary coverage in narrow transition periods.
Quick enrollment with limited paperwork. |
It does not meet ACA standards, and coverage may exclude prescriptions, hospital stays, maternity care, and more.
Can deny coverage based on pre-existing conditions.
May impose dollar caps on benefits and no limits on out-of-pocket costs.
Not a viable long-term solution for retirees. |
Can I afford private health insurance before Medicare?
Another concern is the affordability of private health insurance during the time period between retiring and qualifying for Medicare. Health insurance can be costly without employer assistance. Anxiety about the cost of private insurance prevents many people from considering early retirement when it may be possible with some wise financial planning. Depending on your financial situation, it may be feasible for you. Consult your Fee-only Certified Financial Planner™ Professional to discuss your options for retirement.
*As of 2025
