Retiring at 62? Build the Health-Insurance Bridge to Medicare Before You Leave Work

Quick answer: Retiring at 62 usually means paying for about 36 months of health coverage before Medicare starts at 65. COBRA generally lasts only 18 months, so many people need two coverage sources in sequence. Budget for premiums and out-of-pocket costs for every year. Then check how your planned withdrawals affect Marketplace savings, which for 2026 coverage end above 400% of the federal poverty level.

Count the months, not just the years

Medicare generally begins on the first day of your 65th-birthday month, if you enroll before that month. Write down the exact month your employer coverage ends and the month Medicare would begin. The number of months between those dates is the length of your bridge, and every month needs a plan.

If you switch from COBRA to a Marketplace plan when COBRA runs out, the expiration of COBRA generally qualifies for a Marketplace Special Enrollment Period. Dropping COBRA early, outside open enrollment, usually does not.

Build a three-year healthcare budget

Healthcare costs during the bridge have two parts: premiums you will definitely pay, and out-of-pocket costs you might pay up to the plan's maximum. A reasonable budget shows both an expected case and a worst case.

Hypothetical All amounts above are invented to show the structure of a budget. They are not quotes or estimates. Your actual premiums depend on your age, ZIP code, plan, household size and, for the Marketplace, your income. The point is the gap between the expected column and the worst-case column. Your cash reserves should be able to cover the difference.

How the 2026 subsidy rules change the math

The enhanced premium tax credits of 2021–2025 expired at the end of 2025, and as of this October 2026 review they had not been restored. For 2026 coverage, a household above 400% of the poverty level ($62,600 for one person, $84,600 for two in the contiguous states) generally receives no premium tax credit. Below that line, the expected contribution toward the benchmark plan tops out at 9.96% of income. Because age raises Marketplace premiums, a 64-year-old just above the line can face a much larger premium increase than a younger person with the same income.

That makes the source of retirement cash important. Traditional IRA and 401(k) withdrawals generally count toward MAGI. Spending from cash savings does not, and qualified Roth distributions generally do not. For a fuller explanation, see healthcare before Medicare. Keeping income low is not automatically wise, though. It can leave larger pre-tax balances to be taxed later, which is the trade-off explored in Roth conversions in the retirement window.

Married couples: two bridges, not one

If one spouse is 62 and the other is 59, the couple may need coverage for six years, not three. When the older spouse moves to Medicare, the younger spouse may need individual coverage. Their household income also changes as withdrawals or Social Security start. Map each spouse's timeline separately, then combine the costs. If the younger spouse is still working with family coverage, adding the retiring spouse to that plan may be one of the options to price.

Five questions to answer before you give notice

1. On what exact date does my employer coverage end, and what will COBRA cost?
2. Does my employer offer any retiree coverage or bridge subsidy?
3. What would a Marketplace plan with my doctors and prescriptions cost at my expected income?
4. How much of my three-year healthcare budget is already in cash reserves or an HSA?
5. Which account will fund living expenses each year, and what MAGI does that create?

Common mistakes

• Letting the 60-day window close. After losing job-based coverage, you generally have 60 days to pick a Marketplace plan or elect COBRA. Missing it can mean waiting for open enrollment.
• Assuming COBRA lasts until 65. It generally lasts 18 months, which is half of a three-year bridge.
• Underestimating income. For 2026 coverage, there is no cap on repaying excess advance premium credits. A year-end IRA withdrawal or capital gain can be expensive.
• Forgetting the deductible resets. Switching plans mid-year usually restarts the deductible and out-of-pocket maximum.
• Ignoring a younger spouse's timeline when the older spouse moves to Medicare.

Frequently asked questions

What to do next

1. Get the Retiring Before Medicare Checklist and fill in the coverage-bridge comparison and annual-cost worksheets.
2. Use the Can I Retire at 62? checklist to put healthcare costs into your 62-to-67 income-gap worksheet.
3. Schedule a conversation to review the bridge alongside your withdrawal and tax plan.

Related reading: Can I retire at 62? · Social Security at 62 vs. 67 · Medicare at 65

Sources

• U.S. Department of Labor — COBRA FAQs
• HealthCare.gov — If you lose job-based coverage
• HealthCare.gov — Marketplace income (MAGI)
• Congressional Research Service — ACA premium tax credit after 2025
• IRS Publication 969 — Health savings accounts
• Medicare.gov — When Medicare coverage starts

Premiums and eligibility vary by person and change each year. This page is general education and does not recommend any insurance plan.