The number to know: for 2027 coverage there is no premium tax credit above 400 percent of the poverty line, which is $63,840 for a single person and $86,560 for a couple. One dollar over and the whole credit is gone.
- 3 to 1the most an insurer can charge an older adult versus a young adult for the same plan under federal rules
- $1,377monthly full price of the benchmark silver plan for a 60 year old in Hillsborough County for 2026
- $86,560income ceiling for a couple to get any tax credit on 2027 coverage, 400 percent of the poverty line
Your bridge options, compared
| Option | How long | What you pay | Best for |
|---|---|---|---|
| Marketplace plan | Until you move to Medicare | Full price minus a tax credit based on your income | Most early retirees |
| COBRA | Usually 18 months | Up to 102 percent of the full premium | Mid treatment, or deductible already met |
| Spouse's job plan | While your spouse works there | Your spouse's share of the premium | Couples where one keeps working |
| Retiree coverage | Set by your former employer | Varies | The few who are offered it |
Leaving your job ends your job based coverage, and losing that coverage is a qualifying event for a marketplace Special Enrollment Period. You can apply up to 60 days before your last day of coverage, so line up the new plan before you retire.
Why COBRA is usually the wrong bridge
COBRA keeps the same plan, but your employer stops paying its share. KFF puts the average 2025 employer premium at $9,325 a year for single coverage and $26,993 for a family, and COBRA can charge you 102 percent of that. It also runs out after 18 months in most cases, which will not reach 65 for most early retirees. And HealthCare.gov is clear that voluntarily dropping COBRA does not open a Special Enrollment Period. If you choose it, you may be stuck with it until open enrollment. I walk through that trap in my between jobs guide.
Why age makes this expensive
Federal rules let insurers charge an older adult up to 3 times what they charge a young adult. In Hillsborough County a 60 year old pays about 2.7 times what a 21 year old pays for the same benchmark silver plan. Here are full 2026 monthly prices from the CMS plan files, before any tax credit.
| County | Silver, age 50 | Silver, age 60 | Couple, both 60 |
|---|---|---|---|
| Hillsborough, FL | $906 | $1,377 | $2,754 |
| Sarasota, FL | $1,003 | $1,525 | $3,050 |
| Lee, FL | $1,002 | $1,523 | $3,047 |
| Harris, TX | $827 | $1,257 | $2,515 |
| Dallas, TX | $937 | $1,425 | $2,849 |
Silver is the benchmark plan, the second lowest silver, which sets the size of your credit. More counties are on my health insurance by county page. A couple in their early 60s can face a full price bill well over $30,000 a year, which is exactly why the income rules below matter so much.
How retirement income counts for the subsidy
The marketplace uses modified adjusted gross income. IRS Publication 974 defines it as your AGI plus tax exempt interest, untaxed foreign income and the part of Social Security that is not taxed. HealthCare.gov spells out what goes in:
| Counts as income | Does not count |
|---|---|
| Most traditional IRA and 401k withdrawals | Qualified distributions from a Roth account |
| Pensions | Spending cash already in savings |
| Social Security, the full amount, even the untaxed part | The cost basis when you sell an investment (only the gain counts) |
| Capital gains, interest and dividends, including tax exempt interest | |
| Roth conversions, which are taxable in the year you convert |
The cliff, and how Roth money helps
With the enhanced credits gone, 400 percent of the poverty line is a hard wall again. Below it you get a credit. Above it you pay full price. For a couple both age 60 in Hillsborough County, that is the difference between a subsidized plan and a benchmark bill of $2,754 a month.
Here is how the withdrawal source changes things. Say that couple needs $95,000 to live on in 2027.
- All from a traditional IRA: about $95,000 of income. That is over $86,560, so no credit at all.
- $80,000 from the IRA and $15,000 from qualified Roth money: about $80,000 of income. Same spending, but they stay under the line and keep a credit, which at their age is large.
The same logic applies to cash savings and to selling investments with small gains. It also cuts the other way. A big Roth conversion or a lump sum withdrawal in a year you are on a marketplace plan can push you over the line. And starting with 2026 coverage, there is no cap on repaying excess credits at tax time, so a surprise in December can cost you every dollar of credit you received. Update your application as soon as your income picture changes.
Do not go too low, either
In states that did not expand Medicaid, which includes Florida and Texas, income under 100 percent of the poverty line generally means no tax credit and no Medicaid. For 2027 coverage that floor is $15,960 for one person and $21,640 for a couple. Retirees living on savings sometimes report almost nothing and land in that gap. Plan withdrawals so your income lands between the floor and the ceiling.
These are tax decisions as much as insurance decisions, so bring your CPA or financial planner in. My job is to show you the premium side of each scenario. You can run rough numbers yourself with my subsidy calculator.
Bottom line
If a spouse's job plan is cheap, take it, and you may not need me. Otherwise, a marketplace plan paired with a deliberate withdrawal plan is usually the least expensive bridge to 65. I'm Carson Hornish, an independent broker licensed in 31 states. I help with under 65 coverage only, not Medicare plans, and the comparison is free. Here is why a broker costs you nothing.
Common questions
What is the best health insurance for early retirees before 65?
For most early retirees it is an ACA marketplace plan, because the tax credit is based on the income you report for the year. COBRA usually costs more and lasts only 18 months. A working spouse's employer plan can beat both if it is well subsidized.
Do IRA and 401k withdrawals count as income for ACA subsidies?
Yes. HealthCare.gov says to include most traditional IRA and 401k withdrawals. Qualified distributions from a Roth account are not included. Roth conversions are taxable in the year you convert, so they do count.
Does Social Security count as income for marketplace subsidies?
Yes. HealthCare.gov says to enter the full amount of Social Security before deductions, and IRS Publication 974 adds the untaxed part of Social Security back into the income used for the premium tax credit.
What is the ACA subsidy cliff for 2027?
For 2027 coverage there is no premium tax credit if your income is above 400 percent of the poverty line, which is $63,840 for one person and $86,560 for a couple. The enhanced credits that removed this limit expired at the end of 2025.
Can I retire early and get a special enrollment period?
Yes. Losing job based coverage when you retire is a qualifying event. You can enroll in a marketplace plan up to 60 days before that coverage ends or up to 60 days after. Voluntarily dropping COBRA later does not qualify.
Planning an early retirement?
Send me your ZIP, ages and a rough income plan, and I'll show you the premium at each income level, free, no pressure.
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Sources
- HealthCare.gov, What to include as income
- IRS, Publication 974, Premium Tax Credit
- CMS, Market rating reforms
- HealthCare.gov, Special Enrollment Period
- KFF, 2025 Employer Health Benefits Survey
- U.S. Department of Labor, An Employee's Guide to Health Benefits Under COBRA
- HHS ASPE, 2026 poverty guidelines
- HealthCare.gov, Medicaid expansion and what it means for you
- CMS, QHP Landscape individual market medical file, plan year 2026