If you retired at 63 or 64, you face a coverage gap that surprises a lot of people: Medicare does not start until age 65, and your employer plan ends when you leave. That gap can be as long as two full years, and going uninsured is not a real option when a single hospitalization can cost $30,000 or more.
Quick Answer: The best health insurance options before Medicare for most retirees in 2026 are ACA Marketplace plans (which come with premium subsidies if your income is below 400% of the federal poverty level), COBRA continuation from your former employer, or Medicaid if your income is low enough. Use CoveredUSA's eligibility screener to see which option fits your situation in about two minutes.
The good news: the ACA Marketplace was designed with people exactly like you in mind. Insurers cannot charge more because of your health history, and premium subsidies are available based on income. As of 2026, the expanded subsidies that had temporarily removed the income cap have expired, so the rules have changed from the last few years. This guide covers what you need to know.
Why the Pre-Medicare Coverage Gap Is So Expensive
Age is the biggest driver of ACA premiums. Insurers can charge older enrollees up to three times the premium of a 21-year-old. For a 63-year-old, an unsubsidized benchmark Silver plan can run $900 to $1,400 per month depending on your state and county, according to KFF's Health Insurance Marketplace Calculator.
That sounds steep, but premium tax credits (subsidies) can dramatically reduce or even eliminate that cost if your income falls below the 2026 threshold.
ACA Marketplace Plans: The Primary Option for Early Retirees
The ACA Marketplace at healthcare.gov is the most common coverage source for people between retirement and Medicare eligibility. Here is why it works well:
- Guaranteed issue. No medical exam, no denial for pre-existing conditions.
- Income-based subsidies. Premium tax credits reduce your monthly payment based on household income.
- Special enrollment after job loss. Losing employer coverage is a qualifying life event, giving you 60 days to enroll outside of open enrollment.
- All metal tiers available. Bronze, Silver, Gold, and Platinum plans are available. Silver is the only tier that unlocks cost-sharing reductions if your income is below 250% FPL.
2026 ACA Subsidy Income Limits
As of 2026, enhanced pandemic-era subsidies have expired and the ACA subsidy cliff has returned. Subsidies are available to people with income between 100% and 400% of the federal poverty level (FPL). Go above 400% FPL and you lose all subsidy eligibility.
The 2026 FPL guidelines are based on the 2025 HHS poverty guidelines, per aspe.hhs.gov. The table below shows the 400% FPL cutoff (the point where subsidies end) and the 100% FPL floor.
ACA Subsidy Eligibility Income Range, 2026 (48 contiguous states and D.C.)
| Household Size | 100% FPL (Minimum) | 400% FPL (Subsidy Cutoff) |
|---|
| 1 | $15,650 | $62,600 |
| 2 | $21,150 | $84,600 |
| 3 | $26,650 | $106,600 |
| 4 | $32,150 | $128,600 |
| 5 | $37,650 | $150,600 |
| 6 | $43,150 | $172,600 |
| 7 | $48,650 | $194,600 |
| 8 | $54,150 | $216,600 |
| Each additional | +$5,500 | +$22,000 |
Source: 2026 Federal Poverty Level guidelines, aspe.hhs.gov and healthcare.gov.
If you are a single retiree with $50,000 in retirement income (pension, IRA withdrawals, capital gains), you fall below the 2026 cutoff of $62,600 and qualify for some subsidy. If you and your spouse together have $80,000 in income, you are below the 2026 two-person cutoff of $84,600 and also qualify.
What Counts as Income for Subsidy Purposes
Income for ACA subsidy calculations includes:
- Social Security benefits (even if not fully taxable)
- Pension payments
- IRA and 401(k) distributions
- Capital gains and dividends
- Rental income
- Part-time wages
This matters a lot for early retirees. If you can manage your withdrawals and distributions carefully, you may be able to keep your income below the 400% FPL threshold and preserve subsidy eligibility. Roth IRA distributions are not counted as income for ACA purposes, which is one reason financial planners often recommend Roth conversions in the years before retirement.
Check your specific subsidy estimate using the CoveredUSA screener or the KFF Marketplace Calculator.
COBRA: Bridge Coverage That Can Get Expensive
COBRA lets you continue your employer-sponsored health plan for up to 18 months after leaving your job. The catch: you pay the full premium your employer was paying, plus a 2% administrative fee.
Most employers cover 70 to 80 percent of employee premiums. When you retire, that subsidy disappears. The average annual cost of employer-sponsored family coverage in 2025 was roughly $27,000. If your employer was paying $20,000 of that, COBRA now costs you the whole $27,000 per year, or about $2,250 per month.
COBRA makes sense when:
- You are less than 18 months from turning 65 (COBRA covers you until Medicare kicks in)
- Your employer plan has significantly lower cost-sharing than ACA alternatives
- You or a dependent has an ongoing health issue where keeping your current doctors matters
COBRA usually loses to the ACA Marketplace when:
- You qualify for substantial premium subsidies (the ACA plan could cost less)
- You have more than 18 months until you turn 65
- Your income is moderate enough to trigger meaningful subsidy savings
Per CMS guidelines, once you enroll in Medicare at 65, COBRA coverage ends. Do not delay Medicare enrollment just to keep COBRA. That can trigger a late enrollment penalty.
Medicaid: An Option If Your Retirement Income Is Low
If your income in retirement is below 138% of the federal poverty level and you live in a Medicaid expansion state, you may qualify for Medicaid even if you are 63 or 64. Medicaid has no age limit for adults in expansion states.
138% FPL income limits for Medicaid expansion (2026):
| Household Size | 138% FPL Monthly | 138% FPL Annual |
|---|
| 1 | $1,800 | $21,597 |
| 2 | $2,432 | $29,187 |
| 3 | $3,065 | $36,777 |
| 4 | $3,697 | $44,367 |
If your income is above these thresholds, Medicaid is not available but ACA Marketplace subsidies are. Visit medicaid.gov to confirm whether your state has expanded Medicaid. As of 2026, most states have. In non-expansion states, adults without children may not qualify for Medicaid regardless of income.
A Spouse's Employer Plan
If your spouse is still working and has employer-sponsored coverage, joining their plan may be the simplest and cheapest option. Your retirement counts as a qualifying life event, so your spouse's employer must allow you to join during a special enrollment window.
The cost depends on how much the employer contributes toward dependent premiums, which varies widely. Ask your spouse's HR department for the dependent premium before ruling this out.
How to Apply for ACA Marketplace Coverage Before Medicare
Enrollment window: Open enrollment for 2026 ACA coverage runs from November 1 through January 15 in most states. If you retire mid-year and lose employer coverage, that triggers a Special Enrollment Period (SEP): you have 60 days from the loss of coverage to enroll.
Step-by-Step Application
- Gather income documentation. Estimate your 2026 income including all sources: pensions, Social Security, IRA withdrawals, investment income. This determines your subsidy amount.
- Go to healthcare.gov (or your state marketplace if you live in California, New York, or another state with its own exchange).
- Create an account and start a new application. Enter your household size and estimated annual income.
- Compare plans. Review Bronze, Silver, and Gold options. If your income is between 100% and 250% FPL, Silver plans unlock extra cost-sharing reductions.
- Select a plan and enroll. Your coverage start date depends on when you enroll during a SEP.
- Confirm your premium tax credit amount. You can take the full credit upfront (reducing your monthly premium) or claim it on your tax return.
- Cancel when Medicare starts. At 65, you must transition to Medicare. Notify your Marketplace plan so there is no overlap gap.
Documents Needed for ACA Enrollment
- Social Security number for each household member
- Employer and income information for all jobs in the household
- Policy numbers for any current health insurance
- Your most recent tax return (for income verification)
- Bank account information (for premium payments)
Common Reasons Applications Get Denied or Subsidies Are Reduced
- Income reported too high, pushing you over the 400% FPL cutoff
- Failing to report a life event that changes household size
- Not enrolling within the 60-day SEP window after losing employer coverage
- A data mismatch between your application and IRS records
- Living in a non-expansion state and falling into the coverage gap (income below 100% FPL with no Medicaid option)
The 2026 Subsidy Cliff: What Changed and Why It Matters
From 2021 through 2025, the American Rescue Plan and Inflation Reduction Act temporarily expanded ACA subsidies. People above 400% FPL could still receive help. That expansion has now expired for 2026.
The result: if your retirement income is $65,000 as a single person (just above the $62,600 cutoff), you receive zero subsidy and pay full unsubsidized premiums, potentially $1,000 to $1,400 per month for a Silver plan at age 63.
Strategies to manage this:
- Delay large IRA withdrawals until after your Medicare birthday to keep income low enough for subsidy eligibility
- Time Roth conversions carefully since Roth distributions do not count toward ACA income
- Defer Social Security if possible; Social Security income counts toward the ACA threshold
A financial planner who specializes in retirement income can help you model these tradeoffs. The KFF Marketplace Calculator lets you test different income scenarios for free.
Comparing Your Options Side by Side
| Option | Best For | Typical Monthly Cost | Duration |
|---|
| ACA Marketplace (subsidized) | Income below $62,600 single / $84,600 couple | $0 to $500+ depending on income | Until age 65 |
| ACA Marketplace (unsubsidized) | Income above 400% FPL | $900 to $1,400+ (age 63, varies by state) | Until age 65 |
| COBRA | Less than 18 months from 65; want to keep current doctors | $1,200 to $2,500+ | Up to 18 months |
| Spouse's employer plan | Spouse is still working | Varies (often subsidized by employer) | As long as spouse works |
| Medicaid | Income below 138% FPL in expansion state | $0 to minimal | Until age 65 |
How to Check Your Eligibility
The fastest way to see what you qualify for is to run your numbers through CoveredUSA's free screener at /screener. It takes about two minutes, covers ACA Marketplace, Medicaid, and Medicare Savings Programs, and tells you exactly which options are available based on your income and household size.
Check your eligibility now at CoveredUSA. It takes 2 minutes.
Frequently Asked Questions
Can I get health insurance at 63 without a job?
Yes. You can enroll in an ACA Marketplace plan through healthcare.gov regardless of employment. If you recently lost employer coverage, you have a 60-day Special Enrollment Period. If you missed that window, you must wait for open enrollment in November.
What happens to my ACA plan when I turn 65?
When you become eligible for Medicare at 65, you must transition to Medicare. You cannot receive ACA premium subsidies for any month you are enrolled in Medicare. The Marketplace will terminate your coverage when Medicare begins. Notify healthcare.gov in advance to avoid gaps.
Do I have to use Medicare when I turn 65 even if I like my ACA plan?
Not exactly. You can choose not to enroll in Medicare Part B. However, if you want Part B coverage later, you face a late enrollment penalty of 10% per year for every 12-month period you delayed. For most retirees, enrolling in Medicare at 65 is the financially correct move.
How much does a Silver ACA plan cost at age 63 in 2026?
Without subsidies, a Silver plan for a 63-year-old in 2026 typically costs $900 to $1,400 per month depending on your state. With subsidies, the cost can drop to $0 to $200 per month if your income falls below 250% FPL (about $39,125 for a single person). Use the KFF Marketplace Calculator for your exact state and county.
What income counts toward the ACA subsidy calculation?
ACA household income includes wages, pensions, Social Security benefits, capital gains, dividends, rental income, and IRA/401(k) distributions. Roth IRA distributions are excluded. The 2026 subsidy cutoff is $62,600 for a single person (400% FPL, based on 2025 HHS poverty guidelines used for 2026 plan year) per aspe.hhs.gov.
Is COBRA better than an ACA Marketplace plan for early retirees?
For most early retirees, no. COBRA costs you the full unsubsidized premium plus 2% administrative fees, which typically exceeds $1,500 to $2,500 per month for family coverage. ACA plans with subsidies often cost less. COBRA makes sense if you are within 12 to 18 months of turning 65 and want continuity of care with your existing doctors.
Can I qualify for Medicaid before Medicare at age 63?
Yes, if you live in a Medicaid expansion state and your 2026 income is below $21,597 (138% FPL for a single person, based on 2025 HHS poverty guidelines). Medicaid has no upper age limit for adults in expansion states. Check medicaid.gov to confirm your state's expansion status and income limits.
What if I cannot afford any of these options?
If your income is very low (below 100% FPL) and you live in a state that has not expanded Medicaid, you may fall into the coverage gap where neither Medicaid nor ACA subsidies are available. Some states have limited coverage programs for adults in this situation. Contact your state Medicaid office or use the CoveredUSA screener to see all options in your state.
