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Your Situation

Retiring Early — Bridging the Gap to Medicare

Medicare starts at 65 for most people — not at retirement. If you're leaving work before then, you'll have a coverage gap to bridge. How long that gap is and what you do about it makes a significant difference in both your coverage and your costs.

When Does Medicare Actually Start?

For most people, Medicare eligibility begins at age 65. There are limited exceptions — primarily people who have received Social Security Disability Insurance (SSDI) for 24 months, or people with End-Stage Renal Disease (ESRD) or ALS.

Example: If you retire at 62 and turn 65 three years later, you have roughly 36 months of coverage to arrange on your own before Medicare begins. Planning for that window is the key task.

Your Coverage Options Before 65

🏛️ ACA Marketplace — Usually the Best Option

The Affordable Care Act Marketplace (healthcare.gov) offers comprehensive health insurance that you can buy on your own. When you leave employer coverage, you qualify for a Special Enrollment Period to enroll — you don't have to wait for open enrollment.

  • • Income-based subsidies (APTC): If your income falls between 100%–400% of the Federal Poverty Level (and beyond, under current law), you may qualify for significant premium tax credits that reduce your monthly cost
  • • Coverage is comprehensive: Marketplace plans cover the same essential health benefits as employer plans
  • • No medical underwriting: You can't be denied or charged more for pre-existing conditions
  • • Wisconsin-specific: Wisconsin uses the federal marketplace at healthcare.gov, not a state-run exchange

📋 COBRA — Temporary, Often Expensive

COBRA lets you stay on your employer's group plan for up to 18 months after leaving work. The catch: you pay the full premium — both your share and what your employer was paying — plus a 2% administrative fee.

  • • Useful if you want to keep your same doctors and plan through a health event mid-year
  • • Often costs $500–$800+/month for an individual — compare this carefully to a Marketplace plan with subsidies
  • • Lasts 18 months from your coverage end date (longer in some circumstances)
  • • Does not count as creditable coverage for Medicare's Special Enrollment Period purposes — when COBRA ends, it does not restart your SEP clock

💑 Spouse's Employer Plan

If your spouse is still working and has employer coverage, joining their plan is often the most cost-effective option. Your retirement qualifies as a life event that lets your spouse add you mid-year. Compare the cost of adding you to their plan against Marketplace options with any subsidies you might qualify for.

The Subsidy Opportunity — And the Income Strategy

One of the most significant financial levers available to early retirees is the ACA premium tax credit. Before you start collecting Social Security or drawing heavily from pre-tax retirement accounts, your taxable income may be low enough to qualify for substantial subsidies.

Subsidy-friendly income sources

  • • Roth IRA withdrawals (not counted as income)
  • • After-tax savings and brokerage accounts (only gains count)
  • • Part-time or self-employment income (counts, but manageable)

Income that reduces or eliminates subsidies

  • • Traditional IRA / 401(k) withdrawals (fully taxable)
  • • Social Security benefits (partially taxable)
  • • Pension income
  • • Required Minimum Distributions (RMDs)

Early retirees often have significant flexibility over their taxable income before 65. A financial advisor or tax professional can help model what income level maximizes your subsidy while meeting your cash flow needs.

Transitioning From Marketplace to Medicare at 65

When you turn 65, Medicare becomes your primary coverage. This transition requires action — it doesn't happen automatically unless you're already collecting Social Security.

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Enroll in Medicare during your Initial Enrollment Period

Your IEP opens 3 months before the month you turn 65. Don't wait — if you enroll late, you'll face permanent Part B and Part D penalties.

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Cancel your Marketplace plan when Medicare starts

Once you have Medicare, you're generally no longer eligible for Marketplace premium tax credits. You must cancel your Marketplace plan. Continuing to collect subsidies you're no longer eligible for creates a tax liability.

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Marketplace drug coverage is not creditable for Part D

Marketplace plans cover prescriptions, but this coverage does not count as "creditable" for Medicare Part D purposes. You'll need to enroll in Part D (or an MAPD plan) at 65 to avoid a late enrollment penalty.

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Wisconsin gives you Medigap guaranteed issue at 65

At 65, Wisconsin guarantees your right to enroll in a Medicare Supplement plan regardless of health history. This window is limited — after your initial enrollment period, switching Medigap plans requires medical underwriting.

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Turning 65 Soon

Your Medicare enrollment guide →
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MAPD vs. Medicare Supplement

Choose your Medicare path at 65 →
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Talk to an Agent

Plan your Medicare transition →

Planning your early retirement health coverage?

We can help you think through the Marketplace-to-Medicare transition and make sure you're set up right when you hit 65 — at no cost.

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