ACA Enrollment Just Dropped by 3 Million People - Here's What It Means If You're Retiring Before 65

The Affordable Care Act (ACA) marketplace traditionally offered a way for early retirees to save money in retirement before becoming eligible for Medicare. But a significant drop in ACA enrollment is drawing attention to climbing health care costs, which pose a real problem to many people retiring before age 65.

If you or a loved one plan to retire early, here's what you should know about the changes to the ACA and how those changes might impact your health care costs in retirement.

The decline in ACA marketplace enrollment

According to newly released Department of Health and Human Services data, enrollment in plans bought on the ACA marketplace declined by approximately 3 million people, a decline of about 13% from the end of 2025 to February 2026. It marks the largest enrollment decline since the ACA marketplace was established in 2014.

The significant drop provides the first look at how enrollment has changed since enhanced ACA premium subsidies lapsed at the end of 2025. Those subsidies had previously reduced the cost of monthly premiums, and according to health policy experts, the enrollment decline signals that the subsidies' lapse has made health insurance coverage too expensive for millions of Americans to afford.

The rising cost of health insurance

When subsidies lapsed, enrollees saw a steep increase in their health insurance premiums, on average. In 2025, premiums averaged $888, but they climbed to $1,904 in 2026.

That increase in health insurance premiums also came at a time when inflation was high, resulting in an increased cost of living that eroded household earnings. Such economic factors likely made it even more challenging for ACA enrollees to keep up with a doubling of their premiums, prompting them to switch to cheaper, higher-deductible plans.

According to KFF, earlier signup data suggests that making the switch to higher-deductible plans resulted in a 58% premium increase and a 37% deductible increase, or a deductible increase of over $1,000 per person. Deductibles hit a record average of $3,786.

Why this matters for early retirees

The ACA is often the only coverage bridge between an employer health insurance plan and Medicare eligibility at age 65. According to data from the Center for Retirement Research at Boston College, the average retirement age for men is 64.6 years, while women average retirement at 62.6 years, suggesting a large portion of the population may rely on the ACA for coverage to bridge that gap until age 65.

Facing the subsidy cliff

Early retirees are also disproportionately exposed to an ACA "subsidy cliff." Older adults with household incomes above 400% of the federal poverty line lost any assistance eligibility when the enhanced premium subsidies expired, and they saw some of the steepest premium increases.

Even retirees who aren't employed could potentially face that subsidy cliff. Retirees drawing a significant retirement income or realizing capital gains when selling an asset, like stocks or real estate, might qualify as being above 400% of the federal poverty line and could lose their assistance eligibility.

With early retirees facing such significant health insurance premium increases, it's important to strategically shop for health insurance.

Shop health insurance plans during open enrollment

During the annual open enrollment period, you may buy a new health insurance plan or make changes to your current health insurance plan. The open enrollment period lasts from November 1 through December 15 each year. Changes you make during the period have an effective date of January 1, 2027. The open enrollment period for 2027 coverage is shorter than it's been previously, so it's important to be proactive in shopping the marketplace and selecting your coverage.

Open enrollment gives you a chance to shop the health care marketplace. You may explore different coverage levels, compare different types of plans, change your existing coverage, and enroll in new coverage. It's a chance to find a health insurance plan that works best for your needs and your budget.

Consider the timing of your income

As you near retirement age, it's a good idea to carefully manage your income timing. For example, managing retirement withdrawals or Roth conversions so that they fall in certain years may help you to stay under subsidy thresholds, so you may still qualify for subsidized health insurance coverage.

This is a good time to have a conversation with your financial planner about your health insurance needs, the subsidies that affect what you pay for coverage, and your withdrawal plans.

Compare COBRA or spousal coverage as alternatives

You may be able to get health insurance through alternatives to the ACA marketplace. If you've recently lost a job or had your hours reduced, COBRA, a federal law, may allow you to temporarily keep your health coverage. COBRA may help you maintain your coverage through your employer until you're able to secure new coverage.

If your spouse's employer offers health insurance, you may be able to get coverage through one of their available plans. Be sure to carefully compare the plans and their deductibles, premiums, out-of-pocket maximums, and exclusions with the plans you find on the ACA marketplace to determine which option is a better fit.

Bottom line

The expiration of the ACA subsidies makes buying health insurance more complicated and more expensive, especially for early retirees. If you're planning to retire before age 65, be sure to model the post-subsidy ACA premium costs now and see how they fit into your retirement plan. Don't assume that next year's health care marketplace may look like this year's, since prices may increase and plan options may change, too.

If you're concerned about budgeting for expenses like health care as a retiree, consider meeting with a financial planner to check up on your retirement readiness and come up with a plan for covering those costs.

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Author Details

Paige Cerulli

aige Cerulli has covered personal finance for more than 15 years and writes about the money news readers can actually act on. In particular, she helps people claim what they are owed from class-action settlements, understand Social Security COLA changes and Federal Reserve rate moves, and make the most of everyday decisions around insurance, mortgages, and credit cards. Her work has appeared in U.S. News & World Report and Kiplinger.