Retiring Before 65? Millions of Pre-Retirees Are Facing a $10,000 Health Insurance Shock in 2026

A 60- to 64-year-old who retired at the start of this year, counting on an Affordable Care Act marketplace plan to bridge the gap before Medicare, is now looking at extra annual premium costs of $9,600 to $11,000+, depending on age. The enhanced premium tax credits that had kept ACA marketplace coverage within reach since 2021 expired at the end of 2025, and insurers raised gross premiums by a median of 18% nationwide on top of that loss.

Half of all ACA enrollees who qualify for subsidies are between 50 and 64, many of them early retirees with no other coverage option. Here's what the gap actually costs, what Washington has and hasn't done about it, and five ways to keep it from derailing your retirement plan.

Editor's note: Premium and subsidy figures come from KFF and the Peterson-KFF Health System Tracker. Survey data comes from the Transamerica Center for Retirement Studies and Fidelity Investments.

Congress still hasn't fixed the issue

The House passed a three-year extension of the subsidies in a 230-196 vote in January. Still, Senate negotiators have pushed for a shorter, two-year version with income caps and minimum premium payments instead, and President Donald Trump has indicated he may veto any extension that reaches his desk. 

No fix has passed as of this writing. As Jamie Cox of Harris Financial Group puts it, "Health care is there to basically save your life. But it can also kill your retirement."

Build the higher cost into your budget now

A 50-year-old on an unsubsidized marketplace plan will see average costs nearly double from $5,328 to $9,828 this year, while a 64-year-old's bill will more than triple to $16,500.

Make sure you account for this higher cost and rework your retirement budget to accommodate it. You need to make sure that your current savings rate still gets you through the years before Medicare kicks in.

Tap savings strategically if you're close to 65

If you're 63 or 64, drawing down a brokerage account or 401(k) to cover one or two years of higher premiums does far less damage than doing the same thing at 55. 

Retirees living off savings can also actively manage how much taxable income they report each year, since staying just under the 400% poverty line cutoff can mean thousands of dollars in tax credits restored, even without a deal in Congress.

Consider part-time work for the coverage, not just the paycheck

Some employers extend health benefits to staff working as few as 20 to 30 hours a week. A part-time job with group coverage attached can be worth more than its hourly wage once you weigh it against a full-price marketplace premium. 

Before writing off part-time work as not worth it financially, price out the employer plan and run both options through a marketplace subsidy calculator side by side.

Shop the marketplace before assuming there's no better price

Average marketplace deductibles grew by about $1,000 per person in 2026 as enrollees shifted from silver to cheaper bronze plans to offset higher premiums. 

A higher-deductible bronze plan isn't automatically the wrong move if you're healthy and rarely see a doctor, but it's the wrong move if you manage an ongoing condition. Compare at least three plan tiers before assuming last year's plan is still your best option.

Take adult children off your family health plan

If your adult child is still on your employer plan, moving them to their own individual policy can lower your premium, since people in their early twenties typically cost insurers less than older adults and your "family" rate may be priced well above "employee plus spouse" coverage. 

This works best when your child can find an individual plan, through an employer or the marketplace, that costs less than what they're adding to your family premium.

Bottom line

The years between an early retirement and Medicare eligibility now carry a real and growing price tag that you need to plan for. Whatever Congress eventually decides about the subsidies, the safest assumption for anyone retiring before 65 is that health coverage will cost more next year than it did this year, until Medicare finally kicks in.

Contributing to a health savings account (HSA), if you are enrolled in an HSA-eligible plan, lowers your reported income for ACA subsidy purposes the same way a 401(k) contribution would for a worker. For someone hovering near the 400% poverty line cutoff, that single move can be the difference between qualifying for a subsidy and paying full price, letting you keep more of your senior benefits.