Early Retirees Must Fill a Health Insurance Gap

Even though you’re eligible for Social Security at age 62, very few 62-year-olds qualify for Medicare.

If you’re planning to retire at 62, you’re probably thinking more about bucket-list vacations or a loved one’s caregiving needs than your own health care.

When you retire, you not only say goodbye to a regular paycheck; many people also lose medical insurance that their employer helped pay for. And if you file for Social Security, your benefits will be stuck at 70 percent of your full entitlement for the rest of your life.

You won’t have Medicare until age 65

Medicare, which provides coverage for about 70 million Americans, doesn’t start for most people until age 65 unless they have a disabling condition.

If your spouse is younger than you and relies on your insurance, your spouse won’t be able to sign up for Medicare either. Every person qualifies for Medicare individually by age or medical condition.

That means you’ll have a three-year gap to fill — and some sort of gap if you leave work any time before age 65. If you’re like most people, you’ll leave your employer’s group health coverage behind, and that raises the question: What are your options?

You could get coverage through COBRA

Provisions in COBRA, the acronym for the Consolidated Omnibus Budget Reconciliation Act, let you keep your workplace plan.

The federal law requires companies with 20 or more employees to continue offering health care coverage after employees leave their job. Some states have similar requirements for smaller employers.

COBRA premiums are more expensive than what you used to pay. COBRA costs = your health insurance premium + employer’s share + 2% 

After your employer-sponsored insurance ends, you’ll have 60 days to sign up for COBRA. But the coverage will last only 18 months after you leave your job.

The good news is the benefits and insurer you had will continue. If you go on Medicare but your spouse is still too young, your spouse can sometimes continue on your COBRA plan for 36 months.

The bad news is COBRA can be costly.

Expect to pay the total premium for coverage, what you were paying and what your employer was paying, plus a 2 percent administrative fee. Some companies pay as much as 80 percent of their workers’ insurance tab.

You could buy an Affordable Care Act plan

Affordable Care Act (ACA) coverage is available through the federal insurance marketplace or, in some states, a state’s own exchange. Your starting point for finding the right plan at the right price is HealthCare.gov.

ACA insurers are required to cover preexisting conditions and provide several types of preventive care, including many vaccines, at no out-of-pocket cost. One detail to keep in mind: ACA open enrollment generally runs Nov. 1 to Jan. 15, but you can qualify for a special enrollment period (SEP) if you lose your medical coverage because you retired.

You might qualify for a subsidy to help pay premiums based on your household income for the year, but your Social Security benefits will count as income.

Without any financial help, KFF, a nonpartisan nonprofit health care policy research group, estimates that a 62-year-old in 2025 would pay $1,116 a month on average for a popular silver-tier plan. A bronze plan, which offers the lowest premiums but also the least coverage, averages $857 a month.

Adding a spouse of similar age to create a family plan offers a small discount or tax credit.

Then add a surcharge if you smoke, chew tobacco or vape, and think how much you would have to pay toward the deductible before your coverage kicks in. The 2025 maximum out-of-pocket cost for any tier is $9,200 for one person and $18,400 for a family.

Other options may be tougher to get

Three other possibilities are not available to everyone:

• Coverage through your spouse’s employer if the company offers coverage to dependents.
• Retiree health insurance if your employer offers it. It’s rare.
• Medicaid if your household income is below a certain threshold that varies by state. ​​

If you decide to file for Social Security before you turn 65, you’ll be enrolled automatically in Medicare Part A and Part B at the beginning of the month you turn 65. That’s because the Social Security Administration handles registration for both Social Security and Medicare, no matter what age you apply.

Medicare Part A helps pay hospital and some skilled nursing care costs after an inpatient hospital stay. Medicare Part B helps pay for doctor visits and other outpatient services.

Most people don’t have to pay a premium for Part A, but the premium for Part B, $185 a month in 2025, will be deducted from your Social Security benefit. If you wait to file for Social Security retirement benefits until after you’ve signed up for Medicare, you’ll get a monthly bill for your Medicare premium until you’re on Social Security.

This story, originally published April 16, 2025, was updated to add the latest number on Medicare enrollees and a list of sources for this article.

Contributing: Donna Fuscaldo, Phil Pruitt

About the author

Kimberly Lankford is a contributing writer who covers Medicare and personal finance. She wrote about insurance, Medicare, retirement and taxes for more than 20 years at Kiplinger’s Personal Finance and has written for The Washington Post and Boston Globe. She received the personal finance Best in Business award from the Society of American Business Editors and Writers and the New York State Society of CPAs’ excellence in financial journalism award for her guide to Medicare.

About the reviewer

Jammie Lyell, the Social Security program manager for AARP’s office of community, state and national affairs, previously worked at the Social Security Administration as a legal administrative specialist and technical expert. He earned a master’s degree in organizational psychology from Walden University.

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