The gap between leaving an employer plan and turning 65 is a major blind spot in retirement planning. The average retirement age in the U.S. is 63, but Medicare doesn't start until 65, creating a coverage gap of at least two years.
According to Fidelity's 2025 Retiree Health Care Cost Estimate, a 65-year-old retiring in 2025 can expect to spend an average of $172,500 on health care and medical expenses throughout retirement. That's per person, after Medicare kicks in.
Here are six ways to bridge the gap.
The ACA marketplace is the default option for most early retirees. However, enhanced premium tax credits that held down costs since 2021 expired at the end of 2025. Income management has become a serious planning consideration.
COBRA lets you stay on your former employer's plan for up to 18 months, but you pay the full premium plus a 2% administrative fee. It's expensive, but offers no surprises.
If a spouse is still working, joining their employer plan is often the cheapest option.
Health-sharing ministries are not insurance. They are cost-sharing arrangements, often faith-based. Premiums look great, but there is no legal requirement they pay your bill. Pre-existing conditions are usually excluded.
A part-time job with benefits at employers like Starbucks, Costco, or REI can provide health coverage.
If you have a Health Savings Account (HSA), it offers a triple tax advantage: deductible contributions, tax-free growth, and tax-free withdrawals for medical expenses.
The takeaway: Don't model your early retirement budget without a realistic, current-year quote on health coverage. Get on HealthCare.gov, run a quote at the income level you actually expect.