This article is part of the Biblically-Informed Framework for Retirement Stewardship. It was originally published on September 3, 2016, and substantially updated in April 2026.
Your medical insurance choices will depend greatly on whether you are young and far from retirement, an “early” retiree with a few years until Medicare eligibility, or 65 or older and eligible for Medicare. In this article, I discuss the medical insurance options that younger people and “early retirees” may consider.
Medicare will factor into every retiree’s plans at some point. But what if you’re an “early retiree” – either by choice or of necessity – and not yet eligible for Medicare? Or perhaps you are younger and in need of insurance. You need to know your options, especially if you don’t have coverage via an employer-sponsored plan.
Is it biblical?
Generally, the Bible is neutral about insurance. (I don’t think it was around in biblical times.) So, we have to look at biblical principles for guidance.
The Bible does not promise Christians perfect health or that God will provide all the money they need for medical treatments if they do get sick. God does promise to care for us, but not always in the way we expect or would prefer (Matt. 6:31-33). Medical insurance, including Medicare, could be viewed as one of the ways God through his common grace provides for us and a way that we can provide for our families (1 Tim. 5:8). It could also be seen as a way to set aside a little money (that is pooled with others’) for a time when a lot may be needed, which is good stewardship as biblically defined (Gen. 41).
Whether these provisions are absolutely necessary and, if so, whether medical insurance is the best way to do it, is a matter between individuals or families and God (James 1:5). (If you find that you are opposed to traditional medical insurance or Medicare, you can check out the non-traditional options I discuss later in this article.)
Do we all need it?
Health care remains very much in the news, now more than a decade after the implementation of the Affordable Care Act (ACA). Medical care costs a lot, and we need to plan for it, especially if we’re older. That statement remains true regardless of political perspectives.
The rate of inflation in medical costs continues to significantly exceed the general inflation rate. In large part, this is because of new (and expensive) medications and treatment options, as well as life-prolonging successes. All of this makes health insurance necessary for the vast majority of people.
I am of the opinion that medical insurance is a good thing unless your conscience dictates otherwise. So, as a general rule, you probably don’t want to go without it, especially when you’re older.
If you don’t have it, you will have to figure out a way to pay for your healthcare expenses. And, as with home and auto insurance, the idea is to take prudent steps to protect yourself from the financial effects of a catastrophic accident or illness. Another problem is that hospitals generally charge uninsured patients prices that are significantly (sometimes outrageously) higher than those they charge insurance companies and Medicare. While this situation has improved somewhat with the introduction of price transparency requirements in recent years, it remains a significant concern.
Pre-Medicare options
If you need health insurance and have not yet reached age 65, when you’ll be eligible for Medicare, you essentially have five choices:
- Shop inside the Health Care Exchange Marketplace (ACA)
- Continue employer coverage through COBRA
- Get coverage through a working spouse’s plan
- Shop outside of the Health Care Exchange Marketplace (private insurance)
- Shop for a “non-traditional” provider
Let’s look at each of these in detail:
Option one: the ACA Marketplace
The main goals of the ACA remain unchanged: to make medical insurance more available and affordable to more people. However, 2026 marks a significant shift in how affordable that coverage actually is for many people.
The big change is that the enhanced premium tax credits that were in place from 2021 through 2025 expired on December 31, 2025, and Congress did not extend them. This has dramatically increased out-of-pocket costs for millions of Americans who purchase coverage through the ACA Marketplace.
Understanding the subsidy changes
From 2021-2025, the “enhanced” subsidies provided significantly more help with premiums. People with incomes between 100% and 150% of the federal poverty level (FPL) received full subsidies, paying $0 in monthly premiums. (For 2026, the FPL for a family of four is $33,000.) Those with higher incomes, even above 400% of FPL, could still receive help, with no one paying more than 8.5% of their income for the benchmark silver plan.
In 2026, we’re back to the original ACA subsidy structure that was in place from 2014 to 2020:
- Income cap restored: You must have income between 100% and 400% of FPL to qualify for any subsidy. For 2026, that’s $15,650 to $62,600 for an individual, or $32,150 to $128,600 for a family of four. If you earn even $1 above the 400% threshold, you get no subsidy at all.
- Higher required contributions: The percentage of income you’re required to pay for coverage has increased significantly. For example, someone at 150% of FPL now pays about 4% of their income, rather than $0. Someone at 250% of FPL pays about 8.5% instead of 6%.
- Average impact: For subsidized enrollees, premium payments have increased an average of 114% – about $1,016 per year. But the impact varies widely based on age, location, and income.
Who’s hit hardest?
The changes affect different groups in different ways:
Low-income enrollees (100-150% FPL): The 45% of Marketplace enrollees who previously paid $0 in monthly premiums now pay 2-6% of their income. For someone earning $20,000 annually, that could mean going from $0 to $800-$1,200 in annual premiums.
Near the 400% cliff: A 60-year-old couple earning $85,000 (just above 400% FPL) could face annual premiums of $22,600—about a quarter of their annual income. Just one year ago, they would have paid 8.5% of their income, or about $7,200. That’s a $15,400 annual increase.
Early retirees in their late 50s and early 60s: Because premiums increase dramatically with age, older Marketplace enrollees face the highest absolute costs. A 64-year-old can be charged up to three times what a 21-year-old pays for the same plan. Combined with reduced subsidies, this makes the final years before Medicare particularly expensive.
The repayment trap
Another critical change: the repayment caps that protected low-income enrollees from having to pay back excess subsidies if their income turned out higher than estimated – those caps are gone for 2026.
Previously, if you underestimated your income and received more in subsidies than you qualified for, your repayment was capped at your income level. For someone at 200% of FPL, the cap was $1,500. Now, if you end up with income above 400% of FPL, you must repay the entire subsidy, potentially thousands of dollars at tax time.
This is especially dangerous for retirees who might have variable income from Roth conversions, capital gains, or occasional consulting work. You could think you qualify for a subsidy at the beginning of the year, only to find that a December Roth conversion or stock sale pushes you over the 400% threshold, requiring you to repay thousands of dollars in April.
Income management becomes critical
Given the harsh 400% cliff and the elimination of repayment caps, managing your income becomes essential if you’re anywhere near these thresholds:
Strategies to reduce MAGI:
- Maximize pre-tax contributions to traditional IRAs and 401(k)s
- Contribute to Health Savings Accounts (HSAs) if you have a high-deductible plan
- Time Roth conversions carefully or avoid them entirely during Marketplace coverage years
- Defer capital gains or use tax-loss harvesting
- Consider the timing of consulting income or part-time work
The MAGI calculation: For ACA subsidy purposes, your Modified Adjusted Gross Income (MAGI) is your Adjusted Gross Income (line 11 of Form 1040) plus any tax-exempt interest, foreign earned income exclusion, and Social Security benefits that weren’t included in AGI.
Is the Marketplace still worth it?
Despite these changes, the ACA Marketplace remains the primary option for most early retirees without employer coverage. If you qualify for any subsidy, the Marketplace is almost certainly your best option. Even with reduced subsidies, subsidized Marketplace coverage typically costs less than COBRA or private insurance.
However, if you’re close to or above the 400% FPL threshold, you’ll want to carefully compare all your options and run the numbers. For some higher-income early retirees, private insurance outside the Marketplace, or even COBRA (see below) in the short term, might make sense.
A very important point to emphasize: the subsidy credit is calculated monthly. You do not have to qualify for the entire year. If you retire mid-year, your subsidy eligibility is based on your projected income for the remainder of the year, not your full-year income, including your working months.
Option two: COBRA coverage
The Consolidated Omnibus Budget Reconciliation Act (COBRA) allows you to continue your employer’s health plan for up to 18 months after leaving your job. You’ll pay the full premium (including the portion your employer previously covered) plus up to a 2% administrative fee.
For early retirees, COBRA can serve as a bridge to Medicare if you’re retiring within 18 months of turning 65. You maintain your current coverage and doctors, which provides continuity of care. However, COBRA is typically expensive; what seemed like a reasonable employee contribution might balloon to $600-$1,500 per month or more when you’re paying the full freight.
Before choosing COBRA, compare the cost to Marketplace plans. For many early retirees who qualify for subsidies, Marketplace coverage will be significantly cheaper than COBRA. But if you’re above the 400% FPL threshold and don’t qualify for subsidies, or if you have ongoing medical treatment and prefer to keep your current doctors and plan, COBRA might be worth the extra cost.
But remember that if you turn 65 while on COBRA, you can (and should) enroll in Medicare. Your COBRA coverage typically ends when Medicare begins, though your spouse and dependents under 65 can continue COBRA for the remainder of the 18-month period.
Option three: spouse’s employer plan
If your spouse is still working and has employer-sponsored health insurance, getting added to their plan is often the simplest and most cost-effective solution. Losing your own coverage when you retire qualifies as a “special enrollment period,” allowing you to join your spouse’s plan outside the annual open enrollment window.
This option deserves serious consideration, especially given the changes to Marketplace subsidies. Employer-sponsored coverage is often more comprehensive and cheaper than individual Marketplace plans, particularly if you’re above the 400% FPL subsidy threshold.
One strategic consideration: if both spouses are approaching Medicare eligibility at different times, you’ll need to plan for the transition period when one is on Medicare, and the other still needs coverage.
Option four: employer retiree health benefits
Some employers – particularly large companies, unions, and government entities – offer health insurance to retirees. According to recent data, about 17% of large employers provide retiree health benefits, down from 24% a decade ago. This trend continues downward as companies seek to reduce long-term benefit obligations.
If your employer offers retiree coverage, count yourself fortunate. These plans typically cover about 40% of the premium cost on average, leaving you responsible for the remaining 60%. For a 64-year-old retiree, this might mean paying around $8,600 annually for coverage that would cost $14,000+ at full price.
Important notes about retiree coverage:
- Many plans are designed to supplement Medicare, not provide pre-Medicare coverage. Check whether the benefit starts at retirement or at Medicare eligibility.
- You typically need to meet minimum service requirements (often 10+ years with the company) to qualify.
- Even if offered retiree coverage, compare it to Marketplace plans. If you qualify for significant subsidies, a Marketplace plan might actually cost less.
Option five: private insurance outside the marketplace
You can purchase health insurance directly from insurance companies or through brokers without using the government Marketplace. The plans follow the same ACA rules (no denials for pre-existing conditions, coverage of essential health benefits, etc.), but you cannot use premium tax credits for these plans.
This option makes sense primarily for people with income above 400% of FPL who don’t qualify for Marketplace subsidies. You might find different plan options or provider networks outside the Marketplace. However, for the same level of coverage in the same area, the pre-subsidy price should be identical whether you buy on or off the Marketplace.
If you’re eligible for even a small subsidy, buying through the Marketplace is almost always the better financial choice. The subsidy typically outweighs any perceived advantages of off-Marketplace plans.
Option six: non-traditional options
If you don’t want to pursue traditional insurance, there are some “non-traditional” options to consider. However, it’s important to understand that these are not insurance in the legal sense and do not provide the same protections.
Direct Primary Care (DPC)
Direct Primary Care involves a flat monthly fee (typically $50-$150) that covers routine primary care services, rather than the typical fee-for-service model. You have direct access to your doctor, often with same-day appointments, longer visit times, and even text or email access.
DPC makes your routine healthcare expenses more predictable and can provide excellent preventive care. However, DPC does not cover major medical expenses like hospitalizations, surgeries, or specialist care. Most people using DPC pair it with a high-deductible health insurance plan (either through the Marketplace or privately) to cover catastrophic expenses. This combination can sometimes be paired with a Health Savings Account (HSA) to help manage the high deductible.
Concierge Medicine
Concierge medicine is similar to DPC but typically more expensive, with annual retainers ranging from several hundred to several thousand dollars. You receive highly personalized care with 24/7 access to your physician. Like DPC, this is not insurance and must be combined with a traditional health plan for major medical coverage.
This option appeals mainly to affluent retirees who value the enhanced access and personalized attention, but it’s not a substitute for comprehensive insurance.
Health Care Sharing Ministries
Faith-based health care sharing ministries function like private insurance pools for groups that share similar beliefs and philosophies. Members pool their resources to cover each other’s medical expenses. These are not insurance – they’re cost-sharing arrangements.
The main ministries include Medi-Share, Christian Healthcare Ministries, Samaritan Ministries, and Liberty HealthShare. Members often report high satisfaction and significantly lower monthly costs than traditional insurance – sometimes $200-$400 per month versus $600-$1,200 for comparable Marketplace coverage.
However, these plans come with important limitations and considerations:
Not subject to ACA rules: Health sharing ministries are not insurance and don’t have to follow ACA regulations. This means:
- They can exclude pre-existing conditions (though some offer limited coverage after a waiting period)
- They can limit coverage for certain conditions or treatments
- They typically don’t cover preventive care in the same way as ACA plans
- Payments to providers are not guaranteed – they depend on the ministry’s available funds
Faith requirements: Most require members to sign a statement of faith and agree to live according to certain moral and ethical standards. Some restrict coverage for conditions they consider related to “unhealthy lifestyle choices.”
Need-based sharing: Rather than contractual obligations, these ministries operate on voluntary sharing. While most members report their needs being met, there’s no legal guarantee of payment.
For early retirees with strong faith convictions who are in relatively good health and willing to accept limitations, health-sharing ministries can offer a significantly more affordable alternative to traditional insurance. However, if you have serious pre-existing conditions, need extensive ongoing care, or want the security of guaranteed coverage, traditional insurance remains the safer choice.
Strategic considerations for early retirees
The changed subsidy landscape makes strategic planning more important than ever for anyone considering early retirement:
Timing your retirement: Consider whether retiring at the end of the year makes sense, allowing you to start the following year with predictable retirement income for subsidy purposes. Mid-year retirement can complicate subsidy calculations.
The 400% cliff management: If you’re close to the 400% FPL threshold, even small amounts of income can trigger massive premium increases. A $1,000 year-end bonus or a small Roth conversion could cost you thousands in lost subsidies.
Planning the Medicare bridge: If you’re in your late 50s or early 60s, calculate the total cost of health insurance from retirement to age 65. For a 60-year-old couple, this could be $50,000-$150,000, depending on income, location, and subsidy eligibility. This should factor into your retirement readiness analysis.
Part-time work considerations: Some early retirees find part-time work at a company that offers health benefits. Even a modest position can sometimes provide access to group coverage that’s better and cheaper than individual Marketplace plans.
State variations: Some states provide additional subsidies beyond the federal premium tax credits. If you’re flexible about where you live in retirement, this might factor into your decision about location.
The bottom line
Most people who aren’t covered by an employer plan, COBRA, or a working spouse’s coverage will need to purchase insurance through the ACA Marketplace. The expiration of enhanced subsidies in 2026 has made this significantly more expensive for millions of Americans, but it remains the primary option for early retirees under age 65.
If you qualify for any subsidy at all, the Marketplace is almost certainly your best choice. Compare plans carefully – Bronze plans have lower premiums but higher deductibles; Silver plans qualify for cost-sharing reductions if you’re under 250% of FPL; Gold and Platinum plans have higher premiums but lower out-of-pocket costs when you need care.
If you’re above the 400% FPL threshold and don’t qualify for subsidies, carefully compare Marketplace plans, COBRA (if available), private insurance, and potentially health sharing ministries or DPC combined with catastrophic coverage.
Whatever path you choose, don’t go without major medical coverage. The financial risk of a serious illness or accident without insurance far outweighs the cost of premiums. And if you’re 65 or older, Medicare will almost certainly be the way you get coverage – but that’s a topic for another article.
The key is understanding your options, running the numbers based on your specific situation, and making an informed decision. Health insurance for early retirees has become more complex and expensive in 2026, but with careful planning, you can find coverage that protects you financially while you bridge the gap to Medicare.