How to Cover Healthcare Costs While Waiting for Medicare

What happens between losing employer coverage and turning 65

If you're retiring before 65, you'll face a gap where you no longer have employer health insurance but Medicare hasn't started yet. That gap can be anywhere from a few months to several years, depending on when you retire and when you turn 65. During that time, you still need to pay for doctor visits, prescriptions, and hospital care — and the costs can be substantial without any coverage.

The waiting period isn't optional, and it's not something Medicare can shorten. But you have concrete options to cover yourself during those months or years: the Affordable Care Act marketplace, COBRA continuation coverage, Medicaid (in some states), coverage through a spouse's plan, or retiree health benefits if your employer offers them. Each one has different costs, different rules about when you can use it, and different things you need to do first.

Key Takeaways

• You must enroll in a health plan within 60 days of losing employer coverage, or you may face a penalty when you eventually join Medicare.
• The ACA marketplace is usually the cheapest option if your income is low to moderate, because you may receive tax credits that reduce your monthly premium.
• COBRA lets you keep your old employer plan for up to 18 months, but you pay the full premium yourself — often $800 to $2,000 per month for individual coverage.
• Medicaid covers healthcare with no premium in many states, but income limits are strict and vary widely by state.
• When you turn 65, you must enroll in Medicare Part A and Part B during your initial enrollment period, or you'll owe a permanent penalty.

ACA marketplace coverage: the most common bridge

The Affordable Care Act marketplace (also called Healthcare.gov or your state's exchange) is where most people under 65 find coverage during the waiting period. You can enroll any time, but if you've just lost employer coverage, you have a special 60-day window to sign up without waiting for open enrollment. Missing that window means you can't enroll until the next open enrollment period, which runs November 1 to January 15 each year.

The cost depends on your income. If you earn less than about 400% of the federal poverty line — roughly $55,000 for a single person in 2024, though this changes yearly — you may receive a tax credit that lowers your monthly premium significantly. Some people with lower incomes pay $0 to $50 per month. You'll also choose a deductible and out-of-pocket maximum, which affects your premium: lower premiums mean higher deductibles.

To enroll, go to Healthcare.gov (or your state's marketplace website if your state runs its own) and create an account. You'll need your Social Security number, income information, and details about any current coverage. The process takes 15 to 30 minutes. Once you're enrolled, coverage starts on the first of the following month if you enroll by the 15th; if you enroll after the 15th, coverage starts two months out.

COBRA: keeping your old plan, at a cost

COBRA (Consolidated Omnibus Budget Reconciliation Act) lets you stay on your employer's health plan for up to 18 months after you leave the job. Your employer must offer it if they have 20 or more employees. You pay the full premium yourself — what the employer was paying plus a 2% administrative fee — which is usually $800 to $2,000 per month for individual coverage, depending on the plan.

COBRA makes sense only if your employer's plan is unusually cheap or if you have ongoing medical needs and want to avoid switching doctors mid-treatment. For most people, the ACA marketplace is cheaper, especially if you may have access to for tax credits. You have 60 days from the date you lose coverage to elect COBRA, and coverage is retroactive to your last day of employment, so you can wait to decide.

Your employer's HR or benefits department will send you a COBRA election notice in the mail. Read it carefully — it includes the deadline, the premium amount, and instructions for paying. If you miss the deadline, you lose COBRA may be able to access permanently.

Medicaid: free or very low-cost coverage in participating states

Medicaid covers healthcare with no premium in most states, though a handful charge small copays for certain services. However, income limits are strict: in most states, you must earn less than 138% of the federal poverty line to may have access to, which is roughly $18,000 for a single person. Some states have lower limits. A few states have not expanded Medicaid at all, so coverage is only available to people over 65, blind, disabled, or in families with children.

To find out whether you may have access to in your state, visit your state's Medicaid office website or call 211 (a free referral line). You can also apply through Healthcare.gov — if you're not may be able to access for Medicaid, the site will show you ACA marketplace options instead. Medicaid enrollment has no deadline; you can enroll any time you're may be able to access.

One important note: if you're receiving Social Security retirement benefits, your income for Medicaid purposes includes those benefits. If you're not yet receiving benefits, your income calculation is simpler. Either way, call your state Medicaid office to confirm your specific situation before you assume you don't may have access to.

Coverage through a spouse or family member

If your spouse still works and has employer health insurance, you can usually join their plan as a dependent. This is often the cheapest option because employer plans typically have lower premiums and out-of-pocket costs than individual marketplace plans. Ask your spouse's HR department about adding you; you'll usually need to provide proof of marriage and proof that you've lost your own coverage.

If your spouse is retired and has retiree health benefits, you may be able to join that plan too. The rules vary by employer, so contact their benefits department directly. Some retiree plans end when the retiree turns 65 and becomes may be able to access for Medicare, so confirm the plan will still cover you during your waiting period.

Retiree health benefits from your former employer

Some employers offer health coverage to retirees before they turn 65. This is becoming less common — most large employers have phased it out — but if your employer offers it, it's usually cheaper than marketplace coverage and often better. Ask your HR department whether you're may be able to access and what the enrollment process is. You typically have to enroll within 30 to 60 days of retiring, so don't delay.

If your employer does offer retiree coverage, you can use it as your bridge plan and then switch to Medicare when you turn 65. Some retiree plans coordinate with Medicare, meaning Medicare becomes primary and the retiree plan covers some of what Medicare doesn't. Ask your benefits department how the coordination works before you enroll in Medicare.

Timing your enrollment and avoiding penalties

The key deadline is this: you must enroll in a health plan within 60 days of losing your employer coverage. If you don't, you may face a penalty when you eventually join Medicare. The penalty is 1% of the national average Medicare premium for each month you were uninsured, added to your Part B premium permanently. For example, if you go uninsured for 12 months, you'll pay roughly 12% more for Part B for the rest of your life.

When you turn 65, you have an Initial Enrollment Period that runs three months before your birthday month, through three months after. You must enroll in Medicare Part A and Part B during this window. If you miss it and don't have other may have access to coverage (like an active employer plan or COBRA), you'll owe a permanent penalty on Part B as well.

Mark both dates on your calendar: the 60-day deadline after losing coverage, and your Initial Enrollment Period for Medicare. If you're unsure of either date, call Social Security at 1-800-772-1213 to confirm.

Frequently Asked Questions

What if I retire before 62 and can't get Medicare for over three years?

You'll need continuous coverage for the entire period. The ACA marketplace is your most affordable option if your income qualifies you for tax credits. Enroll within 60 days of losing employer coverage, then re-enroll each year during open enrollment (November 1 to January 15). When you turn 65, switch to Medicare during your Initial Enrollment Period.

Can I go without health insurance during the waiting period?

Technically yes, but it's risky and costly. If you go uninsured for any month, you'll owe a permanent penalty on your Medicare Part B premium when you turn 65. A single hospitalization can also cost tens of thousands of dollars. Enrolling in an ACA marketplace plan, even with a high deductible, protects you from both the penalty and catastrophic medical bills.

Do I have to choose the cheapest marketplace plan?

No. You can choose any plan available in your area. Cheaper plans usually have higher deductibles and out-of-pocket maximums, so consider your expected healthcare needs. If you take regular medications or see specialists, a plan with a lower deductible may cost less overall, even if the monthly premium is higher.

What happens to my marketplace coverage when I turn 65?

Your marketplace plan ends on the last day of the month you turn 65. You must enroll in Medicare Part A and Part B during your Initial Enrollment Period (three months before through three months after your birthday month). Medicare then becomes your primary coverage. You don't need to do anything to end your marketplace plan — it ends automatically.

If I have a pre-existing condition, will I be denied coverage?

No. The ACA prohibits insurance companies from denying coverage or charging more based on pre-existing conditions. This applies to all marketplace plans. You cannot be denied, and your premium is based only on your age, location, and tobacco use — not your health history.