# Coast FIRE and Health Insurance Before 65

> Health insurance is the cost most Coast FIRE plans leave out. Your options before Medicare, how ACA subsidies react to lower income, and how to budget it.

Source: https://mycoastfire.com/blog/coast-fire-health-insurance-before-65
Last updated: 2026-09-26

If your Coast FIRE plan includes a job without benefits, health insurance turns into a bill you pay yourself. For a lot of people it's the biggest line in the budget that nobody wrote down.

Before 65, most people on Coast FIRE get health insurance from one of four places: a job that offers it at part-time hours, an ACA Marketplace plan, COBRA for a while after leaving a job, or a spouse’s plan. For most, the Marketplace ends up being the answer, and because its subsidies are based on income, earning less can make coverage cheaper, right up to a hard cutoff.

## Why health insurance is the cost people miss

You build your spending number from bank statements, and bank statements don’t show what your employer paid for your health plan. In KFF’s [2025 Employer Health Benefits Survey](https://www.kff.org/health-costs/2025-employer-health-benefits-survey/), the average premium was $9,325 a year for single coverage and $26,993 for family coverage. Workers paid 16% of the single premium and 26% of the family premium from their paychecks. The employer covered the rest, and you never saw it.

Leave that job and the whole premium lands on you unless something else picks it up. On a coasting income that’s sized to cover today’s bills, an extra $10,000 or $20,000 a year isn’t a rounding error. It’s the kind of surprise that sends people back to full-time work.

The cost also shows up twice. You need coverage while you coast, which your paycheck has to pay for, and again after you retire, which your portfolio has to pay for.

## Your options before Medicare

### A part-time job that offers benefits

This is the cleanest fix. Some large employers offer health coverage to part-time workers who put in enough hours each week. Read the current benefits policy before you accept, especially the waiting period and the minimum hours you’ll need to keep.

One catch: if a job offers you coverage that counts as affordable, you generally can’t take a Marketplace subsidy for yourself instead. For 2026, that means your share of the cheapest self-only plan is no more than 9.96% of household income, according to [IRS Rev. Proc. 2025-25](https://www.irs.gov/pub/irs-drop/rp-25-25.pdf). For plan years starting in 2027 the line moves to 10.22%, under [Rev. Proc. 2026-26](https://www.irs.gov/pub/irs-drop/rp-26-26.pdf).

### ACA Marketplace plans

Anyone without other coverage can buy a plan on HealthCare.gov or a state exchange during open enrollment, or within 60 days of losing job-based coverage. For 2027 coverage, open enrollment on HealthCare.gov runs from November 1, 2026, to January 15, 2027, and you need to pick a plan by December 15 for coverage that starts January 1, according to its [dates and deadlines page](https://www.healthcare.gov/quick-guide/dates-and-deadlines/). If your state runs its own exchange, check its dates. Insurers can’t turn you down or charge you more for a health condition. They can charge older adults up to three times what they charge a 21-year-old, though, and that matters a lot if you plan to stop working in your late 50s.

KFF puts the [average 2026 benchmark silver premium](https://www.kff.org/affordable-care-act/state-indicator/marketplace-average-benchmark-premiums/) for a 40-year-old at $625 a month, up from $497 in 2025. For 2027, insurers have asked for a median increase of about 15%, according to KFF’s [review of rate filings](https://www.kff.org/affordable-care-act/how-much-and-why-aca-marketplace-premiums-are-going-up-in-2027/), so expect another jump when you shop. Subsidies can cut that a lot.

### COBRA

COBRA lets you stay on your old employer’s plan after you leave or your hours get cut, usually for up to 18 months, as long as the employer has 20 or more employees. The price is the problem. The plan can charge you the full premium, including the share your employer used to pay, plus 2%, per the [Department of Labor](https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/faqs/cobra-continuation-health-coverage-workers). You get 60 days to elect it.

COBRA works as a short bridge. If you’ve already met this year’s deductible or you’re partway through treatment with doctors you want to keep, a few months can be worth the money. As a multi-year plan it’s usually the most expensive option you have. Decide early, because quitting COBRA voluntarily outside open enrollment doesn’t qualify you for a special enrollment period on the Marketplace.

### A spouse’s plan

If your spouse or partner keeps a job with family coverage, joining that plan is often the cheapest route. Some couples set up Coast FIRE this way on purpose: one person takes the lower-stress job, the other keeps the benefits. The whole household’s coverage then rides on one job. Our [Coast FIRE for couples](https://mycoastfire.com/blog/coast-fire-for-couples) post goes through the rest of the joint math.

### HSAs

A health savings account isn’t insurance, but it pairs well with a cheap plan. Contributions, growth and withdrawals for medical costs are all tax-free. Starting in 2026, bronze and catastrophic plans count as HSA-compatible under the 2025 tax law, as the [IRS explains](https://www.irs.gov/newsroom/treasury-irs-provide-guidance-on-new-tax-benefits-for-health-savings-account-participants-under-the-one-big-beautiful-bill), so a low-premium Marketplace bronze plan can now come with an HSA. Contributions also lower the income figure subsidies are based on, and that matters for the next section.

## How ACA subsidies work when you earn less on purpose

The premium tax credit limits what you pay for the benchmark silver plan in your area to a set share of household income. Under the same IRS table, that share for 2026 runs from 2.10% at the lowest incomes up to 9.96% for households between 300% and 400% of the federal poverty level. For 2027 coverage, Rev. Proc. 2026-26 moves the range to 2.15% through 10.22%. The credit is a fixed dollar amount, so a cheaper plan costs you less and a pricier one costs you more.

Say you’re single, coasting on $55,000 a year. For 2027 coverage that’s about 345% of the poverty line, so your cap is 10.22%, and the benchmark plan costs you at most $5,621 a year, about $468 a month, however high the sticker price is where you live. The same income capped it at 9.96%, or $5,478, for 2026.

Here’s the cutoff. The enhanced subsidies Congress added in 2021 expired at the end of 2025, and with them went the rule that let people above 400% of the poverty level get help. For 2026 coverage, 400% works out to $62,600 for a single person and $84,600 for a household of two. Coverage for 2027 uses the newer [2026 poverty guidelines](https://www.healthcare.gov/glossary/federal-poverty-level-fpl/), so the line rises to $63,840 and $86,560. Earn a dollar more and the credit disappears. KFF [estimated](https://www.kff.org/quick-insights/a-steep-subsidy-cliff-looms-for-older-middle-income-enrollees-if-aca-enhanced-tax-credits-expire/) that a 60-year-old earning $62,000 would pay about $6,175 a year for a benchmark plan in 2026, while one earning $64,000 would pay about $14,931.

The House passed a three-year extension, [H.R. 1834](https://www.congress.gov/bill/119th-congress/house-bill/1834), on January 8, 2026. As I write this in late September 2026, the Senate hasn’t passed it, nothing has been signed into law, and the IRS table for 2027 still stops at 400%. I’d plan for the cliff to be there in 2027 and check HealthCare.gov before you enroll in case Congress acts.

For Coast FIRE, this is mostly good news. A deliberately modest income can put you well inside the subsidy range. Pre-tax 401(k), traditional IRA and HSA contributions all reduce the income that counts. Two warnings, though. Starting with tax year 2026 there’s [no longer a cap](https://www.irs.gov/newsroom/irs-updates-frequently-asked-questions-on-the-premium-tax-credit) on paying back excess subsidy, so if a good freelance year pushes you over your estimate, you repay the difference in full at tax time. And if your income falls below the poverty level in a state that hasn’t expanded Medicaid, you may get neither a subsidy nor Medicaid.

## Putting health insurance into your Coast FIRE number

Treat it as two budgets. While you coast, premiums and out-of-pocket costs come from your paycheck, so add them to what your job has to earn. For retirement, add them to the spending figure that drives your Coast FIRE number.

Take Jordan, who is 40, has $600,000 invested and wants to stop working at 60. Jordan spends $50,000 a year, and none of that is health insurance, because work pays for it. At that spending level, Jordan’s Coast FIRE number is $583,417, so Jordan looks done.

Now add health care. For all of retirement I’d budget $8,000 a year. That’s my own rough assumption, but Medicare Part B alone is $202.90 a month in 2026, or $2,435 a year, according to [Medicare.gov](https://www.medicare.gov/publications/11579-medicare-costs.pdf), before a supplement, a drug plan, dental and deductibles. The Medicare trustees [estimate](https://www.cms.gov/oact/tr/2026) $209.50 a month for 2027. The five years from 60 to 65 cost more, because Jordan would be buying individual coverage at the priciest ages. I’ll add another $10,000 a year for those, or $50,000 in total.

|  | Leaving health care out | Including health care |
| --- | --- | --- |
| Yearly retirement spending | $50,000 | $58,000 |
| Extra for ages 60 to 65 | $0 | $50,000 |
| FIRE number at 60 | $1,250,000 | $1,500,000 |
| Coast FIRE number at 40 | $583,417 | $700,100 |

Including health care leaves Jordan $100,100 short instead of already coasting. At $1,500 a month, Jordan crosses the line at 46, about 6 more years of saving. Better to learn that at 40 than at 61.

The calculator has one spending box, so fold the bridge in the way our [Social Security post](https://mycoastfire.com/blog/coast-fire-with-social-security) does: $58,000 + ($50,000 × 4%) = $60,000.

Jordan, with health care included

Spending includes $8,000 a year for health care and the extra cost of the five years before Medicare.

[Open the calculator with these numbers](https://mycoastfire.com/?age=40&ret=60&assets=600000&contrib=1500)

## Medicare at 65, and why retiring early makes the gap longer

For most people, Medicare starts at 65 regardless of when they claim Social Security. Your initial enrollment window opens 3 months before the month you turn 65 and closes 3 months after it. Don’t count on COBRA to delay it. [Medicare.gov](https://www.medicare.gov/basics/get-started-with-medicare/medicare-basics/working-past-65) is clear that COBRA doesn’t extend your time to sign up, and [signing up for Part B late](https://www.medicare.gov/basics/costs/medicare-costs/avoid-penalties) can add 10% to your premium for each full year you could have had it, usually for life.

Medicare is also why this problem gets bigger the earlier you plan to stop. Coast until 65 in a job with benefits and there’s no gap at all. Stop at 60 and you’re buying your own coverage for five years. Stop at 55 and it’s ten, at the ages when individual premiums are highest.

In retirement you’ll have more control over your taxable income than you do now, especially with Roth savings or a brokerage account, so subsidies may well help. I still wouldn’t build the plan around them. The rules have changed several times since 2021, and I’d rather the numbers work at something close to full price, with any subsidy treated as a bonus.

## Questions people ask

### Can I get ACA subsidies if I have a lot of money invested?

Yes. Premium tax credits are based on income, not assets, so a large 401(k) or brokerage balance doesn't disqualify you. What counts is your modified adjusted gross income, which includes wages, self-employment income, taxable withdrawals, dividends and realized capital gains.

### Is COBRA worth it when I leave my job to coast?

Sometimes, for a few months. It keeps your doctors and the deductible you've already paid down, but you can be charged the full premium plus 2%. Compare it with a Marketplace plan within 60 days of losing coverage, because dropping COBRA later on your own doesn't open a special enrollment period.

### Do I need to worry about this if I plan to retire at 65?

Less, but not zero. If you coast in a job with benefits until 65, Medicare takes over from there. The risk is losing that job at 58 or 62 and having to buy individual coverage for several years at the ages when it costs the most.

## Keep reading

-   [Social Security and pensionsCount guaranteed income without fooling yourself.](https://mycoastfire.com/blog/coast-fire-with-social-security)
-   [Coast FIRE for couplesTwo incomes, one plan, sometimes one health plan.](https://mycoastfire.com/blog/coast-fire-for-couples)
-   [Coast FIRE vs Barista FIREWhich one you're actually doing.](https://mycoastfire.com/coast-fire-vs-barista-fire)