Retiring before age 65 can create an awkward gap: your paycheck may stop before Medicare begins. Health coverage during those years can become one of the largest recurring expenses in an early-retirement plan, and the cheapest monthly premium is not always the lowest-cost choice.

Start with the coverage paths available to you

If you lose job-based coverage when you retire, HealthCare.gov says that loss of coverage generally creates a Special Enrollment Period for Marketplace coverage. Depending on your situation, you may also be able to continue an employer plan through COBRA, join a spouse’s employer plan, or consider other private coverage available in your state.

HealthCare.gov’s retiree coverage guide is a useful starting point for understanding Marketplace timing and eligibility.

Do not compare only the premium

For someone in their late 50s or early 60s, the better question is often: What could this plan cost me in a normal year and in a bad year?

Compare the monthly premium, deductible, copays, coinsurance, prescription costs and the out-of-pocket maximum. A plan that saves $150 a month but exposes you to several thousand dollars more in cost sharing may or may not be a good trade depending on your health, cash reserves and expected use.

See our guide: How to Compare Health Plans Beyond the Monthly Premium.

Network access matters more when you already have doctors

Early retirees often have established physicians, specialists and preferred hospitals. Before enrolling, verify the exact network for the exact plan. PPO, EPO and HMO labels describe different approaches to network access, but the label alone does not tell you whether your doctors participate.

HealthCare.gov notes that PPOs generally allow out-of-network care at additional cost, while EPOs generally cover only in-network care except for emergencies. Read more in our PPO, EPO and HMO network guide.

Prescription coverage can change the entire comparison

Check every regular medication against the plan’s current formulary. Look at the drug tier, deductible, copay or coinsurance, prior-authorization rules and preferred pharmacies. Two plans with similar premiums can produce very different annual costs when a high-cost medication is involved.

Marketplace protections are important to understand

Marketplace plans must cover pre-existing conditions and cannot charge more based on your medical history. If you are comparing a Marketplace plan with a non-Marketplace or limited-benefit product, do not assume the rules, benefits or protections are identical. Review the policy documents and exclusions carefully.

For example, federal regulators require prominent notices on fixed-indemnity excepted-benefit coverage because it is structurally different from comprehensive major-medical coverage. Our guide explains what fixed indemnity coverage is and is not.

Retirement withdrawals can affect the Marketplace calculation

HealthCare.gov notes that taxable withdrawals from retirement accounts generally count toward Marketplace income calculations. That means the way you fund the years between retirement and Medicare can affect both your tax picture and potential health-insurance assistance.

This is one reason health coverage should be coordinated with the broader retirement-income plan instead of handled as an isolated purchase.

Build a bridge to Medicare, not just a one-year solution

Someone retiring at 59 may need a different strategy than someone retiring at 64. Ask how the coverage would work if premiums rise, your health changes, a preferred doctor leaves the network, or you move to another state. Also plan for the transition into Medicare so you know when and how the pre-65 coverage should end.

Want help comparing the actual tradeoffs?

King Life can help organize the comparison around total cost, provider access, prescriptions, coverage type and the number of years you need to bridge before Medicare.

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Educational information only. Plan availability, eligibility, underwriting, benefits, networks and costs vary by state, carrier and plan. Review current plan documents before enrolling.