How do I bridge to Medicare with an ACA plan?

How do you stay covered if you retire at 62 and Medicare doesn’t start until 65? For most people, the answer is the ACA marketplace, the individual health plans you buy through healthcare.gov or your state exchange. It’s the bridge across the three years when the paycheck and its insurance are gone but Medicare hasn’t arrived.

Why the marketplace usually wins

Once you leave work you have a few options to bridge to 65: COBRA, a spouse’s plan, or the marketplace. COBRA lets you keep your old employer plan, but you pay the full premium with no employer subsidy, and it’s capped at 18 months in most cases. The marketplace has no such time limit and, depending on your income, can come with a premium tax credit that COBRA never offers.

Leaving work is a qualifying event, so you get a special enrollment window to sign up outside the normal open-enrollment period. Don’t sit on it.

The hidden price: your income controls your subsidy

Here’s the part that catches affluent early retirees off guard. The marketplace premium tax credit is based on your modified adjusted gross income for the year. The lower your reported income, the larger your subsidy. So the early-retirement years that look like a clean, low-income window for tax planning are the exact years a big income event quietly raises your health premiums.

This is the same trap that shows up later with IRMAA, the income-based surcharge on Medicare. Two different programs, same lesson: in these bridge years, the number on your tax return is a dial that controls what you pay for healthcare.

The conversion conflict

If you’re doing Roth conversions before RMDs hit, every dollar you convert is a dollar of income that can shrink your marketplace subsidy. That doesn’t mean don’t convert. It means you have to weigh the long-term tax saved against the short-term subsidy lost, year by year, and decide which matters more for your situation. For a household with $3M-plus, the conversion math often wins outright. For someone counting on the subsidy, it can flip the other way.

For higher-net-worth households

If a large subsidy was never realistic for you, stop optimizing around it. Use these pre-Medicare years to fill the lower tax brackets with conversions and let the premium be what it is. The bridge isn’t just about staying insured. It’s three uninterrupted years to reshape your future tax bill before Social Security and RMDs close the window. Cross it with a plan, not just a policy.