Average Cost of Retirement Health Insurance for Ages 62 – 65

If you buy health insurance independently instead of obtaining from an employer or government program, your monthly premiums will increase markedly as you get older. As you approach retirement, in fact, you’ll find yourself paying premiums up to three times what younger insured people pay for plans. An estimate from the Urban Institute, for example, indicates that average payments for monthly premiums were $1,081 at age 64, while those at age 30 paid only $422. ¹ Health insurance costs can take a big bite out of retirement income.

Talk to a financial advisor if you’re wanting to plan ahead and are looking to make the right financial planning decisions for you.

Effect of Age on Health Insurance Premiums

The Affordable Care Act empowers health insurance companies to incorporate age when calculating premiums. This is based on the idea that older people are more susceptible to illness and injury and can reasonably be charged more than younger policyholders. However, rather than permitting insurers limitless increases in premiums for older insured people, the law caps age-based premium increases. Using the rate charged to a 21-year-old, insurers can only charge a 64-year-old up to three times as much for a given plan.

Some states use lower maximum ratios. Two states, Vermont and New York, prohibit age-based multipliers. In these states, older purchasers of health insurance pay the same as younger ones.

The 3:1 ratio limit of the federal guidelines applies only to 64-year-olds (most people become eligible for Medicare at 65). Insurers are limited to smaller multipliers for buyers at younger ages. For example, under the federal guidelines, a 40-year-old male can be charged a rate 1.278 times the rate charged to a 21-year-old. Multipliers are generally modest until middle-age, when they begin to rise rapidly as older consumers are asked to pay increasingly larger monthly premiums when compared with younger people.

Estimating Premiums for Older Consumers

Kaiser Family Foundation data experts figured the average 40-year-old paid $497 monthly for benchmark Silver plans on ACA marketplaces.[2] These policies represent the second-least expensive option among Silver-tier offerings.

There is no similarly available data for national averages for premiums paid by people at other ages. Nor are there published estimates of a national average for the base rate paid by a 21-year-old. However, it’s possible to generate estimates for these figures using the Kaiser Foundation estimate for a 40-year-old and the allowable parameters for rate-setting.

Since federal rules dictate insurers can extract 1.278 times more from 40-year-old consumers versus 21-year-olds for identical coverage, dividing the average $497 premium for 40-year-olds by the permitted 1.278 aging multiplier produces a base premium of $388.89.

This method suggests $388.89 is the national average paid by a 21-year-old in 2026. The figure can then be used to calculate average premiums for other ages using the federally allowed multiplier for other ages.

Average Health Insurance Premiums Ages 62-65

Starting at age 62, the federal rules allow insurers to charge a 62-year-old 2.873 times the base premium. For a 63-year-old the multiplier is 2.952 and, starting at age 64, the multiplier is the maximum 3. At 65, most people are eligible for Medicare and presumably are not in the market for private health insurance, so the 3 multiplier applies to all purchasers 64 and older.

Multiplying $388.89 by these authorized age factors reveals that the estimated average monthly benchmark premiums escalate to $1,117.27 at age 62, $1,148.56 by age 63 and top out at $1,166.67 for those ages 64-65. Here’s how that looks.

Age-based Premium Caveats

These estimates are for national averages and may not reflect the actual premiums paid by people aged 62 to 65. One reason is that base premium costs vary widely depending on geography. Also, different states use different multiplier schemes, which can significantly affect insurance premiums based on age. Moreover, despite being the most important factor in premium-setting, age is just one consideration. Smoking habits and household size are also key in premium pricing.

These estimates are also restricted to policies sold to individuals through ACA marketplaces. They don’t include other sources of coverage, such as group insurance policies. People may also get coverage through COBRA or as part of retirement benefits from a former employer.

How Health Insurance Costs Fit Into a Retirement Budget

Health insurance can represent one of the largest expenses for individuals who retire before age 65. Monthly premiums of roughly $1,100 to $1,200 per person can meaningfully affect how long retirement savings last, especially when combined with other core costs such as housing, food and transportation. Because these expenses occur before Medicare eligibility begins, early retirees often need to account for several years of higher healthcare costs when determining whether their retirement timeline is financially sustainable.

• Healthcare may account for a significant share of retirement income. Paying about $13,000 to $14,000 per year in premiums per person can consume a notable portion of annual retirement income, particularly for households relying on withdrawals from savings or investments.
• Premiums are only part of total healthcare spending. Deductibles, copayments, coinsurance and prescription drug costs can add several thousand dollars per year, depending on health needs and plan design.
• Higher healthcare costs can affect withdrawal strategies. Early retirees may need to withdraw more from tax-advantaged accounts during ages 62 to 65. This can influence long-term portfolio sustainability and tax planning considerations.
• Healthcare costs often rise over time. Medical inflation has historically increased faster than general inflation, making it important to build flexibility into retirement spending projections.

Tips for Looking for Health Insurance in Your 60s

Finding affordable health insurance between ages 62 and 65 can be challenging, especially if you retire before qualifying for Medicare. During this gap, you’ll likely rely on private coverage through the Health Insurance Marketplace, COBRA or a spouse’s plan. Because premiums and out-of-pocket costs can vary widely, it’s important to compare options carefully and balance affordability with the coverage you need. Here are some key tips to help you navigate health insurance in your early 60s.

• Explore Marketplace Plans Early. If you’re not yet eligible for Medicare, start by checking the Health Insurance Marketplace at Healthcare.gov. Plans are categorized by metal tiers (bronze, silver, gold and platinum) based on how costs are shared. Depending on your income, you may qualify for premium tax credits that can significantly reduce your monthly premiums.
• Consider COBRA if You Recently Retired. If you’ve just left a job that offered group health insurance, COBRA coverage allows you to continue your existing plan for up to 18 months. While this can be a convenient option, it’s often more expensive because you’ll pay the full premium plus an administrative fee. COBRA can be worth it, however, if you need continuity in coverage or have ongoing medical treatments.
• Look Into a Spouse’s Employer Plan. If your spouse is still working, joining their employer’s health insurance plan could be the most cost-effective solution. Employer-sponsored plans typically offer better coverage and lower premiums than individual policies. You’ll need to check the plan’s enrollment rules to ensure you can join outside the standard open enrollment period.
• Compare Private Health Insurance Plans. Private insurers sometimes offer individual health plans outside the federal marketplace. While these plans can fill coverage gaps, be sure to review deductibles, provider networks, and prescription drug coverage. Comparing multiple insurers can help you find the best balance between cost and care quality.
• Budget for Out-of-Pocket Costs. Beyond premiums, remember to account for deductibles, copayments, and coinsurance. Setting aside funds in a health savings account or a separate savings account can help you manage these expenses without straining your retirement budget.
• Work With a Licensed Health Insurance Agent. A qualified health insurance agent can simplify your search by helping you compare plans, understand benefits, and identify cost-saving opportunities. They can also ensure you transition smoothly to Medicare once you turn 65.

How to Reduce Health Insurance Costs Before Medicare Begins

Knowing that premiums can exceed $1,150 per month is only useful if you also know what you can do about it. Several strategies can meaningfully reduce what you pay during the gap between retirement and Medicare eligibility, and most of them require planning before you retire rather than after.

Manage Your Income to Qualify for Premium Tax Credits

Premium tax credits on ACA marketplace plans are based on your modified adjusted gross income, and for early retirees that income is largely within your control. Unlike working years when income flows from a paycheck, retirement income is shaped by which accounts you draw from and how much you take out each year.

Drawing primarily from a Roth account generates little to no taxable income, which can keep reported income low enough to qualify for substantial premium subsidies. Drawing from a traditional IRA or 401(k) adds every dollar to taxable income and can push reported income above the subsidy thresholds. The difference between $50,000 and $65,000 in reported income can translate to hundreds of dollars per month in premium savings, and deliberate withdrawal sequencing, meaning choosing which accounts to draw from and in what order, is often the most powerful cost-reduction tool available to early retirees.

This strategy requires coordination between your retirement income plan and your healthcare cost plan, which is one reason working with a financial advisor before retiring can produce meaningful savings in the years that follow.

Choose the Right Plan Tier for Your Situation

Not every early retiree needs a Silver or Gold plan. A Bronze tier plan carries lower monthly premiums and higher deductibles, which can make financial sense for retirees who are in good health, have savings set aside for out-of-pocket costs and want to keep fixed monthly expenses low. Pairing a Bronze plan with a health savings account allows you to set aside pre-tax dollars specifically for medical costs, which reduces the effective burden of the higher deductible.

The tradeoff is real. A significant health event in a year on a Bronze plan can produce much higher out-of-pocket costs than a higher-premium plan would have required. Reviewing your health history, the plan’s annual out-of-pocket maximum and your ability to cover a worst-case scenario from savings helps clarify whether the monthly premium savings justify the additional exposure.

Catastrophic plans are available to people under 30 and to those who qualify for a hardship exemption. Some early retirees may qualify under specific circumstances. These plans carry very low premiums and very high deductibles and are designed to protect against large unexpected medical costs rather than cover routine care.

Run the Numbers on a Working Spouse’s Plan

If your spouse is still working and has employer-sponsored health insurance, adding yourself to their plan may be the lowest-cost path available. Employers typically cover a meaningful share of the premium, which lowers what the employee pays out of pocket. That built-in subsidy is often unavailable through any other source.

The calculation requires more than a surface comparison, though. Some employers charge considerably more to cover a spouse, and in some cases the combined premium on an employer plan may exceed what marketplace coverage would cost, particularly if the early retiree qualifies for income-based premium credits. Comparing the actual after-subsidy cost of each option for your specific income level is the only way to determine which arrangement is genuinely less expensive.

Weigh Lower-Cost Alternatives Carefully

Some early retirees look at health sharing ministries or short-term health plans as a way to reduce monthly costs significantly. Both can carry premiums well below ACA marketplace rates, but the differences in what they cover are substantial.

Health sharing ministries operate outside insurance regulation and are not required to cover pre-existing conditions, adhere to ACA benefit requirements or guarantee payment of any claim. Short-term plans typically exclude pre-existing conditions, cap coverage duration and may omit essential health benefits that marketplace plans must include. Both arrangements can leave a retiree with significant financial exposure if a serious medical event occurs.

For a retiree in strong health who needs only a short bridge to Medicare and has sufficient assets to absorb a coverage gap, these alternatives may be worth evaluating alongside traditional options. For anyone managing ongoing health conditions or taking regular medications, the financial risk of inadequate coverage is likely to outweigh the savings on premiums.

Bottom Line

Health insurance premiums rise steeply with age. Federal rules permit insurers to charge older Americans up to three times what they charge 21-year-olds, which means an early retiree purchasing coverage through an ACA exchange could pay $1,100 or more per month. Some states limit how much insurers can vary rates by age, but for most retirees without access to Medicare or employer coverage, high premiums are a reality worth planning for.

That gap between early retirement and Medicare eligibility is one of the most overlooked costs in retirement planning.

“Seniors pay more for healthcare in this country, and there’s almost no way around it. Anyone considering early retirement will face a gap in coverage before Medicare kicks in and should be prepared to cover it, since going without insurance is not advised and can even lead to government penalties. Timing account withdrawals is one of the best cost-reduction methods, as keeping your income below a certain threshold can allow you to qualify for subsidies. However, withdrawal strategy can be complex, so it’s best to consult a financial advisor,” said Tanza Loudenback, CFP®.

Tanza Loudenback, CFP®, provided the quote used in this article. Please note that Tanza is not a participant in SmartAsset AMP, is not an employee of SmartAsset and has been compensated. The opinion voiced in the quote is for general information only and is not intended to provide specific advice or recommendations.

Health Planning Tips for Retirement

• A financial advisor can help you create a plan to cover health insurance costs in early retirement. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
• You can find answers to the question of whether you’re saving enough for retirement with the help of SmartAsset’s retirement calculator.

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