Did you know that the average early retiree in the U.S. faces health insurance costs of over $1,000 per month? That’s a massive financial hurdle—but it doesn’t have to be. Many people assume that leaving their job before 65 means getting stuck with sky-high premiums, but that’s not necessarily true. The reality is, there are smart strategies that can help you cut your healthcare costs dramatically, or even eliminate them entirely, before Medicare kicks in.

In this guide, we’ll walk through how early retirees manage to secure affordable healthcare, covering everything from ACA subsidies to Medicaid strategies and even moving to cheaper locations.

Key Takeaways

• You don’t have to pay full price for health insurance before 65—there are ways to legally reduce or eliminate costs.
• ACA subsidies can make premiums much cheaper if you keep your taxable income in check.
• Medicaid eligibility is possible for those who strategically lower their reportable income.
• Geo-arbitrage—moving to a lower-cost state or country—can make healthcare far more affordable.
• Alternative options like Health Sharing Plans and Direct Primary Care (DPC) can provide solid coverage at a fraction of the cost.

Why Health Insurance Feels Like a Roadblock for Early Retirees

You’ve worked hard, saved up, and now you’re ready to leave your 9-to-5 behind. But then you realize—you need health insurance, and private plans can cost over $1,000 per month. It’s enough to make anyone rethink early retirement.

Here’s the good news: If you understand the system and plan ahead, you can drastically cut your costs—sometimes to nearly zero.

1. ACA Subsidies: A Game Changer for Early Retirees

The Affordable Care Act (ACA) offers income-based subsidies that can make health insurance way more affordable. The trick? ACA subsidies are based on taxable income, not net worth. So even if you have a hefty nest egg, you can still qualify if you manage your income correctly.

How It Works:

• The ACA looks at Modified Adjusted Gross Income (MAGI) to determine your subsidy.
• The American Rescue Plan (ARP) and the Inflation Reduction Act (IRA) removed the previous income cap (400% of the Federal Poverty Level) for subsidy eligibility through 2025.
• Now, individuals with higher incomes can still qualify for subsidies if the cost of the benchmark plan exceeds 8.5% of their household income.

Pro Tip: Use tax-smart withdrawal strategies—like pulling from Roth IRAs and taxable accounts—to stay under ACA income limits.

2. Qualifying for Medicaid by Controlling Taxable Income

Medicaid isn’t just for low-income individuals—it’s also an option for early retirees who structure their finances wisely. If you keep your taxable income under 138% of the FPL, you might qualify for free health insurance in many states.

How It Works:

• Medicaid eligibility is based only on income, not your total wealth.
• By keeping withdrawals low, early retirees can legally qualify.

Important Note: Some states have Medicaid estate recovery rules, meaning they can reclaim healthcare costs from your estate after you pass away. Always check your state’s policies if you’re considering Medicaid.

3. Geo-Arbitrage: Lower Costs by Relocating

If U.S. health insurance still feels too expensive, moving to a lower-cost state or country can be a powerful solution.

Best Options:

• Move to a state with expanded Medicaid (like California or New York) where qualification is easier.
• Relocate internationally to countries like Portugal, Mexico, or Thailand, where healthcare is high-quality but a fraction of U.S. costs.

4. Alternative Health Coverage: Health Sharing Plans & Direct Primary Care

Not everyone wants to rely on ACA or Medicaid. If you prefer an alternative approach, health sharing plans and Direct Primary Care (DPC) offer flexible, budget-friendly options.

Health Sharing Plans:

• Members pool money to cover medical expenses.
• Typically lower costs, but some restrictions on pre-existing conditions.

Hypothetical Example: A 50-year-old pays $200/month instead of $800 for traditional insurance by participating in a Health Sharing plan.

Direct Primary Care (DPC):

• Flat monthly fee for unlimited doctor visits.

Hypothetical Example: $75/month covers all primary care needs—often paired with a catastrophic health insurance plan.