Healthcare in Early Retirement

It’s not insurance. It’s the largest variable expense in your retirement plan.

Most physicians eyeing early retirement lose sleep over one number: healthcare. Not tail coverage or disability insurance. Healthcare insurance.

Healthcare is the one expense category that doesn’t follow the standard spending-smile pattern. It spikes in your 50s and early 60s, then transforms at 65 with Medicare. The difference can be $15,000 to $30,000 a year, depending on how you architect the transition.

Let’s jump in.

Pre-Medicare: Ages 50-64

You leave your group plan and suddenly you’re on your own.

COBRA keeps your exact employer plan for up to 18 months. You pay the full premium plus a 2% admin fee. For physicians with solid group coverage, that often runs $700-1,000+ per month single or $1,500-2,000+ for a couple in 2026. It’s predictable and seamless if you’ve met your deductible mid-year, but it’s a temporary bridge. Some early retirees use it for 3-12 months while sorting the next step.

ACA Marketplace is the long-haul solution. Premiums are age-rated, and expensive. But remember, health care is just a line item. In 2026, a 58-year-old might see unsubsidized benchmark Silver plan premiums of $1,000-1,400 per month single or $2,000-2,800 for a couple. A 60-year-old’s national average benchmark sits around $1,326 per month. Often, you decide if you want to keep your income low and get ACA credits, or do Roth conversions.

Here’s where math gets interesting: subsidies are available if your MAGI lands between 100% and 400% of the federal poverty level. For coverage year 2026 that’s roughly $15,650-62,600 for a single person or $21,150-84,600 for a couple. Above that? Subsidy cliff. Full price. No phase-out.

Withdraw from taxable brokerage accounts first, time Roth conversions in low-income years, and plan any part-time locums or consulting carefully around your MAGI window.

The Medicare Pivot at 65

Everything changes when you turn 65.

• Part A: Free with physician-level Medicare taxes. Hospital coverage with a $1,736 deductible in 2026.
• Part B: $202.90 per month per person, deductible $283. Income-Related Monthly Adjustment Amounts (IRMAA) kick in two years later based on your prior MAGI. Above $218,000 joint income you’ll pay $284-690 per month each. Plan your 63- and 64-year-old withdrawals accordingly.
• Medigap: Plan G is the standard move for most. Average premiums $150-250 per person monthly at age 65, varying by state and tobacco use. Covers the Part A deductible, Part B coinsurance, and foreign travel emergencies.
• Part D: $30-100+ per month depending on your formulary. Shop every year at open enrollment.

Realistic total for a healthy 65-year-old couple on Original Medicare plus Plan G plus Part D: $500-800 per month. Far cheaper and more predictable than the pre-65 bridge.

The Long-Term Care Wildcard

Medicare doesn’t cover long-term care.

Self-funding math is straightforward for physicians with substantial assets. Set aside $300,000-500,000 in your IRA (since you get a deduction for medical expenses). That covers 3-4 years of care, mostly. Most physician portfolios clearing $3M by 55 can absorb this risk without insurance. Run your own numbers.

The Bottom Line

Healthcare in early retirement isn’t an insurance problem. It’s a multi-decade cash-flow architecture problem. The 50s are expensive and subsidy-sensitive. Medicare at 65 brings relief but new decisions around IRMAA and supplements. Long-term care is the tail risk you quantify, not ignore.

The physicians who nail this treat healthcare like any other retirement variable: they model scenarios, optimize MAGI, shop plans annually, and build buffers. After all, it is just another line item on the budget.