Reviewed September 2026.
If you leave employer coverage before you qualify for Medicare (often age 65 for people with enough work credits), the bridge years can be one of the largest retirement cash drains. This page is a cost estimate worksheet: premiums + out-of-pocket + drugs + dental/vision. Coverage choice mechanics (COBRA vs Marketplace) live in COBRA vs Marketplace special enrollment and the companion bridge strategy guide. Enrolling while you still have a job: Medicare with employer coverage.
Premium tax credits, plan networks, and Medicare ages/rules change. Recalculate with Healthcare.gov (or your state exchange) and plan documents for the year you retire.
Line items to price every bridge year
| Cost bucket | What to gather | Notes |
|---|---|---|
| Medical premium | COBRA quote vs Marketplace silver/gold quotes for your ages and county | Compare after any premium tax credit estimate |
| Deductible + max out-of-pocket | Summary of Benefits | Assume you might hit a chunk of it in a bad year |
| Prescriptions | Current drug list + formulary check | Specialty drugs can dominate |
| Dental / vision | Separate policies or cash budget | Rarely included like employer bundles |
| HSA / savings draw | HSA for retirement healthcare | Only if eligible / funded |
| Spousal / dependent coverage | Separate quotes | Two adults can cost more than “2× one” |
Short-term limited duration plans are a different product with thinner protections: Short-term vs Marketplace.
Simple annual estimate formula
Bridge-year healthcare cash need ≈
annual premiums + expected routine care + prescription costs + dental/vision + a shock reserve (portion of the plan’s max out-of-pocket).
A conservative teaching habit: budget premiums + drugs + 25–50% of the medical max out-of-pocket unless you have a concrete reason to assume a zero-claim year.
Worked example: retire at 62, Medicare at 65
Sam and Alex are both 62, plan to claim Medicare at 65, and will leave employer coverage in January. Quotes for their county:
| Item | Annual amount |
|---|---|
| Marketplace premiums after estimated credit | $9,600 ($800/month) |
| Expected prescriptions | $2,400 |
| Dental + vision cash budget | $1,200 |
| Medical max out-of-pocket (family) | $12,000 |
| Shock reserve (40% of MOOP) | $4,800 |
Year-1 planning total ≈ $9,600 + $2,400 + $1,200 + $4,800 = $18,000.
Over three bridge years, a straight multiply is ~$54,000 before inflation or plan changes. Sam keeps that figure next to Social Security and portfolio withdrawal plans, then re-quotes each open enrollment.
If income rises (pension start, Roth conversions), premium credits can shrink and future IRMAA can matter once Medicare begins. Re-estimate when income changes.
Checklist
- Write your expected Medicare start month and the number of bridge years.
- Get COBRA length/price and Marketplace quotes for the same household.
- List every maintenance drug and check formularies.
- Add dental/vision and a MOOP shock reserve, not premiums alone.
- Multiply by bridge years; keep a 10–20% inflation/fudge factor if the gap is multi-year.
- Revisit each open enrollment and after any income change.
Educational only. Not insurance or tax advice. Plan premiums, subsidies, and Medicare eligibility rules change; confirm with Healthcare.gov or your state exchange, plan Summaries of Benefits, and Medicare.gov when you near eligibility.