Health Insurance Before 65: ACA Credits in CT

The Core Challenge

The Gap Between Early Retirement and Medicare

For many Connecticut residents who want to retire before age 65, one question rises above all others: What do I do about health insurance? Medicare eligibility does not begin until age 65, which means early retirees must find and pay for coverage on their own — often during the years when their income is lowest and their need for a smart plan is highest.

The Affordable Care Act (ACA) created premium tax credits to help individuals and families afford Marketplace health insurance. These credits reduce your monthly premium based on your household income relative to the federal poverty level (FPL). For early retirees with significant savings, the key planning insight is this: your credit is determined by your taxable income, not your total wealth.

In Connecticut, Marketplace plans are available through Access Health CT, the state's official ACA exchange. As of 2026, the enhanced subsidies that expanded eligibility from 2021 through 2025 have expired, making careful income management more important than ever for pre-retirees who want to access meaningful credits.

At a Glance: 2026 ACA Basics for Early Retirees

1 Income window: Premium tax credits are generally available to households with income between 100% and 400% of the federal poverty level. For a single person in 2026, 400% FPL is approximately $62,600.
2 Enhanced subsidies expired: The additional credits available 2021 through 2025 were not extended by Congress. The 2026 credit structure returns to original ACA thresholds, tightening the planning window.
3 Credit is based on MAGI: Your Modified Adjusted Gross Income — not your savings balance or net worth — determines eligibility. Roth distributions and certain other income sources may not count.
4 CT cost context: Without subsidies, a 62-year-old in Connecticut can expect to pay approximately $1,072 to $1,800 per month for individual coverage, according to 2026 Marketplace data. The potential savings from a well-structured plan are substantial.
5 Enroll through Access Health CT: Connecticut's state-based Marketplace handles enrollment. Open enrollment typically runs November 1 through January 15, with special enrollment periods for qualifying life events such as retirement.

The Strategic Insight

Why Income Management Is the Real Strategy

If you have $1 million or more saved for retirement, you may assume you earn too much to qualify for ACA premium tax credits. In many cases, that assumption is wrong. The credits are based on what you report as taxable income — not the size of your portfolio. A retired couple with $1.5 million in savings could have a Modified Adjusted Gross Income well below 400% FPL if their income sources are structured thoughtfully. This is where retirement income planning becomes healthcare planning.

1

Understand What Counts as MAGI

For ACA purposes, Modified Adjusted Gross Income generally includes wages, self-employment income, Social Security benefits (a taxable portion), pension and annuity income, traditional IRA and 401(k) withdrawals, capital gains, rental income, and interest and dividend income. Critically, qualified distributions from Roth IRA or Roth 401(k) accounts are generally not included in MAGI. This makes Roth accounts a powerful tool for early retirees trying to manage their credit eligibility. Results vary by individual circumstances, and a qualified financial planner can help determine how different income sources affect your specific MAGI.

2

Sequence Your Withdrawals Strategically

For early retirees with both taxable accounts and Roth accounts, the order in which you draw down assets directly affects your MAGI. Spending from after-tax savings, taxable brokerage accounts (prioritizing positions with minimal capital gains), and Roth accounts can help keep your reported income lower during the years before Medicare eligibility. A detailed withdrawal sequencing plan, built around your specific account balances and projected income needs, may allow you to maintain credit eligibility across multiple years. Individual outcomes vary based on account types, asset composition, and spending needs.

3

Use Roth Conversions Before Retirement — Not During

One of the most common planning mistakes is waiting until retirement to think about Roth conversions. For pre-retirees who are still working, the window before claiming Social Security and before Required Minimum Distributions (RMDs) begin is often the most tax-efficient time to convert pre-tax retirement dollars to Roth. Converting strategically during your working years can position you to draw tax-free Roth income during early retirement — income that does not raise your MAGI and does not reduce your ACA premium tax credit. Whether and how much to convert depends on your current and projected tax rates, other income sources, and state tax considerations. Connecticut does tax Roth conversions as ordinary income in the year of conversion, so timing matters.

4

Be Careful About the Subsidy Cliff

With the expiration of enhanced ACA subsidies at the end of 2025, the "subsidy cliff" is back in full force for 2026. If your household income exceeds 400% of the federal poverty level — approximately $62,600 for a single person or $84,800 for a married couple (figures are approximate and may be adjusted annually) — you lose eligibility for the premium tax credit entirely. This creates a sharp planning boundary: even $1 of income above the threshold can eliminate the entire credit for the year. Careful MAGI management, including capital gains timing and discretionary distribution choices, is essential in years when you are close to the cliff. A qualified advisor can help model these thresholds against your anticipated income sources.

5

Delay Social Security to Keep MAGI Lower

Up to 85% of Social Security benefits may be included in MAGI depending on your total income. Early retirees who begin collecting Social Security at 62 may inadvertently push their MAGI above the subsidy threshold, especially when combined with other income sources. Delaying Social Security benefits — while drawing on other assets — may help keep MAGI within credit-eligible ranges during the years before Medicare, and may also increase your lifetime benefit. The right claiming age depends on your health, other income, and overall retirement plan. This is a decision that benefits from a coordinated analysis, not a rule of thumb.

$1,072+

Estimated monthly premium for a 62-year-old in CT without subsidies (2026 Marketplace data, approximate)

400%

FPL income threshold for premium tax credit eligibility in 2026, approximately $62,600 for a single filer

Age 65

When Medicare eligibility begins — the gap years between early retirement and 65 require a dedicated coverage strategy

Premium and income figures are approximate, based on 2026 Marketplace data and federal poverty level guidelines. Individual eligibility varies. Consult a qualified financial advisor for guidance specific to your situation.

Connecticut Enrollment

How Access Health CT Works for Early Retirees

Connecticut operates its own state-based Marketplace, Access Health CT, where residents can compare and enroll in ACA-compliant health plans. Early retirees leaving employer coverage qualify for a Special Enrollment Period (SEP) — typically 60 days from the date coverage ends — so you do not need to wait for open enrollment.

✓ Plans include Bronze, Silver, Gold, and Platinum tiers — Silver plans qualify for cost-sharing reductions for eligible income levels
✓ Premium tax credits can be taken in advance (reducing your monthly bill) or as a lump sum credit when you file your tax return
✓ If your actual income differs from what you estimated when enrolling, you will reconcile the credit on your federal tax return — underestimating income can result in repaying a portion of the credit
✓ Enrollment should be coordinated with your income projection for the year — a mid-year retirement creates a planning complexity around annualizing income

What to Watch in Connecticut

CT-Specific Considerations for Early Retirees

Connecticut has a few planning nuances that differ from federal-only guidance. Pre-retirees in Fairfield County, Milford, and the surrounding communities should be aware of the following before finalizing a strategy.

Connecticut State Income Tax on Retirement Income

Connecticut taxes pension and retirement income, though it provides exemptions for Social Security benefits for qualifying income levels. The state also taxes Roth conversions as ordinary income in the year of conversion. This affects how you sequence income sources and when you execute conversions. See our tax-sensitive income distribution planning overview for more context.

Higher Cost of Living Affects Coverage Needs

Fairfield County is one of the higher cost-of-living regions in Connecticut. Healthcare costs tend to run higher than national averages. When modeling how much savings you need to retire comfortably, healthcare costs between retirement and Medicare eligibility should be a dedicated line item. Learn more in our guide on how much money you need to retire in Connecticut.

Income Estimation Carries Real Risk

If you take advance premium tax credits and your actual income comes in higher than projected — due to a Roth conversion you did not account for, an unexpected capital gain, or other income — you may be required to repay part or all of the credits at tax time. For retirees with complex income situations, working with a CFP who integrates tax and income planning is not optional; it is essential.

Is This Strategy Right for You?

Who Benefits Most From ACA Income Planning in Early Retirement

Not every early retiree will benefit equally from ACA premium tax credit planning. The strategy tends to be most impactful for a specific profile.

01

Retirees Ages 55 to 64

The gap between early retirement and Medicare eligibility at 65 represents the primary planning window. The earlier you retire, the more years of coverage you need to bridge — and the higher the cumulative value of structuring your income to access credits.

02

Savers with Mixed Account Types

If you have a meaningful balance in Roth accounts alongside pre-tax retirement accounts, you have flexibility in what income you report. This flexibility is the foundation of effective ACA credit planning. Pre-retirees with only traditional 401(k) or IRA assets have fewer levers to pull.

03

Those Not Yet Collecting Social Security

Delaying Social Security removes a significant source of MAGI, making it easier to stay within the credit-eligible income range. Early retirees who can fund living expenses from other sources while delaying Social Security often have the most flexibility in the ACA planning window.

04

Pre-Retirees Who Plan Ahead

The most effective ACA strategies are built two to five years before retirement — not the month you leave your job. Roth conversions, account structuring, and Social Security timing decisions made well in advance create the flexibility you need once you actually retire.

05

Corporate Professionals with Equity Compensation

Professionals with complex compensation packages (including ESPPs, stock options, or deferred compensation) face unique income-timing challenges in early retirement. Large stock sale events or vesting periods in the wrong year can push MAGI over the subsidy cliff. A coordinated plan is vital for these clients.

06

Couples with One Spouse Still Working

If one spouse is still employed with access to employer-sponsored coverage, the other may not be eligible for Marketplace credits — even if the coverage is expensive. Understanding how the "affordability" test applies to your household is a critical step before assuming Marketplace eligibility.

How We Can Help

Integrated Planning That Connects Healthcare and Retirement Income

At Skinner Wealth Strategies, we help Connecticut pre-retirees aged 50 and older navigate the healthcare gap between early retirement and Medicare. Our approach, led by Brian Skinner CFP® CRPC®, integrates income distribution planning, tax strategy, and Social Security timing into a single coordinated plan — so your healthcare coverage decisions and your financial decisions reinforce each other rather than working against each other.

Health insurance tax credit planning is explicitly part of what we do. We review your projected income sources, model MAGI across multiple retirement scenarios, and help you understand what your coverage may cost under different withdrawal and conversion strategies. This kind of coordinated planning is especially valuable in the years immediately before retirement, when the decisions you make have the longest-lasting effect.

Schedule a Conversation

MAGI Modeling Across Retirement Scenarios

We run projections to show how different withdrawal sequences and Roth conversion amounts affect your expected MAGI and your ACA credit eligibility, year by year.

Roth Conversion Timing Strategy

We identify the right conversion windows — before retirement, after retirement but before Social Security, and around RMD age — and weigh the trade-offs against your ACA subsidy target each year.

Social Security Claiming Analysis

We analyze the impact of different Social Security claiming ages on your MAGI and your overall retirement income, coordinating timing with your ACA coverage window.

Annual Plan Reviews

Tax law, subsidy structures, and your personal financial picture all change. We review your plan annually to keep your income management strategy aligned with current rules and your actual situation.

Common Questions

Frequently Asked Questions

Questions early retirees in Connecticut frequently ask about health insurance and ACA premium tax credits.

Can I get ACA insurance if I retire before 65?

Yes. If you retire before age 65 and are not yet eligible for Medicare, you can enroll in a Marketplace health plan through Access Health CT, Connecticut's state-based ACA exchange. Leaving employer coverage qualifies you for a Special Enrollment Period. You may be eligible for a premium tax credit depending on your projected household income for the year.

Are healthcare premium tax credits going away in 2026?

The enhanced subsidies in place from 2021 through 2025 expired at the end of 2025 and were not extended by Congress as of May 2026. This means the 2026 credit structure returns to original ACA thresholds, generally up to 400% of the federal poverty level. Households that previously received credits above the 400% FPL threshold may no longer qualify. The premium tax credit itself still exists — it is the enhanced (expanded) version that expired.

What disqualifies you from the premium tax credit?

You may be disqualified if your household income exceeds 400% of the federal poverty level, if you are eligible for affordable employer-sponsored coverage, if you are enrolled in Medicare or Medicaid, or if you file your taxes as married filing separately in most cases. Having a high savings balance alone does not disqualify you — your reported taxable income (MAGI) is what matters. Strategic income management during early retirement can help you remain within the eligibility window.

Are health insurance premiums tax deductible in early retirement?

Potentially, depending on your situation. Self-employed individuals may be able to deduct health insurance premiums from adjusted gross income. For retirees who are not self-employed, premiums may be deductible as a medical expense if total medical costs exceed 7.5% of AGI. These rules interact with the premium tax credit, and taking both in the same year requires careful coordination. A tax advisor or CFP can help determine which approach applies to your specific situation.

How do I retire at 62 and still get health insurance?

Early retirees at age 62 can enroll in a Marketplace plan through Access Health CT during their Special Enrollment Period after leaving employer coverage. If your projected household income is below 400% of the federal poverty level, you may qualify for a premium tax credit that reduces your monthly premiums. The planning challenge is managing your taxable income carefully — avoiding unnecessary 401(k) withdrawals, delaying Social Security, and drawing from Roth accounts or after-tax savings where possible to keep your MAGI within the credit-eligible range.

How to Use ACA Premium Tax Credits to Retire Before 65 in Connecticut