Do You Lose Your Health Insurance Premium Tax Credit at 65?
Yes — once you become eligible for Medicare at 65, you generally lose eligibility for the ACA premium tax credit. But the years leading up to 65 are when income planning matters most. Here's what Connecticut pre-retirees need to understand.
KEY TAKEAWAYS
- ✓ Once eligible for Medicare at age 65, you are no longer eligible for a premium tax credit (PTC) on an ACA Marketplace plan, regardless of income.
- ✓ The window between early retirement and age 65 is when the ACA premium tax credit may provide the most value.
- ✓ Decisions about Roth conversions, retirement account withdrawals, and other taxable income sources in your early 60s may directly affect eligibility.
- ✓ Connecticut residents face additional complexity: CT taxes most retirement income for higher-income filers, which affects MAGI and in turn credit eligibility.
- ✓ Working with a CRPC®-credentialed planner before you retire gives you the most flexibility to structure income favorably.
How the Premium Tax Credit Works — and When It Ends
The ACA premium tax credit helps eligible individuals pay for Marketplace health insurance. Eligibility is based on household income relative to the federal poverty level (FPL), as well as access to other qualifying coverage — including Medicare.
According to the IRS, you cannot claim a premium tax credit for any month in which you are eligible for Medicare. Medicare eligibility — not enrollment — is the disqualifying factor.
Premium Tax Credit: Before and After 65
| Factor | Ages 60–64 | Age 65+ |
|---|---|---|
| ACA Marketplace | Yes | No (Medicare replaces) |
| Premium Tax Credit | Yes, if income-eligible | No |
| Coverage Type | ACA Marketplace plan | Medicare (Parts A, B, D + Medigap) |
| Income Affects Premiums | Yes — via MAGI vs. FPL | Yes — via IRMAA surcharges |
| Planning Leverage | High — income management may maximize credit | High — income management may minimize IRMAA |
How Your Retirement Income Affects ACA Credit Eligibility
The premium tax credit is income-based. In the years before you turn 65, what you take out of your retirement accounts — and when — can directly affect whether you qualify. Common income sources that count toward MAGI include:
Connecticut-Specific Factors
CT taxes IRA and 401(k) distributions for higher-income filers
While the 2026 exemption eliminates CT state tax on IRA distributions for eligible taxpayers below the AGI thresholds, retirees with AGI above those levels still face state tax on distributions, which increases overall tax burden.
Social Security may be partially taxable in CT
Connecticut taxes Social Security benefits for individuals with higher adjusted gross incomes.
Connecticut's Cost of Living Is High
Healthcare premiums on the CT marketplace reflect the state's higher cost structure, making the premium tax credit potentially more significant.
Access Health CT
Connecticut operates its own state-based ACA Marketplace, which may have different plan options and timelines.
HOW WE HELP
How Skinner Wealth Strategies Can Help
For clients considering retiring before age 65, the pre-Medicare window is a planning priority. Brian Skinner, CFP® and CRPC®, incorporates healthcare cost planning into each client's broader income distribution strategy.
1. Discovery
We understand your full financial picture — income sources, assets, retirement timeline, and healthcare needs.
2. Assessment
We analyze how projected income in the pre-Medicare years may interact with premium tax credit eligibility and your broader plan.
3. Opportunity
We identify strategies across income timing, account sequencing, and coverage transitions to support your retirement goals.
The decisions you make about retirement income in your early 60s can have a meaningful impact on your healthcare costs and coverage options before Medicare begins.