I have this conversation more than people might expect.
Someone comes in at 61. They have done everything right. The mortgage is paid off. The debt is gone. They have a solid balance in their retirement accounts and they are ready to go. Then we start talking about health insurance, and the timeline shifts.
Medicare eligibility begins at 65. If you want to retire before then, coverage is one of the largest and least-planned variables in the entire equation. Not because people are avoiding it, but because the numbers are genuinely hard to find in one place and the options depend on individual circumstances in ways that are not obvious until you sit down and work through them. What follows is a plain-language overview of what that gap looks like in New Jersey in 2026 and what options may be available.
What It Actually Costs in New Jersey Right Now
The New Jersey Department of Banking and Insurance reported that average premiums on the individual market rose 16.6% for 2026. That increase was compounded by the expiration of enhanced federal premium tax credits that had reduced costs for enrollees since 2021. [Source: NJ DOBI via njbiz.com/nj-health-insurance-marketplace-premiums-2026]
Under ACA age-rating rules, carriers may charge older adults up to 3 times what they charge younger adults for the same plan at the same tier. For a 60-year-old shopping without subsidies on the Get Covered NJ marketplace, Silver plan premiums in 2026 have ranged from approximately $1,050 to $1,440 per month depending on carrier and county. That is $12,600 to $17,280 per year before a single claim is filed. These figures are illustrative and based on publicly available 2026 marketplace data. Actual premiums vary by county, carrier, specific plan selected, and tobacco use status.
Here is a way to think about it in retirement income terms. At a 4% withdrawal rate, covering a $1,200 monthly premium would require approximately $360,000 in portfolio assets dedicated to that one line item. (That is a rough illustration only, and is not a recommendation or projection, but it gives you a sense of what this variable means to the overall plan.) It is worth running before you set a retirement date.
Four Options for Bridging the Gap
There is no single right answer here. The path that makes sense depends on your income, your timeline, and your specific situation. Here is a plain overview of what is generally available. Work with a licensed insurance professional or financial advisor for guidance specific to your circumstances.
A working spouse’s employer plan. If a working spouse has employer coverage available, joining that plan may be one of the more cost-effective options. Employer-sponsored plans can sometimes carry lower premiums than anything available on the individual market, though the specifics depend on the employer’s plan and contribution structure.
COBRA. COBRA allows you to continue your current employer coverage for up to 18 months after leaving your job in many circumstances. According to the U.S. Department of Labor, under COBRA you are generally responsible for the full premium, including both the portion you previously paid as an active employee and the portion your employer contributed, plus a 2% administrative fee. [Source: dol.gov/general/topic/health-plans/cobra] For a lot of people, that number is a real shock because the employer contribution that was quietly covering a large share of the cost disappears the moment you leave. COBRA can work well as a short bridge, particularly if you are close to 65, but the full unsubsidized cost tends to make it difficult to sustain over several years.
ACA Marketplace through Get Covered NJ. For people who need coverage for more than 18 months and do not have access to a spouse’s plan, the Get Covered NJ marketplace may be a practical path for some people. Financial assistance is available for households that qualify based on income. New Jersey’s NJ Health Plan Savings program, funded at approximately $215 million for 2026, extends subsidy eligibility to households up to 600% of the federal poverty level, which goes beyond what is available in many other states. [Source: healthinsurance.org/aca-marketplace/new-jersey] That said, subsidy eligibility is based on Modified Adjusted Gross Income, not just wages, which creates a planning issue I see come up regularly. See the next section.
Employer-provided retiree coverage. Some employers continue to provide health coverage for retirees before age 65. It is less common than it used to be, but it is worth a direct conversation with HR before you leave. It may meaningfully affect the cost picture.
The Income Interaction Worth Understanding
This is the piece that catches people off guard, and it is worth understanding before you set up any automatic distributions from your retirement accounts.
ACA marketplace subsidies are based on Modified Adjusted Gross Income, which includes IRA withdrawals, investment income, and realized capital gains, not just wages or pension income. If you are drawing from your IRA to cover living expenses in the years before 65, that income counts toward your MAGI and could reduce or eliminate your subsidy eligibility depending on your total income picture. The difference between qualifying for meaningful assistance and receiving very little can sometimes come down to a relatively small income difference.
How you structure your income in the years before 65 may therefore affect what you pay for coverage in a meaningful way. This is general information only. The interaction between IRA withdrawals, MAGI, and subsidy eligibility is complex and depends entirely on your individual situation. Please consult a qualified tax or financial professional before making any decisions. [Source: healthinsurance.org/aca-marketplace/new-jersey]
A Representative New Jersey Example
According to NJ DOBI, a couple in their early 60s in Middlesex County with a household income of $94,000 could face a $22,000 annual increase in premiums in 2026, which would consume approximately 31% of their income (for illustrative purposes only). [Source: njbiz.com/nj-health-insurance-marketplace-premiums-2026] That example came directly from the state’s Department of Banking and Insurance as a representative planning scenario. For a household that has spent decades doing things right, that number belongs in the retirement income model long before the retirement date is set.
Run the Numbers Before You Retire
The health insurance gap before 65 is not a reason not to retire. It is a reason to understand what you are walking into before you make the decision. Knowing what coverage may cost, which option may fit your situation, and how your income structure interacts with subsidy eligibility can all affect the plan in ways that are worth modeling in advance.
If you are within a few years of retirement and have not worked through the health insurance piece yet, that conversation is worth having before you leave your job.
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This material is intended for informational/educational purposes only and should not be construed as investment/tax advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.
Premium figures and subsidy information are based on publicly available 2026 marketplace data and are subject to change. Individual costs will vary based on age, county, household income, plan selection, and other factors. Verify current rates and subsidy eligibility at getcoverednj.com or with a licensed insurance professional before making any coverage decisions.
Safe Harbor Wealth Management does not provide legal or tax advice. You should consult a legal or tax professional regarding your individual situation.
Sources
NJ Department of Banking and Insurance — 2026 individual market rate announcement: njbiz.com/nj-health-insurance-marketplace-premiums-2026
Get Covered NJ marketplace overview: healthinsurance.org/aca-marketplace/new-jersey