Your Health Insurance Could Cost $20K More in 2026

If you're retiring before 65, you buy health insurance through the ACA marketplace (Obamacare). In 2025, the government caps what you pay based on income. In 2026, that protection disappears if your income crosses a threshold — and your premiums can jump by tens of thousands overnight.

Based on 2026 Federal Poverty Levels and national Silver plan benchmark rates (KFF).

What This Means for Early Retirees

If you're retiring before 65, the ACA cliff can cost you thousands — or you can plan around it.

The Cliff Effect

In 2026, earning $1 over the income threshold means losing your entire subsidy. For a 57-year-old couple, that's a jump from ~$7,000/yr to ~$36,000/yr in premiums — a $29,000 penalty.

MAGI Management

Your Modified Adjusted Gross Income includes Roth conversions, capital gains, and Traditional IRA withdrawals. Choosing which accounts to draw from determines whether you stay under the cliff.

Plan Ahead

The right withdrawal strategy can save you $10,000+ per year in healthcare costs. It's not about earning less — it's about knowing where your income comes from.

Below 138% FPL? You May Qualify for Medicaid

If your MAGI falls below 138% of the Federal Poverty Level (~$29,400 for a couple in 2026), you may qualify for Medicaid in expansion states — with near-zero premiums and minimal out-of-pocket costs. This can happen when most of your assets are in Roth accounts, which don't count toward MAGI. Trade-off: Medicaid provider networks may be more limited than ACA marketplace plans.

Assumptions & Limitations

State-level benchmark premiums. Premiums use KFF 2025 state-level SLCSP benchmarks for a 40-year-old, adjusted by CMS age rating factors. Your actual premium depends on your county and plan choice — the benchmark is a statewide average. 2026 state-level data is not yet published.
Second-lowest cost Silver plan (SLCSP). ACA subsidies are calculated against the SLCSP benchmark in your area, not the plan you actually choose. Choosing a Bronze or Gold plan changes your out-of-pocket cost but not your subsidy amount.
Estimated 2026 Federal Poverty Levels. Actual FPL numbers are published annually by HHS, typically in January. The 400% FPL thresholds shown here ($61,600 single / $83,600 couple) are estimates.
Spouses are assumed to be the same age. In practice, different ages mean different premiums for each spouse. Children are rated at the standard CMS child factor, with a maximum of 3 children charged per ACA rules.
Out-of-pocket costs are estimates. Annual OOP varies significantly by plan, provider network, and actual healthcare usage. The estimates shown are national averages adjusted by health status.

Could You Benefit from This?

Check the statements that apply to you.

I'm retiring (or already retired) before age 65
I have savings in both Traditional (IRA/401k) and Roth accounts
My annual spending needs are under $120,000
I don't have a pension or other fixed income that already pushes me above the threshold

Get a Personalized Plan

The calculator shows the problem. The guide explains the strategy. A consultation gives you your numbers.

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We review your situation — accounts, income sources, timeline — and show you how the cliff applies to you specifically. You'll leave knowing how much you could save.

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If it makes sense, we build your personalized plan: year-by-year withdrawal strategy, Roth conversion schedule, ACA optimization, and a written report you can take to your advisor.

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