Introduction

Let’s be real — starting a new chapter at age 62 in 2025 comes with major questions: Can you afford health care insurance if you leave work before Medicare kicks in at 65? How do you avoid draining your nest egg? If you’re planning to retire early in either the United States or Canada, this post breaks down all the possibilities — in plain, friendly, step‑by‑step language.

You’ll walk away with a clear understanding of your coverage options, money-saving strategies, and how to bridge the health gap years without compromising your hard‑earned savings.

Why 62 Matters — And Why Coverage Matters Even More

Turning 62 is more than a birthday:

• In the U.S., it’s the earliest age to claim Social Security retirement benefits (though reduced compared to waiting until full retirement age, typically 67)).
• But Medicare eligibility only begins at 65. That leaves you with a 3‑year gap that needs coverage.
• In Canada, you won’t hit federal Medicare waiting periods—but you still lose employer group benefits at 62 unless you convert or extend them; and provincial plans may not cover everything (e.g. private prescriptions or dental).

Without planning, encountering illness in that interim could cost tens or hundreds of thousands out of pocket.

A recent report estimates average annual health‐care expenses in retirement at about $8,600 per person, rising over time due to inflation and increasing medical needs(Kiplinger).

The Main Health Coverage Options Until Medicare in the U.S. 🇺🇸

1. COBRA Continuation

• You can stay on your existing employer insurance for up to 18 months (sometimes up to 36) by paying 100% of the premium plus a 2% admin fee(GoodRx).
• Pros: Same doctors, same coverage.
• Cons: Often very expensive—average premiums in 2024 were $746/month for individuals, over $2,100/month for families(The Motley Fool).

2. ACA Marketplace Plans (HealthCare.gov or state‑based exchanges)

• Losing employer coverage triggers a special enrollment period for around 60 days to sign up outside open enrollment(HealthCare.gov).
• Pros: Guaranteed issue, cannot be denied for pre‑existing conditions, potential federal premium tax credits or subsidies based on income(Verywell Health).
• Cons: Enhanced subsidies currently set to expire after 2025; premiums could spike by $700/year for individuals, or much more for older couples in 2026 per recent proposals(Barron’s).

3. Private Major Medical or Short‑Term Plans

• Major medical plans comply with ACA rules and include essential benefits, preventive care, and cannot deny you based on health status.
• Short-term medical gives temporary coverage (30–364 days) but may exclude pre‑existing conditions and preventive care. It’s less costly, but riskier.

4. Stay on Your Spouse’s Employer Plan

• If your spouse works and their plan allows, you can remain a dependent on that coverage, often at lower incremental cost(Rebel Retirement). Check eligibility and cost.

5. Medicaid (U.S.)

• If your income is low, you may qualify for Medicaid during the gap years — free or very low-cost coverage. Eligibility varies by state(myhealthinsurance.com).

Canadian Options Until Provincial Medicare Kicks In (If Employer Plan Ends) 🇨🇦

• In Canada, provincial health care covers core medical services for citizens and permanent residents. But many retirees at 62 lose employer-sponsored extended benefits (dental, prescription drugs, vision) unless conversion or retiree plans are available(myhealthinsurance.com).
• Options include:
  • Retiree or conversion plans offered by former employers or associations.
  • Private individual health plans, which may cover prescription drugs and dental.
  • If eligible, provincial drug or vision coverage programs (varies by province).

Side‑by‑Side Comparison Table: U.S. & Canada Coverage Options

How to Decide What’s Right for You

Here’s the step-by-step process:

1. List out your current coverage and eligibility:
   • Do you have COBRA rights?
   • Are you eligible as a dependent on spouse’s employer plan?
   • Are there employer retiree or conversion plans available?
2. Estimate your healthcare needs and expected costs:
   • How many doctor visits, prescriptions, labs, imaging?
   • Use the average $8,600/year baseline and adjust for local cost of living or specific needs.
3. Get quotes for ACA plans (U.S.) or private alternatives (Canada):
   • For U.S., visit HealthCare.gov (or your state exchange).
   • For Canada, contact private insurers or AARP‑style retirement associations if you’re abroad.
4. Check subsidy/income limits:
   • In the U.S., premium tax credits apply only if you do not stay on retiree health; dropping a retiree plan lets you qualify if your income is low enough.
   • In Canada, check provincial assistance programs or income-based supports.
5. Factor in inflation and subsidy changes:
   • ACA enhanced subsidies are set to expire end of 2025; 2026 costs may increase dramatically, especially for older adults (e.g. a couple could see premiums jump by $18,400/year)(Barron’s).
6. Plan for transitioning into Medicare:
   • In the U.S., enroll in Medicare Part A and Part B during your initial enrollment window (3 months before turning 65 through 3 months after) to avoid penalties(Kiplinger).
   • In Canada, plan how to replace private coverage if provincial plans don’t include prescription or dental.

Money‑Saving Strategies (Without Sacrificing Coverage)

• Maximize an HSA (Health Savings Account, U.S.). Contributions are tax‑advantaged and can be used for qualified expenses before Medicare kicks in and after(Investopedia).
• Compare Medigap (supplemental) plans as soon as you enroll in Medicare later. They can significantly reduce out-of-pocket costs in retirement(Wikipedia).
• Delay large capital gains or Roth conversions until after 2025 subsidies expire (U.S.), to stay under income thresholds that qualify for tax‑credit help(Barron’s).
• Pay down debt or mortgage early to reduce fixed costs during retirement, easing the burden of high insurance premiums(AP News).
• Maintain preventive care — regular checkups and screenings can catch issues early and keep costs lower in the long run.

Key Insight: The Trade‑Off between Coverage and Cost

• COBRA: Familiar but expensive, especially as premiums rise each year.
• ACA Marketplace: Affordable with subsidies — but uncertain after 2025 expiration. Pre‑existing conditions are protected.
• Private short‑term: Cheaper but risky if you get sick.
• Spouse’s plan: Often the most affordable reliable option if available.
• Conversion plans (Canada): Great bridge for extended benefits.
• Medicaid or provincial low-income support: Excellent fallback if eligible, but income eligibility is strict.

Case Studies: Two Hypothetical Scenarios

Case 1: American couple, retiring at 62 in 2025

• State: California.
• They both retire at 62.
• Option A: Use COBRA for 18 months ($1,500+/month); then enroll in ACA with subsidies.
• Option B: Immediately enroll in ACA Marketplace with subsidy; quote shows ~$400/month each after tax credit.
• Strategy: Skip COBRA to qualify for subsidies, manage their income to stay within thresholds. Use HSAs and budget for Medi gap later. Plan ahead before 2026 subsidy expiration.

Case 2: Canadian single retiree, age 62

• Lives in Ontario.
• Employer plan ends at retirement, covering prescription and dental.
• Option A: Convert former employer plan into a retiree benefit scheme or purchase private extended plan (around CAD 200/month).
• Option B: Provincial health plan covers doctors and hospitals, so she adds private prescription/dental only.
• Strategy: Convert employer conversion plan if cost‑effective. If private plan too costly, shop for scaled coverage (e.g. drug only). Maximize provincial support.

External Resources

For further reading on early‑retirement health options:

• HealthCare.gov’s guide for retirees lays out how losing job coverage qualifies you for Marketplace plans and subsidies, and how retiree coverage affects eligibility(mdrnwealth.com, GoodRx, HealthCare.gov).
• GoodRx overview offers 10 helpful options including COBRA, private plans, and ACA marketplace specifics for early retirees(mdrnwealth.com).

Conclusion

Retiring at 62 in 2025 can be incredibly rewarding — you finally get to focus on life beyond work! But health coverage doesn’t wait until Medicare starts at 65. Whether you’re in the U.S., needing ACA plans or COBRA, or in Canada, managing a provincial‑plus‑private coverage combo — careful planning is key.

• Check all your eligibility (COBRA, spouse plans, retiree or conversion options)
• Compare costs honestly — quotes now matter, but so do subsidy timelines (especially in the U.S.)
• Use tax‑advantaged tools like HSAs
• Plan for the transition into Medicare or provincial coverage carefully
• And above all: plan early so you don’t need to draw down your portfolio prematurely

With the right strategy, you can bridge that three-year gap without derailing your retirement dreams or tapping into savings you hoped to live off long term.

If you’d like help comparing specific plans in your state or province or want help estimating your subsidy eligibility, let me know — I’m happy to walk you through it!

Hope this helps set you up for a smooth, smart transition into retirement with peace of mind around healthcare.