Losing your job and health insurance can be a stressful experience, especially if you’re approaching retirement age. If you’re in this situation, you may be wondering how you’ll be able to afford health insurance. The good news is that the Affordable Care Act (ACA) provides subsidies to help low- and moderate-income individuals and families afford health insurance.

But what happens if you retire early and lose your job-based health insurance? Will you still be eligible for ACA subsidies?

The answer to that question depends on several factors, including your income and the time of year you retire.

If you retire before you turn 65, you will need to purchase health insurance through the Health Insurance Marketplace

You may be eligible for a premium tax credit to help you pay for your health insurance premiums. The amount of the credit you receive will depend on your income and the number of people in your household.

If you retire after you turn 65, you will be eligible for Medicare

Medicare is the federal health insurance program for people 65 and older. Medicare Part A (hospital insurance) is free for most people, and Medicare Part B (medical insurance) has a monthly premium. You may also be eligible for Medicare Part D (prescription drug coverage).

How is ACA subsidy eligibility determined?

ACA subsidy eligibility is determined based on your income and family size. To be eligible for a premium tax credit, your income must be between 138% and 400% of the federal poverty level (FPL). The FPL is a measure of poverty that is used to determine eligibility for many government programs.

For 2023, the FPL is $13,590 for a single person and $27,750 for a family of four.

If your income is below 138% of the FPL, you will not be eligible for a premium tax credit. However, you may still be eligible for Medicaid, which is a government health insurance program for low-income individuals and families.

If your income is between 138% and 400% of the FPL, you will be eligible for a premium tax credit. The amount of the credit you receive will depend on your income and the number of people in your household.

To estimate your 2024 income, you can use the following formula:

Estimated 2024 income (2023 income + expected 2024 income) / 2

For example, if your 2023 income is $50,000 and you expect to earn $25,000 in 2024, your estimated 2024 income would be $37,500.

What if I retire early and my income changes?

If your income changes after you retire, you will need to report the change to the Marketplace. The Marketplace will then recalculate your premium tax credit. You may be eligible for a larger or smaller premium tax credit, depending on your new income.

It is important to note that ACA subsidy eligibility is based on your income for the entire calendar year

This means that if you retire in the middle of the year, your subsidy will be based on your income for the entire year, not just the months after you retire.

If you are considering retiring early, it is important to talk to a licensed insurance agent to learn more about your health insurance options. An agent can help you determine if you are eligible for ACA subsidies and can help you find a health insurance plan that meets your needs and budget.