By Max Novak, MBA, CFP® · November 2026
If you retire before 65, you'll need health insurance until Medicare begins. Many early retirees buy coverage through the ACA Marketplace, which in Illinois is Get Covered Illinois. Others use a spouse's employer plan, COBRA, or retiree coverage.
Marketplace coverage can be far more affordable than people expect, because financial help is based on income, not savings. How you fund your retirement spending can therefore make a substantial difference in your health insurance premiums.
How much help could you receive?
The main form of help is the premium tax credit, a federal credit that lowers your monthly Marketplace premium. It's usually paid in advance directly to your insurer, so it reduces your bill rather than arriving as cash. For 2027 coverage, it's generally available to households with income between 100% and 400% of the federal poverty guideline: about $21,640 to $86,560 for a household of two.
Income isn't the only requirement. You generally can't receive the credit if you're enrolled in COBRA or retiree coverage, are offered affordable employer coverage through a spouse, or are eligible for Medicare or Medicaid. In Illinois, adults under 65 with lower incomes may qualify for Medicaid instead.
Here's what Get Covered Illinois estimated in November 2026 for a hypothetical married couple, both 55 at the start of 2027, in ZIP code 62901 in Williamson County. Every scenario uses the same lower-premium Bronze plan, Blue Choice Preferred Bronze PPO – Support HSA, with a full premium of $2,932.22 a month.
| Annual household income for ACA purposes | Monthly assistance applied to this plan | Monthly premium after assistance |
|---|---|---|
| $40,000 | $2,922.84 | $9.38 |
| $60,000 | $2,922.84 | $9.38 |
| $80,000 | $2,922.84 | $9.38 |
| $88,000 | $0 | $2,932.22 |
Source: Get Covered Illinois estimator, November 2026. Estimates for one hypothetical household and one plan; not a quote, a universal price, or a plan recommendation.
In this example, assistance keeps the selected plan's premium at $9.38 a month across the first three income levels. At $88,000, the couple no longer qualifies for premium tax credits and pays the full $2,932.22 monthly premium. That's approximately $35,074 more annually than at $80,000 of income, assuming these monthly estimates apply throughout the year.
For this two-person household, the 2027 income ceiling is $86,560. The $88,000 scenario illustrates income above that ceiling; it isn't the cutoff itself.
The available tax credit declines as income rises, but the amount applied to a particular plan is limited by its eligible premium. That's why this plan's price stays unchanged across the first three scenarios.
Premiums are only one part of the coverage decision: this plan has a $16,000 deductible and a $24,000 out-of-pocket maximum. This is one illustration, not a recommendation of this plan or a price everyone should expect. At lower eligible incomes, Silver plans may also offer cost-sharing reductions that lower deductibles and copays.
What counts as income for ACA subsidies?
Eligibility is based on ACA household income, called modified adjusted gross income or MAGI. It isn't the same as taxable income or what you spend.
Generally included in ACA MAGI:
- Wages and taxable pension income.
- Interest and dividends, including tax-exempt interest.
- Realized capital gains, even when taxed at 0% federally.
- The taxable portion of traditional IRA and 401(k) withdrawals, including taxable distributions from inherited retirement accounts.
- The taxable portion of Roth conversions.
- Social Security benefits, including the nontaxable portion, but excluding Supplemental Security Income (SSI).
Generally not included in ACA MAGI:
- Money withdrawn from cash savings. Interest earned on those savings is included.
- The cost-basis portion of investments sold. Only the realized gain is included.
- Qualified Roth account withdrawals and withdrawals of regular Roth IRA contributions.
- Cash gifts and inherited cash. Subsequent interest, dividends, or realized gains may be included.
- Loan proceeds.
Say the same couple spends $50,000 in a year. They use $6,000 from cash savings, receive $8,000 of interest and dividends, and sell $36,000 of investments that originally cost $10,000. Only the interest, dividends, and $26,000 gain count, so their MAGI is about $34,000, not $50,000.
Any gains or taxable withdrawals used to pay premiums and medical costs belong in the income projection too, along with wages earned earlier in the year you retire. MAGI covers the full calendar year.
How can tax planning affect your premiums?
Long-term capital gains taxed at 0% federally still count toward MAGI, so realizing gains to reset your cost basis can reduce assistance even when the federal tax is $0. Taxable Roth conversions count too. Illinois generally exempts traditional IRA-to-Roth conversions from state income tax, but they can still raise federal tax and reduce assistance.
That doesn't make the lowest possible income the goal. Realizing gains or converting to Roth can still be worthwhile after weighing lifetime taxes, future required distributions, diversification, and cash needs. The goal is to choose withdrawals and tax strategies with both healthcare costs and long-term retirement needs in mind. If you're planning around the income ceiling, leave some room for unexpected interest, dividends, or capital gains rather than targeting the limit exactly.
What other coverage options should you consider?
- A spouse's employer plan: often simple, but if it's considered affordable, it can affect eligibility for Marketplace assistance.
- COBRA: keeps your former employer's plan, but you typically pay the full premium.
- Retiree coverage: offered by some employers. Being eligible doesn't prevent Marketplace assistance, but enrolling does.
- Medicaid: may be available at lower income levels.
How can you estimate your costs?
Estimate your premiums and savings with Get Covered Illinois.
Try a few realistic income scenarios while keeping your household details and plan the same. Use your full expected annual income. An estimate isn't a substitute for an application.
Outside Illinois, preview plans on HealthCare.gov. Get Covered Illinois open enrollment for 2027 runs November 1, 2026 to January 15, 2027; enroll by December 15 for coverage starting January 1. Losing employer coverage generally lets you enroll outside that window.
Look beyond the premium. Compare deductibles, out-of-pocket limits, provider networks, and prescription coverage.
Update your income estimate when circumstances change. Advance assistance is reconciled on your tax return, and starting with 2026, there's no cap on repaying excess credits.
Planning an early retirement?
We'd be glad to help you coordinate your retirement income and healthcare coverage. Book a free 30-minute intro call.
Book a free intro callThis article is for general educational purposes only and is not personalized financial, tax, legal, or insurance advice. The premium figures are selected-plan estimates obtained from the Get Covered Illinois estimator in November 2026 for one hypothetical household; they are not quotes, guarantees, or plan recommendations, and your costs will depend on your circumstances and plan choice. Other examples are hypothetical and do not represent an actual client or outcome. Advisory services are offered through Core Planning LLC, a Registered Investment Advisor. For additional disclosures, please visit corepln.com/disclosures.
