ACA Marketplace vs COBRA for Early Retirees in Nebraska

Retiring at 60, 62 or 63 means finding health coverage for the years before Medicare. For most people in Nebraska, it comes down to two choices: keep the work plan through COBRA, or buy a plan on the ACA Marketplace at HealthCare.gov. A spouse's plan is a third option if you have one. Here is how to compare the first two.

Which costs less for an early retiree in Nebraska, the Marketplace or COBRA?

It depends mostly on your household income. COBRA has no income test and no tax help: you can be charged up to 102% of the plan's full premium, including the share your employer used to pay. Marketplace plans can cost less after a premium tax credit, which is available when household income is from 100% to 400% of the federal poverty level.

That 400% line matters again. The larger pandemic-era tax credits expired at the end of 2025, and KFF reports that premium payments after credits rose 58% on average for people who signed up for 2026 coverage. Above 400% of the poverty level, roughly $64,000 for one person, you generally pay the full Marketplace price.

Early retirees have one advantage: your income in the first years of retirement may be lower than when you worked. Marketplace tax credits are based on the household income you expect for the year, so your retirement income plan and your health coverage plan are connected.

When does COBRA make more sense?

COBRA makes the most sense as a short bridge when continuity matters more than price. You keep the same plan, network, drug list and plan year.

• You are in the middle of treatment or have a surgery scheduled.
• You have already met much of this year's deductible. Ask the plan whether your progress carries over.
• Your specialists or medications are not well covered by Marketplace plans in your county.
• You only need a few months of coverage before Medicare or a new job.
• Your spouse or children need the same doctors.

COBRA generally lasts 18 months, and up to 36 months for family members in some situations. You get at least 60 days to elect it.

When does a Marketplace plan make more sense?

A Marketplace plan makes more sense when you qualify for a tax credit or need coverage longer than COBRA lasts. Nebraska uses HealthCare.gov, the federally facilitated Marketplace.

• Your household income qualifies for a premium tax credit.
• You retire at 60 or 61 and need coverage for more than 18 months.
• Your doctors and medications are covered by a plan in your county.
• You want to pick a plan that fits your health, not your old employer's.

Two deadlines matter. Losing job-based coverage gives you 60 days to choose a Marketplace plan. Open Enrollment for 2027 runs November 1, 2026 to January 15, 2027, with December 15 the deadline for coverage starting January 1. HealthCare.gov warns that ending COBRA on purpose does not open a special enrollment period.

What if your income is very low the year you retire?

Look at Medicaid. Heritage Health Adult, Nebraska's Medicaid expansion, covers people 19 to 64 with income up to 138% of the poverty level, which DHHS puts at about $22,025 a year for one person in 2026. Since May 1, 2026, most expansion members must show 80 hours a month of work, volunteering, school or a work program, unless exempt. See our work requirements update. Apply through iServe Nebraska or (855) 632-7633.

How do you bridge to Medicare at 65?

Plan the hand-off months ahead. Sign up for Medicare during your Initial Enrollment Period, the 7 months around your 65th birthday. Coverage starts the first of your birthday month if you sign up in the 3 months before it.

• Marketplace: End your plan so it stops when Medicare starts. Medicare's handbook says that once you are eligible for Part A with no premium, you won't qualify for Marketplace help, and you'll likely have to pay back credits you keep receiving.
• COBRA: It usually ends once you sign up for Medicare. COBRA does not count as current job coverage, so it does not give you extra time to sign up. See COBRA vs Medicare.
• A younger spouse: Their coverage is separate. They can keep COBRA or a Marketplace plan.

Our turning 65 checklist lays out the months in order.

What mistakes do early retirees make with health coverage?

The most common is letting the 60-day Marketplace window pass after choosing COBRA, then wanting out when the premium bill arrives.

Other mistakes:

1. Guessing income too low. If your actual income is higher than you estimated, you may owe back some of the tax credit when you file.
2. Choosing by premium alone. Check the deductible, out-of-pocket maximum, network and every medication.
3. Forgetting the spouse. Plan coverage for both of you, especially if you will reach 65 at different times.
4. Missing Medicare at 65. The bridge ends at your Initial Enrollment Period, and late Medicare enrollment can mean a lifelong penalty.

Our page on health insurance if you retire before 65 covers spouse plans and other options, and the wrong retirement question explains why coverage belongs in the plan from the start.

Who can help with the Marketplace and the switch to Medicare?

For Marketplace plans, use HealthCare.gov or the Marketplace Call Center at 1-800-318-2596. For the Medicare side at 65, 1-800-MEDICARE (1-800-633-4227) is available 24 hours a day, 7 days a week (TTY 1-877-486-2048), and Nebraska SHIP (formerly SHIIP) offers unbiased counseling at 1-800-234-7119.

If you want help planning the bridge and lining up Medicare at 65, talk to me. My help costs you nothing.