Minnesota health insurance, explained
Health insurance for early retirees in Minnesota
Retiring before 65 puts you in the most expensive stretch of the individual health insurance market for exactly the years you no longer have a paycheck. The good news is that the price you are quoted is rarely the price you pay: for most early retirees the lever is income, and a household that plans its withdrawals can qualify for a MNsure tax credit that changes the picture entirely. Here is how the pieces fit for the years between the last day of work and the first day of Medicare.
Why the premium looks so high at 62
Individual plans price by age, and federal rules allow a 3 to 1 spread: a 64-year-old can be charged up to three times what a 21-year-old pays for the same plan. That is the sticker price. Whether you pay it depends on the next section.
Income is the lever
MNsure's tax credit is based on the household's expected income for the year. For 2026 coverage it is available up to $84,600 for a couple and $62,600 for one person, and under the cap the benchmark plan is limited to a share of income that tops out a little under 10%. Pensions, Social Security, taxable withdrawals and Roth conversions all count; drawing from savings you already paid tax on does not. Two retirees with the same net worth can pay very different premiums depending on which account they draw from — a conversation to have with us and your tax preparer together, before the year starts.
The cap is a cliff: one dollar over and the whole credit is gone. The enhanced credits that softened this from 2021 through 2025 have expired.
COBRA or a MNsure plan?
COBRA keeps your employer plan for up to 18 months at the full premium plus a small administrative charge. It is the right bridge when you are mid-treatment with doctors you cannot lose, or when the employer plan is unusually rich. It is the wrong bridge when a MNsure plan with a credit costs a fraction of it, which is the more common case. Losing employer coverage gives you 60 days to enroll in a marketplace plan; taking COBRA first and switching later is possible only at open enrollment or when COBRA ends.
Counting down to 65
Medicare's Initial Enrollment Period is the seven months around your 65th birthday. Enroll in the three months before it and coverage starts the month you turn 65; the MNsure plan ends the day before. Minnesota is one of three states with its own Medigap designs — Basic and Extended Basic, with optional riders — instead of the lettered plans sold elsewhere. Premiums here are not based on age, and anyone enrolling in Part B gets a six-month window to buy a Medigap plan with no health questions, whatever their age. Part B is $202.90 a month in 2026 for most people — often less than the bridge plan cost.
If you are over the cap anyway
Then the job is to find the right plan at full price. An HSA-eligible plan often wins for a healthy early retiree: lower premium, and up to $8,750 a year for a couple ($1,000 more each from 55) set aside tax-free for the deductible and for Medicare premiums later.
Questions we get about this
Can I get a MNsure tax credit if I have a lot of savings but a small income?
Yes. The credit is based on income, not assets. Savings you draw on that were already taxed do not count; withdrawals from pre-tax retirement accounts do.
Should I take COBRA for the full 18 months?
Only if the math says so. Price the MNsure plan with your credit first. Many early retirees find COBRA costs several times more for similar coverage.
What happens to my MNsure plan when I turn 65?
You enroll in Medicare during your Initial Enrollment Period and end the MNsure plan the day before Medicare begins. Your tax credit ends once you are eligible for premium-free Part A either way.
My spouse is younger. What happens to them?
They stay on a MNsure plan as a household of two — both incomes count — until their own 65th birthday. We set up both timelines so nothing overlaps or lapses.
Ask us the version that is about you.
Pat or Spencer reads every request personally. Certified MNsure brokers, independent since 1986, and there is no charge for the conversation.
We do not offer every plan available in your area. Currently we represent 11 organizations which offer 36 products in your area. Please contact Medicare.gov, 1-800-MEDICARE, or your local State Health Insurance Program (SHIP) to get information on all of your options.