Health Insurance for Early Retirees in Alabama (Ages 55 to 64)

Bridging to Medicare in Alabama

If you retire before 65 in Alabama, a Marketplace plan is the usual bridge to Medicare. You can apply during open enrollment, or within the special enrollment window after losing a retiree or employer plan.

Income planning matters more now that the enhanced subsidies are gone. For 2026, a household earning even a dollar more than 400% of the federal poverty level gets no premium tax credit, and a 60-year-old's full-price premium is far higher than the $645 statewide benchmark KFF reports for a 40-year-old. How you time pension payments, IRA withdrawals and other income can decide whether you qualify.

Be careful in the other direction too. Alabama did not expand Medicaid, so an early retiree with very low reported income may fall below 100% of the poverty level, where Marketplace subsidies stop and Medicaid usually does not pick up adults without dependent children.

Why your income estimate matters so much

Marketplace subsidies are based on your modified adjusted gross income (MAGI) for the coverage year. For early retirees, that number is partly in your control: it depends on which accounts you draw from and when.

Withdrawals from traditional IRAs and 401(k)s count as income. Qualified Roth withdrawals generally don’t. For ACA purposes, MAGI also adds back tax-exempt interest and any Social Security benefits that aren’t taxed. A tax professional and a licensed agent working from the same income plan can make a large difference to what you pay.

Subsidies in 2026

The enhanced premium tax credits expired at the end of 2025. The House passed a three-year extension in January 2026, but the Senate has not passed it, so the original rules apply for 2026 and, unless Congress acts, for 2027. That means households earning more than 400% of the federal poverty level get no premium tax credit at all, and people below that line generally pay a larger share of their income than they did in 2025.