Bridging to Medicare: Health Coverage Strategies Pre-65

Why planning to bridge to Medicare matters

Turning 65 brings Medicare, but many people face years of health coverage decisions beforehand. Gaps in coverage or late enrollments can cause large medical bills and penalties (for Medicare Part B and Part D) that last years. Starting a deliberate bridging plan early—often 18–24 months before age 65—gives you time to compare costs, preserve benefits, and avoid surprise out‑of‑pocket expenses.

Authoritative sources: Centers for Medicare & Medicaid Services (CMS), HealthCare.gov, U.S. Department of Labor (DOL), IRS Publication 969, and Medicaid.gov provide official rules and timelines. See CMS for enrollment windows (https://www.cms.gov) and HealthCare.gov for marketplace guidance (https://www.healthcare.gov).

In my practice working with pre‑65 clients, the most common problems are: missing a Medicare Special Enrollment Period after dropping employer coverage; selecting short‑term plans that leave major gaps; or underestimating COBRA costs. I’ve helped clients avoid penalties by coordinating employer plan coverage and timely Medicare enrollment.

Key bridging-to‑Medicare options (what they are and when they work)

• COBRA (Consolidated Omnibus Budget Reconciliation Act)

• What it is: A federal law that lets eligible workers and their dependents temporarily continue employer group health coverage after a qualifying event (job loss, reduction in hours).

• Typical length: up to 18 months for most qualifying events; some situations allow 29 months (disability) or 36 months for certain dependent events (DOL guidance).

• Cost: You generally pay the full plan premium plus up to a 2% administrative charge (DOL).

• When to use it: When you want to keep the same network and benefits and can afford the premium.

• Employer Coverage & Special Enrollment

• If you (or your spouse) remain actively employed with employer health coverage, you may qualify for a Medicare Special Enrollment Period (SEP) to sign up for Part A/B without penalty when you stop that employer coverage. Employer size matters for who pays first: for active employees, large employers typically coordinate differently with Medicare—review CMS guidance for employer‑based situations.

• Action point: Confirm with your benefits administrator how the employer plan coordinates with Medicare and whether you’ll have an SEP.

• ACA Marketplace Plans (Health Insurance Marketplace)

• What it is: Individual and family plans that meet ACA requirements; financial help (premium tax credits / APTC) depends on household income and eligibility.

• When to use it: If COBRA is unaffordable or you’re ineligible for Medicaid and need ACA protections (no denials for pre‑existing conditions, essential benefits).

• Note: Open Enrollment is annual; qualifying life events (job loss, aging into Medicare soon) can trigger a Special Enrollment Period.

• Medicaid

• What it is: State‑administered, federally supported coverage for low‑income people; eligibility rules vary by state.

• When to use it: If your income and assets meet your state’s thresholds. Medicaid can provide a full coverage option until Medicare starts.

• Short‑Term Limited Duration Plans

• What it is: Temporary plans that can provide short gaps of coverage but are not ACA‑compliant.

• Caveats: They may exclude pre‑existing conditions, limit benefits, and state law varies on how long they can be sold. Use only as last‑resort and after reading plan exclusions (HealthCare.gov warns these are not a substitute for comprehensive coverage).

• Health Savings Accounts (HSAs)

• What they do: Tax‑advantaged accounts paired with high‑deductible health plans (HDHPs) to save pre‑tax dollars for qualified medical expenses.

• Important rules: You can no longer contribute to an HSA once you enroll in Medicare, but existing funds remain and can be used for qualified expenses, including some Medicare premiums such as Part B and Part D (see IRS Publication 969). Coordinate HSA contributions timing if you plan to enroll in Medicare early.

Timing and enrollment rules you must know

• Medicare Initial Enrollment Period (IEP): a 7‑month window (3 months before the month you turn 65, the month you turn 65, and 3 months after). If you miss it, late‑enrollment penalties may apply to Part B and Part D.

• Source: CMS (https://www.cms.gov)

• Special Enrollment Period (SEP): If you delay Medicare because you had qualifying employer coverage, you may enroll later without penalty—typically within 8 months after that employer coverage ends, but confirm with CMS and your benefits administrator.

• COBRA timing: COBRA must be offered promptly after the qualifying event; you have 60 days to elect COBRA coverage once notified. Plan and budget for the full premium (DOL guidance).

• Marketplace timing: Losing employer coverage or COBRA election are qualifying events for a Special Enrollment Period on HealthCare.gov.

How to choose between options: a practical decision framework

1. Inventory current coverage and costs

• What are your current premiums, deductibles, provider networks, and out‑of‑pocket maximums?
• Ask HR for the Summary Plan Description and call plan customer service for specifics.

1. Review eligibility and timing

• Can you get SEP for Medicare based on active employer coverage? If so, you might delay Part B to avoid paying for duplicate coverage.
• If COBRA is available, can you afford full premiums plus admin fee?

1. Compare total costs, not just premiums

• Include deductibles, copays, coinsurance, pharmacy costs, provider access, and likelihood of using services.

1. Consider continuity of care

• If you have specialists or scheduled procedures, keeping the same network (via COBRA or employer plan) may be worth higher premiums.

1. Use subsidies where possible

• Marketplace plans may be subsidized by premium tax credits if your income qualifies—don’t ignore APTC calculations.

1. Factor HSAs and tax effects

• Stop HSA contributions before taking Medicare. Consider timing Roth conversions, withdrawals, or other tax moves that could affect Medicare Part B/D IRMAA later (see planning articles on FinHelp).

Practical timelines and checklists (start this no later than age 63)

• 24 months before 65

• Review employer benefits and retirement timeline.

• Start estimating medical spending in retirement projections.

• 12–18 months before 65

• If retiring before 65, compare COBRA vs. Marketplace vs. Medicaid options.

• Confirm any special enrollment rules with HR/benefits.

• 6 months before 65

• Confirm your Medicare IEP window and plan enrollment strategy (Part A generally automatic if you’re already receiving Social Security; Part B requires action unless delaying for employer coverage).

• If using an HSA, stop contributions in the month before you enroll in Medicare.

• After you turn 65

• Enroll in Medicare during your IEP or SEP to avoid penalties.

• Coordinate secondary coverages (Medigap, Medicare Advantage) during the appropriate enrollment windows.

Common pitfalls and how to avoid them

• Assuming employer coverage and Medicare coordination are automatic: talk to HR and get written confirmation of whether the employer plan pays primary or secondary when you enroll in Medicare.

• Choosing short‑term plans without checking exclusions: these may leave you responsible for major claims and do not meet ACA consumer protections.

• Missing the Medicare enrollment window because you thought COBRA or marketplace gave you extra time: documentation and timely applications are your responsibility.

• Failing to factor in long‑term costs: Medicare has premiums, cost sharing, and potential Medigap or Part D costs. Plan for these in retirement budgeting (see FinHelp’s planning guides).

Real examples (anonymized)

• Case A: A client lost employer coverage at 63 and chose COBRA for 18 months to preserve provider access. They used that time to finalize retirement and enroll in Medicare at 65 without a coverage gap.

• Case B: A client with limited income qualified for Marketplace subsidies and saved over COBRA premium costs; they switched to Medicare at 65 and used HSA funds accumulated earlier for initial Medicare‑related expenses.

Quick resources and internal links

• For enrollment timing & avoiding penalties: Medicare Enrollment Strategies to Avoid Penalties and Gaps (https://finhelp.io/glossary/medicare-enrollment-strategies-to-avoid-penalties-and-gaps/).

• For using HSAs strategically before and during Medicare coordination: Strategic Use of HSAs and Medicare Coordination (https://finhelp.io/glossary/strategic-use-of-hsas-and-medicare-coordination/).

• For broader retirement health‑cost modeling: Planning for Retirement Healthcare Costs Before Medicare (https://finhelp.io/glossary/planning-for-retirement-healthcare-costs-before-medicare/).

External authoritative references:

• CMS: Medicare enrollment windows and penalties (https://www.cms.gov).
• HealthCare.gov: Marketplace plans and subsidies (https://www.healthcare.gov).
• U.S. Department of Labor: COBRA rules (https://www.dol.gov).
• IRS Publication 969: Health Savings Accounts and tax rules (https://www.irs.gov/publications/p969).
• Medicaid: state eligibility and enrollment (https://www.medicaid.gov).

Final professional tips

• Start planning early (at least 18–24 months before 65). Timing errors are the most costly mistakes.
• Document communications with HR, insurers, and Social Security. Keep written confirmation of SEP or employer coverage rules.
• Consider total cost, continuity of care, and tax implications (especially HSA strategy) rather than selecting by premium alone.
• Consult a licensed benefits advisor or financial planner experienced with Medicare transitions if you have complex coverage needs.

Professional disclaimer: This article is educational only and not personalized financial, tax, or medical advice. Rules change—confirm current guidance with CMS, IRS, DOL, or a qualified professional before acting.