Health Insurance Gap
The stretch between losing employer coverage at early retirement and Medicare eligibility at 65, when you buy your own insurance.
The health insurance gap is the period between leaving work before 65 and becoming eligible for Medicare at 65, during which you must source your own coverage — usually through the ACA marketplace, sometimes COBRA or a spouse's plan. For someone retiring at 55, that's a decade of self-funded health insurance.
It's one of the most underestimated costs in early-retirement planning, and one of the most controllable. ACA subsidies are based on your modified adjusted gross income, and early retirees often have real control over their reported income through which accounts they draw from. Managing income down can dramatically cut the premium — though it competes with the desire to do Roth conversions in those same low-income years.
At 65 the gap closes but healthcare doesn't become free: Medicare has its own premiums and out-of-pocket costs. A realistic plan models the expensive pre-65 bridge and the ongoing Medicare costs separately.
This definition is general information to help you understand a term, not financial, tax, or legal advice. Figures that change year to year (limits, thresholds, rates) should be confirmed against current official sources. For guidance on your situation, a licensed fee-only fiduciary is the right next step.