Building a Health Care Bridge in Early Railroad Retirement?

How to Pay for Healthcare Before Medicare: 5 Options for Retired Railroaders

Retiring early is a big win for many railroaders—especially those with 30 years of service who can leave as early as age 60. But with Medicare not starting until age 65, a critical question remains:

How are you going to pay for healthcare before Medicare kicks in?

This gap—sometimes five years or more—can become one of the biggest financial planning challenges you’ll face in retirement. Without proper planning, healthcare costs can quickly eat into your retirement savings.

In this post, we’ll explore five main options to help bridge the gap to Medicare, with pros and cons of each, so you can make an informed decision based on your health, risk tolerance, and financial situation.

1. COBRA: Keep Your Railroad Health Plan (Temporarily)

What is it? COBRA allows you to continue your existing railroad health insurance for up to 18 months after leaving your job.

Pros:

Same plan you’re already familiar with—no change in coverage or providers.
Easy to transition into—no new paperwork or approvals.

Cons:

Very expensive. You pay the full premium yourself (including the portion the railroad used to cover), plus a 2% administrative fee.
Only lasts 18 months.

Best for: Those with cash reserves who want to maintain full coverage in the short term.

2. ACA Marketplace (a.k.a. “Obamacare”)

What is it? Health plans available through the Affordable Care Act (ACA), offering guaranteed coverage regardless of pre-existing conditions.

Pros:

Income-based pricing – you may qualify for subsidies or tax credits if your income is low.
Guaranteed coverage for all applicants.

Cons:

Narrow provider networks—fewer doctors and hospitals may accept the plan.
Plans can be complex and include features you don’t need, potentially driving up costs.

Best for: Railroaders with lower retirement income or who need coverage for several years before Medicare.

3. Short-Term Health Insurance

What is it? Temporary health coverage that typically lasts from 30 to 90 days, often used during job transitions or brief coverage gaps.

Pros:

Lower monthly premiums.
Quick approval and fast coverage.

Cons:

No coverage for pre-existing conditions.
Limited provider networks.
High out-of-pocket risk if something major happens.

Best for: Very healthy individuals who rarely use healthcare services and only need short-term coverage.

4. Private Health Insurance

What is it? Plans purchased outside of the ACA marketplace, directly from private insurance companies.

Pros:

Tailored plans to fit your needs.
Broader provider access—more flexibility in choosing doctors and hospitals.

Cons:

Not income-based—everyone pays the same, regardless of retirement income.
Can be expensive if you don’t qualify for subsidies.

Best for: Those with specific coverage needs and the financial flexibility to pay full premiums.

5. Health Care Cost-Sharing Programs

What is it? Community- or faith-based organizations that help members share healthcare costs. Often structured like co-ops.

Pros:

Lower monthly costs than traditional insurance.
No network restrictions—you can see any provider.

Cons:

Not legally recognized as insurance—no guarantee they’ll pay your medical bills.
Limited protection in the case of major health issues.

Best for: Retirees comfortable with higher financial risk who are looking for a budget-friendly option.

Bonus: Coverage Through a Working Spouse or Part-Time Job

If your spouse is still working or you plan to work part-time, you may be able to join an employer-sponsored health plan. That could be a cost-effective and stable solution until you’re eligible for Medicare.

Planning Ahead: Don’t Leave This to Chance

Healthcare is one of the biggest retirement expenses, and not having a plan in place can result in surprises—both medical and financial.

If you’re planning to retire before age 65, it’s critical to factor in these healthcare options and make them part of your overall retirement strategy.

At Highball Advisors, this is a key part of what we cover in the Boarding for Railroad Retirement planning process. We help railroaders navigate the transition from work to retirement, including how to bridge the Medicare gap safely and smartly.

Ready to Start Planning?

If you're at or near retirement, now’s the time to take a closer look at your healthcare options before Medicare.

➡️ Sign up for a Boarding for Railroad Retirement session and let’s walk through your plan together.

And if you found this helpful, share it with other railroaders who are planning their exit. No one likes surprises—especially when it comes to healthcare costs.

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Until next time—stay safe, stay on track, and take care.

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Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. Highball Advisors encourages you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Highball Advisors, and all rights are reserved from Highball Advisors, and all rights are reserved.