Retiring at 64 in Houston in 2026: The Bridge-to-Medicare Playbook

It usually starts at the kitchen table in Bellaire or Spring Branch, with a stack of paperwork from human resources, a half-empty coffee cup, and a calculator. You are 63, or maybe 64. The job ended sooner than you planned — a layoff, a parent who needed care, a back that finally said no. Medicare does not start until the month you turn 65. And the news from Washington in late 2025 made the in-between months a lot more expensive than they were a year ago.

This is the bridge-to-Medicare problem, and in 2026 it looks different in Houston than it did during the enhanced-subsidy years. The good news is the bridge is well marked once you have a map. Below is the playbook the team at Wise Insurance Agency walks through with our pre-65 clients every week — the ACA Marketplace math, the COBRA option, the spouse-plan path, the seven-month Medicare Initial Enrollment Period, and the handoff month between ACA and Medicare. If you would rather just have a person walk through it with you, call 832-743-1318 or book a consultation appointment.

Why retiring at 64 is harder in 2026 than it was 2021–2025

From 2021 through 2025, two laws — the American Rescue Plan Act and then the Inflation Reduction Act — gave ACA Marketplace shoppers an unusually generous deal. The cap on premium contributions was lowered, and the historic 400% federal poverty level (FPL) “subsidy cliff” was eliminated. If you were 63, 64, retired early, and bought a Marketplace plan, your premium was capped at a percentage of income no matter how much you earned.

That deal expired on December 31, 2025. Congress did not extend it before the year-end deadline. For 2026 plans, the rules reverted to the pre-2021 structure: a hard cliff at 400% FPL, where households above that line lose their entire premium tax credit, and a less generous formula for those below it.

According to KFF’s late-2025 analysis, subsidized Marketplace enrollees on average will see their annual premium payments rise from $888 in 2025 to $1,904 in 2026 — a 114% increase. But the pain is not evenly distributed. The hardest-hit group is exactly the group this article is written for: people between 60 and 64 with modest-to-middle retirement income who used to qualify for help but now sit just above the cliff.

KFF’s example case: a 60-year-old couple earning $85,000 a year — about 402% of the federal poverty level — faces premium increases of more than $22,600 per year on the benchmark Silver plan in 2026. That moves their projected benchmark cost from roughly 8.5% of their income to about a quarter of their income.

On top of that, insurers proposed a median rate increase of 18% for 2026 across the Marketplace, per KFF’s tracker of carrier filings. So pre-65 Houstonians are getting hit twice: rates up, subsidies down or gone.

Your three coverage paths from 64 to 65

Almost every Houston retiree we meet at 63 or 64 ends up choosing among three coverage paths for the bridge year (or years) before Medicare. A small number have a fourth option — qualifying for Texas Medicaid or for retiree health coverage from a former employer (TRS-Care, military TRICARE, federal FEHB) — but the big three cover most cases.

The right path is not the same for every household. It depends on your projected 2026 income, whether your former employer offers COBRA at all (private firms with 20+ employees must, under federal law), whether your spouse is still working with a group plan, and how many months you have to bridge. Six months looks different from twenty-four months.

If you want to see how each of these compares for your specific income, household size, and timeline, that is exactly the conversation our agents have every day — call 832-743-1318 or visit our health insurance overview.

Path 1: ACA Marketplace with the post-cliff math

For Houstonians who do not have access to COBRA or a spouse plan, the ACA Marketplace is still the main bridge option. The mechanics are unchanged — open enrollment runs each fall on healthcare.gov, plans are sold in metal tiers (Bronze, Silver, Gold, Platinum), and the same network of Texas carriers participates. What changed is the math.

The 2026 premium tax credit rules in plain English

Under the pre-2021 (and now 2026) rules, premium tax credits are calculated on a sliding scale by income, but they cut off entirely at 400% of the federal poverty level. Below that, your “expected contribution” is a percentage of household income that rises with income — from roughly 2% near 138% FPL up to 9.5%+ at the top of the eligible range. The Marketplace pays the difference between your expected contribution and the cost of the benchmark Silver plan in your area.

For a Houston household, here is roughly how 2026 income translates to subsidy eligibility. (These are estimated bands using HHS 2025 poverty guidelines; final numbers are confirmed when you apply on healthcare.gov.)

The “just over the cliff” trap

The cruelest part of the 2026 reset is the cliff itself. A household at $84,600 (400% FPL for a couple, using 2025 guidelines) still receives some subsidy. A household at $84,601 receives zero. The difference in real-world premium can be more than $1,500 per month for a 64-year-old couple. We have already met Houston retirees in Cypress and Pasadena who took on a part-year consulting gig in late 2025 and accidentally pushed themselves over the line. Plan your modified adjusted gross income (MAGI) carefully in retirement years — the IRS counts traditional IRA withdrawals, Social Security, capital gains, and rental income, but not Roth withdrawals.

Path 2: COBRA bridge — when 18 months is worth it

COBRA — the Consolidated Omnibus Budget Reconciliation Act of 1985 — gives most employees of private firms with 20 or more workers the right to keep their group health plan after employment ends. The U.S. Department of Labor’s employee guide is the canonical reference for the rules. The headline numbers:

• Up to 18 months of continued coverage after job loss or reduction of hours.
• 60 days to elect COBRA after receiving the election notice from your former plan administrator.
• You pay the full premium plus a 2% administrative fee — typically called “102% of the cost of coverage.” That is the part most retirees underestimate. The employer was paying a large share before; now you pay all of it.
• Coverage is identical to what you had at work — same network, same deductible (which carries over if you elect retroactively), same prescription tier.

For some bridge situations, COBRA is the right choice even at full retail. It is worth it most often when:

1. You are mid-treatment. You have already met a $5,000 deductible for the year, you are halfway through a chemotherapy course or a physical therapy plan at Houston Methodist or Memorial Hermann, and switching networks would disrupt care.
2. Your bridge is short — under six months. If you are 64 years and 6 months old, paying COBRA for the final stretch can be simpler than enrolling in a Marketplace plan, hitting a new deductible, and then switching to Medicare anyway.
3. Your spouse and dependents are on the plan and your income is too high for subsidies. COBRA covers the whole family at the group rate, which can beat unsubsidized Marketplace premiums for a household of three or four.
4. You have a high-cost specialty drug that is well covered on the employer formulary but uncertain on Marketplace formularies.

Path 3: Joining a spouse’s employer plan

If your spouse or domestic partner is still working and their employer offers a group health plan, you almost always have a 30-day Special Enrollment Period to join that plan after you lose your own coverage. This is a HIPAA right tied to a “loss of other coverage” qualifying event.

For many Houston households this is the lowest-cost bridge — the employer is still contributing 70%–80% of the family premium, the network is broad (most Texas plans include Houston’s major systems), and the household keeps a single deductible. The catch: you both have to be eligible under the plan’s rules. Some employer plans charge a “spousal surcharge” if the spouse could have gotten coverage from their own former job. Read the summary plan description carefully or ask HR for the SPD.

The Medicare Initial Enrollment Period (IEP) — the 7-month window

The Initial Enrollment Period is the most important seven-month window of your retirement. Per CMS, the IEP starts three months before the month you turn 65, includes the birthday month itself, and ends three months after. For someone born in October, that is July through January. For someone born in June, that is March through September. You can sign up for Part A, Part B, a Medicare Advantage plan, a Part D drug plan, or a Medigap policy during this window without facing a late-enrollment penalty.

The BENES Act (Beneficiary Enrollment Notification and Eligibility Simplification Act), effective January 1, 2023, fixed an old trap: enrollments made in the last three months of the IEP or during the General Enrollment Period (Jan 1 – Mar 31) no longer face up to a three-month delay before coverage starts. Now coverage starts the first day of the month after enrollment in those windows. That single rule change has saved Houston retirees from a lot of accidental gaps.

If your 65th birthday falls on the first day of a month — say, October 1 — Medicare considers you eligible the month before. So your IEP would actually start in June, not July. Get the details right by reading our Medicare eligibility page or call 832-743-1318 to confirm your specific window.

When Part A makes sense at 65 even if you stay on ACA

Here is a wrinkle a lot of Houston retirees miss. If you have worked and paid Medicare taxes for at least 40 quarters (about 10 years), Part A — hospital coverage — has no monthly premium for you. Per SSA, premium-free Part A at 65 is the standard situation for most American workers.

Because Part A is premium-free, some pre-65 households on a Marketplace plan choose to enroll in Part A at 65 and keep their ACA plan until 65½ or until the spouse also turns 65. There is a critical compliance point here: once Medicare Part A could begin, the IRS treats you as Medicare-eligible for premium-tax-credit purposes. You generally must give up your premium tax credit on the Marketplace plan the month Part A starts. You can keep paying for the Marketplace plan unsubsidized — but most retirees do not, because unsubsidized Marketplace premiums for a 65-year-old are typically higher than Medicare with a Medigap or Medicare Advantage plan.

The transition month: switching from ACA to Medicare without a gap

The handoff month between an ACA plan and Medicare is where small mistakes get expensive. The clean handoff looks like this for a Houstonian whose 65th birthday is October 15:

1. July (3 months before). Enroll in Medicare Parts A and B online through SSA, or in person at a Houston SSA field office. Coverage will start October 1.
2. August. Talk to a Medicare-licensed agent. Decide between Original Medicare with a Medigap policy plus a stand-alone Part D drug plan, or a Medicare Advantage plan that bundles hospital, medical, and drug coverage. Compare doctors and drug formularies.
3. September. Enroll in the Medigap + Part D combination, or in the Medicare Advantage plan, with an October 1 effective date.
4. End of September. Log in to healthcare.gov and report a “life change” — gaining other coverage. Cancel your ACA plan with a termination date of September 30. (Not October 1 — overlapping coverage causes premium-tax-credit clawback.)
5. October 1. Medicare and your supplemental plan are active. Old ACA plan is closed.
6. Tax filing in 2027. When you file your 2026 taxes, Form 1095-A from the Marketplace will show coverage Jan 1 – Sept 30 only. Reconcile premium tax credits as usual.

Avoidable mistakes that cost Houston retirees real money

The patterns repeat. After years of Medicare and Marketplace enrollments at Wise Insurance Agency, the same five mistakes show up again and again. Each one is fixable in advance.

1. Crossing 400% FPL on a part-year project

The most painful one. A retired refinery engineer in Pasadena takes a four-month consulting gig at $20,000. That income, on top of pension and Social Security, pushes the household from $80,000 to $100,000. The 2026 premium tax credit for the year is reduced retroactively, and the IRS requires repayment at tax time. The fix is to project MAGI carefully before saying yes to extra income.

2. Missing the IEP and paying a Part B penalty for life

If you do not have active employer coverage at 65 and you skip the IEP, you may pay a 10% Part B premium penalty for every full 12-month period you were eligible but not enrolled — for the rest of your life, per CMS. A retiree who delays Part B for three years pays 30% more on the standard Part B premium forever.

3. Treating COBRA as creditable coverage to delay Medicare

COBRA is not considered active employer coverage for Medicare’s Special Enrollment Period rules. If you are on COBRA at 65 and skip Part B, you will likely owe a late-enrollment penalty. Per CMS guidance, only active employee coverage (you or a spouse still working at a firm with 20+ employees) triggers a Medicare Special Enrollment Period.

4. Letting ACA and Medicare overlap by one month

See the section above on the transition month. The IRS reclaims premium tax credit dollar-for-dollar for overlapping months. A $1,200 monthly subsidy received in October when Medicare also started October 1 becomes $1,200 owed to the IRS in April.

5. Choosing a Marketplace plan whose network doesn’t include your specialist

Houston has a complicated map of provider networks across Memorial Hermann, Houston Methodist, Texas Children’s, MD Anderson, Kelsey-Seybold, and Baylor St. Luke’s. Marketplace plans differ by network. If you have an oncologist at MD Anderson or a cardiologist at Houston Methodist, confirm their network status before you pick a plan — not after. Our agents check every doctor on every plan we recommend.

When to call Wise Insurance Agency — and what we actually do

The bridge to Medicare is a months-long project, not a one-call decision. Here is what working with a Texas-licensed agent at Wise actually looks like.

Three to six months before you stop working. Bring the projected last-day-of-employment date, your last pay stub, and an estimate of household income for the rest of the calendar year. We project your MAGI, run subsidy numbers for the Marketplace, price COBRA against the spouse plan (if any), and map the months between today and your 65th birthday.

Three months before your 65th birthday. We help you submit Medicare Part A and Part B through SSA, choose between Medicare Advantage and Original Medicare with a Medigap supplement, compare drug formularies for your specific prescriptions, and confirm that your Houston doctors are in-network. There is no consumer fee for this service in Texas — agents are paid by the carriers.

At the transition month. We coordinate the ACA cancellation date, the Medicare effective date, and any spouse-plan changes so coverage starts October 1 (or whichever month applies) without a one-day gap.

For ongoing changes. If you go back to work part-time, move to a different ZIP code, gain a Houston grandchild who needs dependent coverage, or qualify for Extra Help on Part D, we adjust. We are licensed for the full range of ACA Marketplace plans, Medicare, and supplemental Medicare plans in Texas.

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