Reviewed for accuracy on November 3, 2026 by Tina Price, one of Grove's licensed advisors.
Retiring before 65 in Colorado: health insurance until Medicare
Your tax credit depends on the income on your tax return, not your savings. Keep household income at or under 400% of the poverty level and the credit can cover most of the premium. Go a dollar over and you lose all of it, and you repay any credit already paid in advance.
Last updated November 3, 2026
The short version
- The credit is based on household income (MAGI), not on savings or assets.
- For 2027, 400% of the poverty level is $63,840 for one person and $86,560 for two.
- From tax year 2026, going over 400% means repaying the whole advance credit.
- Roth conversions and taxable capital gains count as income. Qualified Roth withdrawals don't.
Why income planning matters before 65
Premiums rise with age, so people in their early 60s pay the most. The tax credit makes up the difference between the benchmark silver plan and a set share of your income.
That makes the credit large for early retirees. It also means a small change in income can change your premium a lot.
The 400% cliff
For 2027 coverage, there's no tax credit if household income is above 400% of the federal poverty level. That's $63,840 for one person and $86,560 for a couple.
Here's what that means in Larimer County for a couple aged 62 and 60. At $86,500 a year, the cheapest silver plan costs them about $381 a month after the credit and Colorado Premium Assistance. At $86,600, the same plan costs $2,443 a month.
From tax year 2026, there's no cap on paying back the advance credit. If your actual income ends up over 400%, you repay all of it when you file.
What counts as income
The credit uses modified adjusted gross income (MAGI). That's the adjusted gross income on your tax return, plus tax-free interest, all of your Social Security, and excluded foreign income.
- Counts: pensions, traditional IRA and 401(k) withdrawals, Roth conversions, taxable capital gains, interest, dividends, rental income, wages and self-employment income.
- Doesn't count: qualified Roth IRA withdrawals, money from savings or the sale of assets you've already paid tax on, and loans.
Ways to plan around it
Retirees often have some control over which year income lands in. Many time IRA withdrawals, Roth conversions and asset sales to stay under 400% in the years before Medicare.
Contributions to a health savings account lower your adjusted gross income, and some bronze plans are HSA-eligible.
Talk to your tax professional before moving money. We can show you what each income level does to your premium.
If you have retiree coverage or COBRA
Being offered retiree coverage or COBRA doesn't stop you from getting the credit. Enrolling in either one does, for the months you're enrolled.
Losing job-based coverage when you retire opens a 60-day window to buy a plan through Connect for Health Colorado.
When you turn 65
Once you're eligible for premium-free Medicare Part A, you generally can't keep the tax credit. Plan your Medicare start date and end your marketplace plan when Medicare begins.
Grove helps with Medicare too, at groveba.com/medicare.
Next step
A licensed Grove advisor can price your plan at a few income levels, so you can see where the cliff sits for you. It costs you nothing.
Want a person to check your pick? A licensed Grove advisor will, at no cost. If you make Grove your broker, you can keep calling the same advisor after you enroll.
Compare plansPrices in your countyCall (970) 840-1130
Common questions
Do my savings or home count against me?
No. The credit looks at income on your tax return, not at what you own.
What if my income is hard to predict?
Estimate as closely as you can and update Connect for Health Colorado if it changes. If you're near 400%, you can take less of the credit in advance to lower the risk of repaying it.
Does all of my Social Security count?
Yes. Even the part that isn't taxed is added back when figuring your income for the credit.
Sources
- HealthCare.gov glossary: modified adjusted gross income (MAGI)
- IRS: Instructions for Form 8962 (household income, family size, employer coverage)
- IRS: repayment caps eliminated for excess advance premium tax credit (tax year 2026 and later)
- Public Law 119-21, sections 71301-71305 (premium tax credit changes)
- IRS Rev. Proc. 2026-26: 2027 applicable percentage table and 10.22% required contribution
- 26 CFR 1.36B-2: eligibility for the premium tax credit (employer coverage, COBRA, retiree coverage, HRAs)
- IRS Publication 590-B: distributions from IRAs (qualified Roth distributions)
- HealthCare.gov glossary: health savings account
- HealthCare.gov: special enrollment periods
- Connect for Health Colorado: get financial help
This guide is general information, not tax or legal advice. Connect for Health Colorado decides eligibility and tax credits.