A financial advisor breaking down the average cost of health insurance premiums for a retiree.
SmartAsset and Yahoo Finance LLC may earn commission or revenue through links in the content below.
If you buy health insurance independently instead of obtaining from an employer or government program, your monthly premiums will increase markedly as you get older. As you approach retirement, in fact, you’ll find yourself paying premiums up to three times what younger insured people pay for plans. An estimate from the Urban Institute, for example, indicates that average payments for monthly premiums were $1,081 at age 64, while those at age 30 paid only $422. Health insurance costs can take a big bite out of retirement income. Talk to a financial advisor to plan ahead.
The Affordable Care Act empowers health insurance companies to incorporate age when calculating premiums. This is based on the idea that older people are more susceptible to illness and injury and so can reasonably be charged more than younger policyholders. However, rather than permitting insurers limitless increases in premiums charged to older insured people, the law caps age-based premium increases. Using the rate charged to a 21-year-old, insurers can only charge a 64-year-old up to three times as much for a given plan.
Some states use lower maximum ratios. Two states, Vermont and New York, prohibit age-based multipliers. In these states, older purchasers of health insurance pay the same as younger ones.
The 3:1 ratio limit of the federal guidelines applies only to 64-year-olds. Insurers are limited to smaller multipliers for buyers at younger ages. For example, under the federal guidelines, a 40-year-old male can be charged a rate 1.278 times the rate charged to a 21-year-old. Multipliers are generally modest until middle-age, when they begin to rise rapidly as older consumers are asked to pay increasingly larger monthly premiums when compared with younger people.
In 2024, Kaiser Family Foundation data experts figured the average 40-year-old paid $477 monthly for benchmark Silver plans on ACA marketplaces (estimated at $497 for 2025). These policies represent the second-least expensive option among Silver-tier offerings. There is no similarly available data for national averages for premiums paid by people at other ages. Nor are there published estimates of a national average for the base rate paid by a 21-year-old. However, it’s possible to generate estimates for these figures using the Kaiser Foundation estimate for a 40-year-old and the allowable parameters for rate-setting.
Since federal rules dictate insurers can extract 1.278 times more from 40-year-old consumers versus 21-year-olds for identical coverage, dividing the average $477 premium for 40-year-olds by the permitted 1.278 aging multiplier produces a base premium of $373.24.
Age
Average Premium
Multiplier
Base Premium
40
$477
1.278
$373.24
This method suggests $373.24 is the national average paid by a 21-year-old (in 2025, based on the $497 estimate, this would go up to $388.89). The figure can then be used to calculate average premiums for other ages using the federally allowed multiplier for other ages.
Starting at age 62, the federal rules allow insurers to charge a 62-year-old 2.873 times the base premium. For a 63-year-old the multiplier is 2.952 and, starting at age 64, the multiplier is the maximum 3. At 65, most people are eligible for Medicare and presumably are not in the market for private health insurance, so the 3 multiplier applies to all ages after 64.
Multiplying $373.24 by these authorized age factors reveals that the estimated average monthly benchmark premiums escalate to $1,072 at age 62, $1,101.80 by age 63 and top out at $1,120 for those ages 64-65. Here’s how that looks.
Age
Base Premium
Multiplier
Estimated Premium
62
$373.24
2.873
$1,072.32
63
$373.24
2.952
$1,101.80
64-65
$373.24
3
$1,119.72
These estimates are for national averages and may not reflect the actual premiums paid by people aged 62 to 65. One reason is that base premium costs vary widely depending on geography. Also, different states use different multiplier schemes, which can significantly affect insurance premiums based on age. Moreover, despite being the most important factor in premium-setting, age is just one consideration. Smoking habits and household size are also key in premium pricing.
These estimates are also restricted to policies sold to individuals through ACA marketplaces. They don’t include other sources of coverage, such as group insurance policies. People may also get coverage through COBRA or as part of retirement benefits from a former employer.
A client working with a financial advisor to create a financial plan to cover health insurance premiums in early retirement.
Health insurance premiums swell markedly as citizens age. Federal rules permit insurers to charge retirement-age Americans up to triple the rates paid by 21-year-olds. This means an early retiree purchasing coverage under a benchmark plan through an ACA exchange might have to pay approximately $1,100 or more a month for health insurance. Some states put tighter limits on age-related insurance price hikes, but the powerful influence of age on health insurance costs means a typical retiree who doesn’t have access to Medicare or another less costly source of coverage should budget for steep premiums.
A financial advisor can help you create a plan to cover health insurance costs in early retirement. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
You can find answers to the question of whether you’re saving enough for retirement with the help of SmartAsset’s retirement calculator.