Best States for Early Retirement Healthcare: ACA Costs by State

When Rashida and Tom retired at 53, they were paying $1,276/month for ACA marketplace coverage in Wyoming. It was their single largest monthly expense — more than food, more than their mortgage. A conversation with another FIRE couple at a conference changed everything: that couple had just moved to Idaho and was paying $293/month for comparable coverage.

That's a $983/month difference — nearly $11,800 per year. Invested rather than spent, that gap compounds to roughly $200,000 in additional wealth by the time they reach Medicare at 65. All for a 400-mile move.

Healthcare costs in early retirement are not fixed. Where you live is one of the biggest variables — and for FIRE planners, it's one of the few levers you can actually pull. Here's what the data shows.

Why ACA Premiums Vary So Much by State

The ACA sets rules for what plans must cover and limits the premium variation based on age — but it does not set the prices themselves. Premiums depend on factors that vary dramatically by geography:

• Number of insurers competing — states with only one or two marketplace insurers pay far more than states with five or more
• Healthcare cost of living — hospital rates, physician fees, and drug costs are set locally
• State reinsurance programs — around 20 states have approved Section 1332 waivers allowing them to run reinsurance programs that lower benchmark premiums by 10–40%
• Medicaid expansion — affects who qualifies for Medicaid vs. marketplace plans at lower income levels
• State-based vs. federal marketplace — some state-run exchanges negotiate differently

The result is premiums for the same person that can differ by 5x between the cheapest and most expensive states. For a 50-year-old, the unsubsidized second-lowest-cost Silver plan benchmark ranges from roughly $330/month in the cheapest markets to over $1,100/month in the most expensive — and for anyone above the ACA subsidy cliff, that entire spread lands directly on your own budget.

It's worth being precise about what "benchmark premium" actually means, since it's the number that drives every calculation in this article. The benchmark is the second-lowest-cost Silver plan available in your specific county — not the cheapest plan on the market, and not an average. Your actual subsidy, when you qualify for one, is calculated as the difference between that benchmark premium and your expected household contribution based on income. You're then free to apply that subsidy dollar amount to any metal-tier plan you choose, which is why some retirees deliberately select a cheaper Bronze plan and pocket the difference, while others select a pricier Gold plan and pay more out of pocket for lower deductibles.

ACA Silver Premiums by State: A 50-Year-Old at $65,000 MAGI (Above the Subsidy Cliff)

The following are approximate 2026 benchmark Silver plan premiums for a single 50-year-old at $65,000 MAGI — just above 400% of the 2026 Federal Poverty Level for one person (about $62,600). The enhanced (ARPA/IRA-era) subsidies that used to soften this threshold expired at the end of 2025, so for 2026 the 400% FPL cliff is a hard cutoff: one dollar over it and you receive zero premium tax credit, no gradual phase-out. At this income, state of residence is the single biggest lever you control — you pay the full benchmark premium wherever you live, so the state comparison below is a direct, dollar-for-dollar look at your actual cost. States with reinsurance programs are noted.

If your MAGI falls back below the $62,600 cliff — say, by managing withdrawals through Roth conversions or capital-gains timing in a given year — the math changes completely. Below 400% FPL, your required contribution is capped at a percentage of income set by the IRS's 2026 applicable-percentage schedule (roughly 6.6% at 200% FPL, rising to 9.96% at 300–400% FPL). At that point, a cheap-benchmark state stops mattering as much, because the subsidy absorbs most of the state-to-state difference — the state comparison above matters most for retirees spending enough to sit above the cliff.

The Medicaid Expansion Factor

If your planned retirement MAGI falls below 138% of the Federal Poverty Level — about $21,600 for a single person or $29,200 for two in 2026 — you qualify for Medicaid in expansion states. Medicaid is nearly free healthcare with no premiums and very low cost-sharing.

This is a significant consideration for FIRE planners who plan lean withdrawals early in retirement. In a Medicaid expansion state with a low-MAGI year (say, you've drawn mostly from Roth accounts), you might owe nothing for health coverage at all.

States that have not expanded Medicaid include Texas, Florida, Georgia, Tennessee, and Mississippi (as of 2026). In those states, incomes below 100% FPL fall into a coverage gap — too low for ACA subsidies, too high for traditional Medicaid. If you're planning very low withdrawal years, an expansion state has an additional advantage.

The coverage gap catches more early retirees than you might expect. Someone who front-loaded a large Roth conversion in their final working years, then plans a genuinely lean first year of retirement living mostly off cash savings and already-taxed Roth contributions, can easily post a MAGI under $15,000 for that year. In an expansion state, that's a Medicaid year with essentially no premium. In a non-expansion state, that same low-MAGI household falls into the coverage gap and may need to manufacture additional taxable income — for example, by realizing capital gains or taking a small traditional IRA withdrawal — specifically to qualify for ACA marketplace subsidies instead. It's a counterintuitive outcome: in a non-expansion state, being "too frugal" in a given year can temporarily leave you without an affordable coverage option.

How Cost-Sharing Reductions Change the Math

At income between 100% and 250% FPL (roughly $15,650–$39,100 for one person in 2026), ACA Silver plans come with cost-sharing reductions (CSRs) that dramatically lower your deductible and out-of-pocket maximum. A standard Silver plan might have a $4,000 deductible — a Silver plan with CSR at 200% FPL might have a $750 deductible.

CSRs only apply to Silver plans. This means the ACA sweet spot for many FIRE retirees is:

1. Manage MAGI to fall between 150%–200% FPL
2. Enroll in a Silver plan specifically (not Bronze, not Gold)
3. Receive both a premium subsidy and significantly improved cost-sharing

In a low-benchmark state like Idaho or Indiana, this combination can produce a Silver plan with a $300–$600 deductible and a $75/month premium. In Wyoming or Alaska, you might pay $400–$600/month even after subsidies, with a standard $5,000+ deductible.

Real Example: From Wyoming to Idaho, Nearly $12,000 Saved Per Year

Rashida and Tom, both 53, had a household MAGI of $52,000 — carefully managed through a mix of taxable account withdrawals, a small Roth conversion, and Tom's part-time consulting income. Here's what their annual healthcare picture looked like before and after their move:

The move cut their annual healthcare cost by nearly $12,000. It also improved their actual coverage quality through the lower deductible. The monthly savings of almost $1,000 compounded at 7% over the 12 years until Medicare: that's roughly $200,000 in additional wealth simply from the decision of where to live.

What to Look For When Evaluating States for FIRE Healthcare

Use this checklist when comparing potential FIRE locations:

1. State reinsurance program

States with Section 1332 waivers — including Idaho, Montana, Wisconsin, Maryland, Colorado, and others — run programs that bring benchmark premiums down substantially. Check the CMS website for current approved states.

2. Number of competing insurers in your county

Two rural counties in the same state can have dramatically different premium environments. A county with five insurers competing might have premiums 40% lower than a county with one. Always check by zip code, not just by state.

3. Medicaid expansion status

If any of your planned retirement years involve MAGI below 138% FPL (possible in heavy Roth withdrawal years), an expansion state provides free coverage. Non-expansion states leave a gap for incomes below 100% FPL.

Check this even if you don't expect a low-income year soon. Plans change — a layoff before your planned retirement date, a sabbatical, or simply deciding to retire a year or two earlier than modeled can all produce an unplanned low-MAGI year. Knowing in advance whether your state would leave you in the coverage gap or cover you through Medicaid changes how much cash buffer is worth holding specifically for that scenario.

4. State income tax on retirement income

Healthcare isn't the only cost. States like Idaho (which has low ACA costs) do have state income tax on retirement income — that affects your net ACA benefit. States with no income tax and competitive healthcare markets — like Arizona or Florida in lower-cost counties — can offer a double advantage.

Run both numbers together rather than separately. A state with a 6% income tax rate but a $600/year healthcare advantage can still come out ahead of a no-income-tax state with a weaker ACA market, depending on how much taxable retirement income you actually draw each year. This is exactly the kind of comparison worth running with real numbers before committing to a move, rather than optimizing for a single line item in isolation.

5. Overall cost of living

Saving $6,000/year on healthcare doesn't help if housing costs $8,000/year more. Run the full picture: housing, taxes, healthcare, cost of daily life.

6. Plan network type and provider access

The cheapest benchmark premium in a given county is often an HMO or EPO plan with a narrow, local provider network — fine if you plan to stay local, a problem if part of your FIRE plan involves seasonal travel or splitting time between two states. Before committing to a state for its low premiums, check whether the low-cost plans in that market include any out-of-network or out-of-area coverage, and what a PPO alternative would cost if you need broader access.

7. How premiums are likely to trend over your retirement

A state's current reinsurance program or single-digit number of competing insurers is not guaranteed to stay the same over a 15-year retirement. Reinsurance waivers are typically approved in multi-year cycles and can lapse if a state legislature doesn't renew funding. A market with only one or two insurers is also more exposed to a single insurer's decision to exit — which has happened in various counties in past years and can spike premiums sharply the following year. Weight your state comparison toward markets with more insurer competition, since diversity of insurers is itself a form of downside protection.

Case Study: Three More State Comparisons

Rashida and Tom's move illustrates the pattern, but the size of the gap varies a lot depending on the starting point. Here are three more common comparisons FIRE households actually run.

Notice that the dollar savings shrink as MAGI drops and subsidies increase — the third example, with a MAGI well below the subsidy cliff, still shows a real gap, but a smaller one than the first two examples above the cliff. This matches the pattern described earlier: state-of-residence matters most for retirees spending enough to sit above 400% FPL, and matters progressively less as subsidies absorb more of the premium.

Common Mistakes When Choosing a State for FIRE Healthcare

• Comparing state-level averages instead of your specific county. A state can have a low average premium driven by a handful of highly competitive metro counties, while the rural county you're actually considering has only one insurer and a much higher rate. Always look up the specific zip code.
• Ignoring state income tax on retirement account withdrawals. A state with cheap ACA premiums but high tax rates on 401(k) and IRA withdrawals can end up more expensive overall for a retiree drawing heavily from tax-deferred accounts, even after accounting for the healthcare savings.
• Assuming the current subsidy cliff rules are permanent. ACA subsidy structure has changed multiple times in the last decade, including the temporary enhanced subsidies that softened the cliff and then expired at the end of 2025. A state comparison built entirely around today's rules should be revisited whenever subsidy policy changes.
• Underweighting plan quality for a cheaper premium. The lowest-premium plan in a county sometimes carries a materially higher deductible or a narrower network than the second-cheapest option. Compare total expected annual cost — premium plus realistic out-of-pocket spending — not premium alone.
• Not revisiting the decision once actually retired. A state comparison run five years before retirement can be stale by the time you actually move — insurer competition, reinsurance programs, and Medicaid expansion status all shift. Re-run the comparison in the year before your actual move.

The Bottom Line

State of residence is not just a lifestyle decision — it's a financial one. For an early retiree spending 12+ years on ACA coverage, the choice between a low-benchmark state with a reinsurance program and a high-cost, low-competition state can easily represent $100,000+ in cumulative healthcare spending. That's real money, with compounding consequences for your portfolio's longevity.

Geographic arbitrage for healthcare is one of the most overlooked FIRE optimization strategies. It requires no advanced financial moves — just thoughtful location planning before retirement. For some couples, it's the move that makes FIRE feasible years earlier than they thought.

Frequently Asked Questions

Is it worth moving states purely to save on healthcare?

It depends on the size of the gap and what else changes with the move. A $5,000–$12,000/year healthcare savings is significant on its own, but a move that also raises your housing costs, distances you from family, or increases your state income tax burden can offset or even reverse the benefit. Run the full cost-of-living comparison, not just the healthcare line, before treating a move as a financial decision rather than a lifestyle one.

How much does the specific county matter versus the state?

Often more than the state does. Two counties in the same state can have a 30–40% premium difference depending on how many insurers compete there. If you're choosing a specific city or region within a state you've already decided on for other reasons, check county-level ACA marketplace data before finalizing the location, not just the statewide average.

Can I control my MAGI enough to stay under the subsidy cliff reliably?

Many FIRE retirees can, especially in years when most income comes from taxable-account withdrawals (capital gains can sometimes be managed with tax-loss harvesting) or from Roth accounts, which don't count toward MAGI at all. It gets harder in years with a large one-time event — selling a rental property, a big Roth conversion for future tax planning, or unusually high dividend income from a taxable account. Plan those higher-income years deliberately and try not to let them coincide with your highest-cost healthcare years.

Does this analysis apply the same way to a couple as to a single retiree?

The state-level cost differences apply proportionally, but the subsidy math changes because it's based on household size and household MAGI together. A couple's 400% FPL cliff is roughly double the single-person threshold, and a couple's benchmark premium is roughly double a single person's — so the dollar gap between a cheap state and an expensive state tends to be larger in absolute terms for a couple, even though the percentage difference is similar.

What happens to this math after I turn 65?

At 65, Medicare becomes available and largely resets the calculation — Medicare Part B premiums are set federally (with income-based adjustments) rather than varying by state the way ACA marketplace premiums do. State of residence still matters for Medigap or Medicare Advantage plan availability and pricing, but the gap between states is typically much smaller than what you'll see pre-65 on the ACA marketplace. This is one more reason the state-choice decision matters most for the specific bridge years between early retirement and 65.

Related: ACA for FIRE: How to Use the Affordable Care Act to Retire Early · Retiring Before 65: The Complete Healthcare Bridge Strategy