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.

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.

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.

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.

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.

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.

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