- Reader Case: From Cancer Survivor to FIRE - September 1, 2026
- The FIRE Guide to America’s Health Care System (2026) - July 7, 2026
- Planting Your Money Trees - February 23, 2026
The most common question I get when being interviewed about FIRE is “What about health care?”
It’s a big, scary question. Health care costs in America, if not managed properly, can easily run into tens of thousands of dollars per year, and that can really screw over someone’s FIRE plan.
So we have to deal with it, but at the same time, the reason why it’s so difficult is that the game keeps changing. Health care is a political football, and the answer to the question “How much do I need to save for health care?” varies wildly depending on where you live.
But we here are Millennial Revolution never shy away from tackling the tough questions, so let’s take a look at the current state of health care in the USA, specifically how it affects someone trying to retire early.
In the USA, there is no single system for health care coverage. Most Americans are covered through their workplace, and retired people above the age of 65 are covered through Medicare, but neither of these systems work for early retirees. So we have to rely on a combination of the ACA and Medicaid, which is the single-payer system for low-income families.
And as with everything to do with health care in America, this gets super complicated, super fast.
Local Geo Arbitrage
When the ACA was passed back in 2010, it expected states to expand their Medicaid programs to fully cover low-income families. However, not every state did so.
As of 2026, 9 states didn’t, namely…
- Alabama
- Florida
- Georgia
- Kansas
- Mississippi
- South Carolina
- Tennessee
- Texas
- Wyoming
These states are all run by Republicans, who have made it their policy to block, or actively sabotage the ACA for political reasons. In these states, not only did Medicaid not get expanded, many define eligibility on other factors other than income, such as disability status, pregnancy, or having dependents.
This has created a dangerous situation known as the ACA coverage gap, where if you report family income below the Federal Poverty Level (or FPL), you don’t qualify for coverage under Obamacare. And if you’re a healthy, child-free adult, you don’t qualify for Medicaid either. Meaning you have to purchase unsubsidized health insurance yourself, which could easily cost tens of thousands per year.
On the other end of the spectrum, liberal states that expanded Medicaid have a security net that allows early retirees to access free, or close-to-free health care in retirement. Admittedly, Medicaid isn’t perfect, especially when it comes to access to providers. But some states, notably New York, Minnesota, Oregan, and recently the District of Columbia, launched supplemental plans that offer a middle tier health care plan that offers far wider coverage, yet costing close to $0 for premiums, deductibles, and co-pays.
State | Program | Income limit |
New York | Essential Plan | Up to 250% FPL (currently) |
Minnesota | MinnesotaCare | Roughly 200% FPL |
Oregon | OHP Bridge | Roughly 200% FPL |
District of Columbia | Healthy DC Plan | Roughly 200% FPL |
So that brings me to the most important takeaway from about health care in the USA:
Where you retire matters. A lot.
It may be tempting to retire to a place based on the weather or whether it’s a low tax state, but for someone retiring early, whether that state is a Medicaid expansion can make a huge difference in your FIRE target.
And this is where geo-arbitrage can save the day. We’ve personally used geo-arbitrage to great effect to optimize living expenses such as food or rent, but for American early retirees, it’s even more important because it can make or break whether the math works at all. It makes far more sense to retire in a state like New York than Florida, because even though the tax rates are higher in NY than Florida, income taxes matter far less than health insurance coverage when you retire.
Which is actually pretty ironic, since Florida is supposed to be a retirement destination. Maybe for 65+ year old retirees, but not for the FIRE crowd.
Income Engineering
That being said, I get that not everybody can just pack up and move to another state. There are many factors that influence where someone lives, like proximity to family, their kids’ school situation, real estate holdings, etc. That brings us to the topic of income engineering.
Income engineering is the process of deliberately reporting income on your tax return. Why would you do this? Because in non-Medicaid expansion states, this could potentially save you tens of thousands of dollars in health care costs.
Health care coverage eligibility under the ACA is based on your family’s Modified Annual Gross Income, or MAGI. Normally, a family’s MAGI is primarily based on their income from their jobs, but it can also come from investment gains like interest and dividends, realized capital gains, 401(k)/Traditional IRA withdrawals, or IRA conversions.
For an early retiree, there will be normally be some amount of interest that are earned in a taxable account. That forms the “floor” of your MAGI.
Next are any IRA conversions that you might be doing. A popular strategy amongst the FIRE crowd is the Roth IRA conversion ladder, which I wrote about here. Basically, it involves moving money from your Traditional IRA to your Roth IRA every year to avoid the 10% early withdrawal penalty. The amount you convert gets added to your taxable income, but if you keep the converted amounts (combined with that taxable interest floor) within your standard deduction, your total federal tax rate should be $0. For 2026, the standard deduction for a married couple is $32,200, so if you keep your conversions + interest below this number, you should be able to get away with a $0 tax bill.
After that, there are dividends. Qualified dividends earned in a taxable account are taxed at lower rate than interest, and the rate is 0% for total income up to $98,900 for a married couple.
And finally, there are capital gains that you can realize. Capital gains that are held for more than a year are classified as Long Term Capital Gains, or LTGC, and these also share the 0% tax rate for total income up to $98,900 for a married couple.
Generally, you don’t have much control over the interest and dividends that get paid. These are purely a function of what ETFs you own in your taxable income.
You do, however, have control over your Roth IRA conversions and your realized capital gains. Every year, you choose how much of these types of income happen, so it’s really important that you choose wisely.
So you can see here that income engineering is not exactly a trivial task, since it requires active effort each year. But it’s not that difficult either, as it basically involves doing some basic calculations to ensure that you minimize taxes while hitting your MAGI targets.
Unfortunately, the stakes of getting this wrong are quite high, and that’s because…
ACA Coverage Bands
There are basically 4 important bands of coverage in the ACA you need to be aware of.
The first is the one we already discussed: The ACA coverage gap.
If your MAGI is below the FPL in a non-expansion state, you aren’t eligible for coverage under either the ACA or Medicaid, and may be on the hook for tens of thousands of dollars. This is bad. Stay out of this.
Another one is above 400% of the FPL. This is when ACA subsidies end for higher-income households, and the cost of earning even a dollar over this threshold is high, often thousands of dollars a year. This is called the ACA subsidy cliff, which is a quirk of Obamacare that got fixed by the Biden administration, but came back under the current one.
But the sweet spot to hit, in my opinion, is between 100%-250% of the FPL. Why?
The ACA has a feature known as Cost Sharing Reductions, or CSRs. These are additional subsidies that help reduce deductibles, co-pays, and the Out-Of-Pocket maximums of your health care plan, which can also be worth thousands of dollars as well, so qualifying for CSRs is really valuable. However, you only qualify under the following conditions:
- Have a household MAGI between 100% and 250% of the FPL
- Buy a SILVER plan
The effect of these CSRs on insurance costs is dramatic. Without CSRs, the 2026 out-of-pocket maximums caused by deductibles and co-pays are $10,600 for an individual and $21,200 for a couple, so in a nightmare scenario of a couple retiring and someone immediately getting sick with a chronic, expensive condition like cancer could create recurring medical costs of $21,200. This would require additional savings $21,200 x 25 = $530,000 in your FIRE portfolio to cover. That’s in addition to your regular living expenses!
However, if you engineer your income to hit that magic target of 100%-250% of the FPL and purchase a silver plan, your OOP maxes are limited to $3500 for an individual, or $7000 per couple. That’s a big difference. Now, covering this nightmare health scenario of hitting your OOP max every year requires an additional $7000 x 25 = $175,000. That’s still a significant chunk of change, but it’s not nearly as bad as without the CSRs.
Conclusion
Health care in the USA is a complicated optimization problem for early retirees, with massive penalties if you get it wrong.
The safest and more reliable way to ensure you have health care in early retirement is to move to a state that expanded Medicaid. Even better, retire in New York, Minnesota, Oregan, or the District of Colombia to take advantage of their supplemental mid-tier insurance plans, which are ideal for early retirees.
Failing that, if you have to retire in a non-Medicaid expansion state, engineer your income very carefully to hit the 100%-250% FPL amount so that you qualify for CSRs, which dramatically reduce the out-of-pocket maximums of silver plans. You’ll still have to save more money in order to cover these potential OOP maxes, but it’ll be way cheaper than having to cover the nosebleed non-CSR OOP maxes of $21,200 per couple.
Or you know, just retire outside the USA and never worry about any of this crap ever again.
What do you think? How do you budget for health care costs in retirement? Let’s hear it in the comments below!
Hi there. Thanks for stopping by. We use affiliate links to keep this site free, so if you believe in what we're trying to do here, consider supporting us by clicking! Thx ;)
Build a Portfolio Like Ours: Check out our FREE Investment Workshop!
Travel the World: Get flexible worldwide coverage for only $45.08 USD/month with SafetyWing Nomad Insurance
Multi-currency Travel Card: Get a multi-currency debit card when travelling to minimize forex fees! Read our review here, or Click here to get started!
Travel for Free with Home Exchange: Read Our Review or Click here to get started. Please use sponsor code kristy-d61e2 to get 250 bonus points (100 on completing home profile + 150 after first stay)!
A genuine question – retiring District of Columbia or the State of New York sounds more expensive than retiring in Tennessee or Wyoming. (Not sure about Florida).
I wonder if the cost of living in, say, New York, doesn’t cancel the benefits of cheaper healthcare.
What’s the math saying?
I’m a Massachusetts resident, and I still remember the sticker shock coming from Rhode Island. I imagine that the COL gaps between DC and Alabama are even higher.
KFF org is an excellent source for ACA premium info. If you hunt around on the website there’s an up to date premium calculator that I’ve found to be accurate.
Cost of living is based on the city, but health care coverage is based on the state. Living in a smaller city somewhere in the state may give you the best of both worlds. And besides, there are lots of other states that did expand Medicaid but aren’t high-cost-of-living states.
If you made a similar list of states ranked by highest overall COL (not just one cherry-picked component like healthcare), they would all be run by Democrats. How’s that for geo-arbitrage?
I think what this shows is that when you factor in the hidden cost of lack of healthcare coverage, those low-cost states turn out to be a lot more expensive to retire to than you think since you have to essentially self-insure.
1) Where the recommendations for Oregon/NY/etc based on the expanded Medicaid coverage only or also based on premium/relative value for ACA plans as compared to other states?
2) On average, how much of a difference in CSR’s would one receive at the 100% FPL vs. 250%?
3) If operating within the 100% to 250% FPL format, what is the best way to compare plans among different states, or even different counties?
1) Non-expansion states < Expansion states < Expansion + Supplemental Plan (NY, Minnesota, Oregon, DC) 2) There appear to be "bands" of CSR benefits. 100% - 150% of FPL is the best, followed by 150% - 200%, then 200% - 250%. Best way to get exact numbers is to go to your state's ACA exchange and see what happens to the available plans when you change your MAGI 3) Open up the ACA exchanges in both states and enter the same income into both tabs.
FYI, due to the HRI (One big Bill) on July 1, 2026 the NYS Essential plan was reduced to 200% from 250% of FPL. $31,300 for one person and $42,300 for two people.
Do you have any more info on Minnesota?
Go to the MinnesotaCare’s state website to get more details: https://mn.gov/dhs/health-care/minnesotacare/
When I FIRE’d, I didn’t fully understand how ACA worked (I’m in California). I just assumed that since I had “significant” assets I would be paying the unsubsidized premium (~$1K/mo), so I didn’t even bother trying for the subsidy. Lo and behold, after my first full calendar year of retirement, I got the full subsidy as a result of my low AGI ($27K-ish). This came as a total surprise. Now that I’ve taken the time to see how it works, it’s actually pretty simple. My guess is that the vast majority of early retirees will be highly subsidized.
A lot of people don’t realize how tightly coupled ACA is to the IRS/Tax system. When MAGI is calculated at tax season, any over/under payment in ACA is calculated and it will be reflected in the tax refund or bill.
Really great post, great info.
In the case of under-estimating your income, is there a calculator somewhere to see how much you would have to repay the subsidy (that is, when doing your taxes in 2027 for the year 2026)?
When you under-estimate your income, you get a higher subsidy as well as access to plans with lower out-of-pocket maximum and deductibles.
I understand that you would have to repay some of the subsidy. But would you have to repay the out-of-pocket maximum or deductible?
In the case of under-estimating your income, is there a calculator somewhere to see how much you would have to repay the subsidy (that is, when doing your taxes in 2027 for the year 2026)?
My brief research into this situation suggests that you’ll have to repay subsidies that you received that you shouldn’t have, but there’s no mechanism to re-bill you for higher deductibles and co-pays you would have had to pay.
Excellent overview of FIRE healthcare as an issue to be managed!
I recently moved from Dallas, Texas where non-ACA premiums for good health insurance were $2,400/mo for a family of four, with aggregate deductible above $20,000. Thus, you’d spend a minimum of $28,800 before any deductibles (!). If you move to a rural area in a state that did not expand Medicare, you may be able to do better than Medicare-expansion states in Total Cost of Living but you are betting that you can still get “free market” health insurance at a reasonable price and that you will not have any “pre-existing conditions”. That might work in a bridge to Medicare that lasts a year or two but if you are more than five, you are taking a big risk. Instead, I moved to Oregon which has a state income tax (8.75%) but NO sales tax (8.25% in Dallas) which makes it pretty much a “wash” since I only use money for spending on products and services (no longer accumulating or converting IRAs). However, healthcare costs are much more predictable and subsidized. Thus, my Total Cost of Living has dropped materially as has my one major risk in early retirement life: having a pre-existing condition prevent me from getting health insurance.
Great job Joe! You’re a great example of someone who really understands the nuances of the the system, and why considering health insurance as part of your overall cost of living can lead to some interesting geo-arbitrage optimizations.
I’m in Canada where we have so called “Free health Care”. It’s awful when you need a doctor or a require medical attention and you’re stuck on a 2-3 year waiting list.
I recently went to Florida and needed a toe nail removed after I dropped a heavy weight on it. The doctor at the hospital was amazing and after my travel insurance covered all but $25 I think if I ever need stitches or something non life threatening it’s worth it to drive to the USA.
I’ve experienced both the long wait times for non-life threatening conditions the Canadian health care system has, but it was also really fast and efficient for my dad when he was going through cancer treatment, so I’m glad it’s there for critical stuff like that.
I find it funny that you talk about Geo arbitrage, and then bashed Florida…
Florida is one of 3 primary states for nomads in the US: Florida, Texas, and South Dakota. Of those 3 it’s the only state to offer a nationwide PPO plan on the ACA market. I have many friends which moved from Texas and other states to Florida in order to get a nationwide policy.
I also have had conversations with other retirees who moved to Florida due to the ACA market having better options than their home states.
Florida also has two of the largest and oldest mail forwarders in the country, both with actual physical addresses so that you can leverage them for banking.
Yes, you have to understand the healthcare hurdles and control your income to hit the correct mark, but it’s far from the worst state to retire to for healthcare or any other reason.
Hey, I’m glad that it’s worked out for you. My point is that in a state like Florida that didn’t expand Medicaid, you have to be REALLY careful to control your income accurately or bad stuff could happen.
If you think things are bad now, the healthcare situation in the USA will only get worse.
[ https://www.washingtonpost.com/health/2026/07/08/another-wave-health-insurance-increases-looms-2027/ ]
Every spring, health insurance companies file state-by-state rate forecasts, an early warning system for premium hikes we can expect to see the next year in the Affordable Care Act marketplace.
The new predictions are in, and the outlook for 2027 is severe.
Double-digit increases are once again expected, following dramatic 2026 rate hikes that helped disrupt health care for millions of people, according to an analysis released Wednesday.
The median proposed increase is 14 percent, according to the filings from 16 states crunched by KFF, a nonprofit health policy organization. The range among states with complete, publicly available filings was 7 percent in Vermont to 25 percent in Indiana.
The 14 percent median compares to an 18 percent proposed hike for 2026 (which turned out to be a staggering 20 percent when the final numbers were analyzed).
The 2026 premium hikes compounded pain from the loss of enhanced ACA marketplace subsidies that expired for many individuals and small-business owners after a protracted, partisan standoff in Congress. Beneficiaries who no longer qualified for the extra subsidies experienced annual costs that were thousands of dollars higher per year in many cases. About 5 million people were expected to drop or lose ACA insurance before 2026 is over.
The main driver of the 2027 premium hikes will be higher costs of health care, KFF said. Insurers also cited increased costs of labor, GLP-1 drugs (mostly for diabetes and indications other than weight loss, which often is not covered), more complex cases showing up in provider billings, and general inflation.
There’s also a key sign of a 2026 hangover in the data, KFF said. Because the healthiest people were most likely to drop coverage, the people remaining in the ACA insurance pool will be proportionally sicker — requiring more costly care — which insurance companies said will push premiums higher.
Goody…
Yeah health care is a constantly moving target. Who knows what next year will bring?
# DonOld the Dementer
# Deport Trump Family
# Nov 3, 2026 VOTE
Anyone pursuing FIRE in the U.S. Healthcare is often one of the biggest unknowns in early retirement planning stickman clash, so breaking down the available options and potential costs is incredibly valuable.
I once met a 55 year old engineer and he would retire early since the determined his savings could cover his expenses and he wanted to spend the time as he wished. He lived in east coast and I asked him how he would deal with healthcare expenses. He looked at me and said calmly, “nothing, I knew from age 5 that doctors and hospitals could do nothing for me, I could take care of my health just fine. I have never seen a doctor since my childhood hospitalization.” And he was a fit guy. I guess that would be another option and he would accept the consequence of whatver might happen. You know there are millions of people in the earth who never get entangled with a healthcare system and live just fine.
I guess, but “don’t get sick” is not a great plan. Anyone can get cancer or get hit by a car.
The guide highlights many important aspects of the U.S. health care system, but it’s also helpful to understand how legal matters can affect medical decisions, insurance disputes, and family-related cases. Resources like Kenton Court Information can provide useful context when researching public legal records connected to these situations. Looking at both health care and legal information together often gives a more complete picture for making informed decisions.
This guide provides useful information about the American health care system and highlights how public resources can help people make informed decisions. Reliable records and official resources are valuable for anyone researching legal or government-related matters, including Iowa Case Search for organized court information. Clear access to accurate details supports better awareness and helps users find relevant information efficiently. Sharing educational resources like this can improve public knowledge and encourage responsible research.
Great insights shared about the FIRE Guide to America’s Health Care System and the value of reliable information for making informed decisions. Having access to organized public resources can help users better understand important details and records. Resources like Shelby Property Database can support research by providing structured information for those seeking accurate property-related data. Clear and verified records always make decision-making more efficient and transparent.
This guide provides valuable insights into America’s health care system and highlights the need for reliable information when making informed decisions. Researching accurate records and verified details can help people better understand different aspects of public information. Resources like Arrests Public Records can be useful for finding organized legal record details when needed. Clear access to trustworthy information supports awareness and responsible decision-making across various areas.
Really practical. The point about fire america health is one I wish I had read a year ago – we ended up learning it the slow way while building Ravvi. Appreciate you sharing it.
The article points out that early retirees can’t rely on workplace insurance or Medicare and must navigate the ACA and Medicaid instead. I’ve been modeling my FIRE budget using ACA subsidy cliffs, and the way those phase out with investment income is the trickiest variable I’ve encountered. Did you factor in the 2025 subsidy rule changes for your projections?
Thanks for sharing this guide—it’s helpful to see such a practical overview of the healthcare system for 2026. For anyone researching legal matters that may intersect with medical or insurance issues, reviewing can provide useful public information about court procedures and related records. Having access to reliable resources from different fields often makes research more complete and easier to understand. Looking forward to seeing future updates on this topic!