Overview of The Ultimate Guide to Healthcare Costs for FIRE
This episode of BiggerPockets Money is a deep dive into how to estimate healthcare costs for early retirement, self-employment, and financial independence in 2026. Scott Trench lays out the mechanics of the Affordable Care Act (ACA), premium tax credits, modified adjusted gross income (MAGI), and why healthcare can look wildly different depending on your state, age, household size, and income. The episode also looks beyond 2026, showing how to think about healthcare costs all the way to Medicare eligibility at age 65.
Key Takeaways
- Getting insurance is mechanically simple: go to Healthcare.gov or your state exchange and shop plans.
- The real challenge is pricing and planning, not enrollment.
- State matters enormously: the same family can see radically different premiums and subsidy outcomes depending on location.
- Age matters: under ACA rules, older adults can pay up to 3x what younger adults pay in many states.
- Income matters a lot: staying below the MAGI cliff is critical if you want premium tax credits.
- Healthcare costs usually rise over time in early retirement, even before general inflation, because premiums increase with age.
- For many FIRE plans, it may be prudent to budget for unsubsidized premiums rather than rely on subsidies forever.
- Scott’s model suggests healthcare may require a meaningful extra margin of safety in your FIRE number.
How ACA Healthcare Costs Work in 2026
The basics
- The ACA prevents insurers from denying coverage for pre-existing conditions.
- Insurers can still vary premiums based on:
- Age
- Tobacco use
- Location
- For healthy early retirees/self-employed people, Scott assumes a bronze plan with a high deductible / high out-of-pocket maximum, often HSA-eligible.
Bronze vs. silver plans
- Bronze plans are generally the lowest-premium option.
- Silver plans are important because they are often the benchmark for premium tax credit calculations.
- Many people in FIRE may prefer bronze + HSA for lower premiums and tax advantages.
Why State of Residence Can Make or Break Your Costs
Scott uses several examples to show how extreme the differences can be.
Example: New Hampshire
- Family of four, two 35-year-olds + two kids
- Bronze plan premium: about $11,733/year
- Estimated out-of-pocket spending: about $4,000/year
- Total rough healthcare cost: about $15,700/year
- With subsidies, the bronze plan can become much more manageable.
Example: Vermont
- Same family setup
- Bronze plan premium: about $35,000/year
- Silver benchmark: about $51,000/year
- Vermont is unusual because its rules and market dynamics flatten age-based pricing, which can make sticker prices very high.
- But with premium tax credits, the net bronze premium can be $0 in the example Scott gives.
Example: Arizona
- Lands somewhere in between New Hampshire and Vermont
- Roughly $17,000 in premiums with about $9,000 in premium tax credits in Scott’s example
Main lesson
- Sticker price is not the same as actual cost
- Your net premium depends heavily on:
- state
- family size
- MAGI
- plan tier
Premium Tax Credits and MAGI: The Planning Bottleneck
Why MAGI matters
For many early retirees, the key number is MAGI (Modified Adjusted Gross Income). If you stay under the subsidy threshold, you may qualify for substantial tax credits that reduce premiums.
What counts toward MAGI
MAGI generally includes:
- wages / earned income
- capital gains
- qualified dividends
- retirement income
- some government benefits
It can also be increased by:
- municipal bond interest
- untaxed foreign income
- the non-taxable portion of Social Security
What can reduce MAGI
- retirement contributions
- HSA contributions
- self-employment tax deductions
- certain other adjustments
Important nuance
- Self-employed people may be able to deduct health insurance premiums from income.
- Early retirees without self-employment income generally cannot use that deduction.
Practical planning point
If you’re close to the subsidy threshold, Scott recommends being extremely careful with:
- capital gains realization
- Roth conversions
- IRA withdrawals
- portfolio rebalancing
- interest/dividend income
- HSA contributions
Long-Term Healthcare Planning for FIRE
Scott’s core forecasting approach
Scott argues that you should not assume:
- healthcare premiums stay flat
- subsidies will last forever
- healthcare costs track CPI neatly
Instead, he suggests planning for:
- age-based premium increases
- rising healthcare inflation
- possible loss of subsidies
- periodic years with large out-of-pocket costs
Why he models unsubsidized costs
Scott takes a conservative stance and models full unsubsidized premiums over decades, rather than assuming premium tax credits will always be available.
His reasoning:
- policy can change
- subsidy rules may tighten
- the current system may not remain intact for decades
- FIRE plans should not depend entirely on ongoing government support
His estimate
For his household in Colorado, Scott says the present value of extra healthcare spending may be around $250,000 above what a standard 4% rule-style plan would suggest, if he does not count on subsidies.
Why Healthcare Inflation May Be Worse Than You Think
Scott argues that healthcare deserves its own inflation assumption because:
- ACA marketplace premiums increased sharply in 2026
- the expiration of enhanced premium tax credits raised net costs for many people
- healthier enrollees may leave the exchange if subsidies disappear, worsening the risk pool
- that can push premiums higher again next year
Episode’s broad warning
Healthcare inflation may be higher than general inflation for the next several years, even if it eventually moderates.
Tools and Resources Mentioned
Scott created several tools to help listeners estimate costs:
-
Healthcare cost estimator
biggerpocketsmoney.com/healthcare costs -
Tax projection tool
biggerpocketsmoney.com/tax projection
These are meant for:
- educational use
- scenario planning
- understanding how income, state, and age affect healthcare costs
They are not official exchange quotes, but they can help FIRE planners get a realistic sense of exposure.
Practical Recommendations
Do now
- Check your state exchange or Healthcare.gov
- Get a real quote for your household
- Test different scenarios using Scott’s calculator
- Estimate:
- premiums
- out-of-pocket costs
- subsidy eligibility
- future age-based premium increases
For FIRE planning
- Build healthcare into your retirement model as a separate line item
- Consider a higher margin of safety
- Be conservative about subsidy assumptions
- Watch your MAGI carefully if you plan to live on ACA coverage
General advice
- Staying healthy matters
- Better health habits may be the single biggest long-term lever for reducing healthcare costs
Final Thought
The episode’s main message is that healthcare is one of the biggest and least understood risks in FIRE planning, but it is also something you can model with a reasonable degree of confidence once you understand the rules. The big variables are state, age, MAGI, and policy uncertainty—and ignoring them can leave a major hole in your retirement plan.