When you sell your business, you lose access to your company's group health insurance plan at or shortly after closing. If you're under 65 and not yet eligible for Medicare, you must find replacement coverage, the most common options are COBRA continuation coverage (expensive but immediate), an ACA Marketplace plan (potentially subsidized depending on your income), or coverage through a spouse's employer plan. Planning this transition before closing prevents a gap in coverage.
For most business owners, the company health plan was one of the most valuable non-salary benefits they enjoyed, often covering the owner and their family at group rates not available in the individual market. When the business is sold, that group plan ends, and you become personally responsible for health insurance costs that can range from $700 to $2,500 per month for a family, depending on the plan and your location.
COBRA allows you to continue your existing group plan for up to 18 months after the qualifying event (the sale). The catch: you pay the full premium yourself, both the employer's share and your own, plus a 2% administrative fee. This is typically significantly more expensive than what you paid as an employee-owner. However, COBRA provides continuity of coverage and the same network, which matters if you're mid-treatment or have preferred providers.
An ACA Marketplace plan is a strong option if your income in the year after the sale is structured carefully. ACA subsidies are available for individuals with MAGI between 100% and 400% of the federal poverty level, and above 400%, premium tax credits phase out on a sliding scale. Business sellers with significant one-time income from the sale may not qualify for subsidies in the year of sale, but may qualify in subsequent years if income normalizes.
For business sellers approaching 65, the gap between closing and Medicare eligibility may be short enough to bridge with COBRA or a short-term plan. For those in their 50s, a multi-year bridge strategy is required. We model healthcare costs as a line item in your retirement income plan, it's consistently one of the largest and most underestimated expenses.
Key facts
- COBRA continuation coverage lasts up to 18 months; must be elected within 60 days of losing coverage
- Standard Medicare Part B premium in 2026: $185/month per person; plus Medigap or Medicare Advantage coverage
- ACA subsidies are available for MAGI between 100%-400% of FPL (approximately $14,580-$58,320 for a single individual in 2026)
- Illinois ACA Marketplace open enrollment: November 1, January 15; special enrollment available after a qualifying life event (business sale counts)
- The average business owner couple spends $700-$2,500/month on health insurance between retirement and Medicare eligibility
Can I reduce my income to qualify for ACA subsidies after selling my business?
Yes, but carefully. Your MAGI for ACA subsidy purposes includes capital gains from the sale in the year it occurs, which typically exceeds subsidy thresholds. In subsequent years, if your income from investments and other sources is lower, you may qualify. Structuring your withdrawal strategy to stay below the relevant thresholds (while also optimizing for Roth conversions and IRMAA) is a multi-year income planning exercise.
Should I include health insurance costs in my retirement budget?
Absolutely, and most people underestimate this line item significantly. From the time you sell until Medicare eligibility, plan for $1,500-$2,500 per month for a couple depending on your plan choice. After Medicare enrollment, costs typically drop, but you will still need a Medigap or Medicare Advantage plan plus Part D drug coverage. Fidelity estimates the average couple needs $315,000 for lifetime healthcare costs, not including long-term care.
