Almost every week someone tells me they're staying at a W2 they hate for the health insurance. It's the number one early-retirement objection I hear, and it's usually built on a number they've never actually checked. The real cost of coverage for an investor household is often $400 to $500 a month, and premiums are generally deductible for the self-employed anyway. Ours: $465 a month for our family. Here's the math, including the mistake that had us paying nearly double at first.
The Four Options, Compared
When you leave employer coverage, there are exactly four doors:
| Option | What it is | The catch |
|---|---|---|
| COBRA | Your old employer plan, up to 18 months | You pay the full unsubsidized price; usually the most expensive door |
| ACA marketplace | Individual plans with income-based subsidies | Cheapest with subsidies, but navigating it takes help; deductibles run higher |
| Health sharing | Faith-based cost-sharing pools | Cheap for healthy people, but it's legally not insurance (more below) |
| Medicare | Government coverage | Age 65+, so not an early retirement answer |
Our Insurance History, With Real Numbers
We've been buying our own coverage since 2015 and have walked through three of those four doors. COBRA first, at $1,200 a month: excellent coverage, brutal price, and we know a member currently paying $1,100 a month in COBRA for one adult and two kids. Then a faith-based health share at $750 a month for a few years, in our thirties and healthy. Then the ACA marketplace.
Our first ACA quote came back around $800 a month, because we calculated our income wrong. After sitting down with our CPA, the corrected number was about $465 a month for the family on a bronze plan with an $18,000 annual out-of-pocket max. That structure is deliberate: we rarely go to the doctor stateside (we handle a surprising amount of care abroad, where the prices are honest), so what we want is catastrophic protection at a subsidized premium, not a plan that prepays for visits we don't make.
The Math Investors Get Wrong: MAGI, Not Gross
ACA premium subsidies are based on your modified adjusted gross income. Not your gross income, not your savings, not your net worth. For real estate investors, that distinction is structural.
What counts toward MAGI, per healthcare.gov: federal taxable wages and tips, net self-employment income (note: net, not gross, and the gap is large for business owners), unemployment compensation, Social Security disability, retirement account withdrawals, alimony received, capital gains, investment income, and net rental income.
What doesn't count: Supplemental Security Income and Roth withdrawals.
Now the part that changes everything for investors: net rental income means after depreciation. If you hold real estate professional status and buy consistently, your net rental income on paper should be near zero or negative even while cash flow lands in your account every month. Nearly every serious investor I know should not be showing meaningful net rental income, which is precisely the number the subsidy calculation looks at. For some investors the legitimate result is coverage at close to zero monthly premium. (REPS is its own qualification with a 750-hour test, which is what REPS Time exists to track. Talk to your CPA.)
More levers that lower MAGI, which most people never pull: traditional IRA contributions (if you're not covered by an employer plan), HSA deposits, student loan interest, educator expenses, and alimony paid. Self-employed people can load a solo 401(k) or IRA specifically to drop under a subsidy threshold. One warning for the flippers: capital gains count toward MAGI, which is why buy-and-hold investors have a structurally easier time with this than flip-heavy operators.
One critical timing note: the enhanced subsidies that suspended the "subsidy cliff" expired at the end of 2025, and as of 2026 the cliff is back. Cross 400% of the federal poverty level (about $128,600 for a family of four in 2026) by even a dollar of MAGI and the subsidies disappear entirely. That makes the depreciation and MAGI management above more valuable than ever, and it makes a year-end sit-down with your CPA to project MAGI non-negotiable. Congress moves this line, so verify the current rules for whatever year you're reading this.
Check Your Real Number in Two Minutes
Before you let insurance chain you to a desk for another decade, spend two minutes on the KFF subsidy calculator (kff.org). Plug in your realistic post-W2 MAGI, not your salary. Most people staying "for the insurance" discover the door was never locked.
For your first marketplace enrollment, use a broker. They're free to you (the carrier pays them the same commission regardless of which plan you pick, so there's no steering incentive), and firms like Move Health Partners specialize in coverage for exactly this transition.
Three More Levers Almost Nobody Pulls
- Log every unreimbursed medical expense. If you itemize, unreimbursed medical and dental costs above 7.5% of AGI are deductible. At $50,000 AGI, the threshold is $3,750; with $8,000 in qualifying expenses, that's a $4,250 deduction. Qualifying costs include dental work, eye exams, glasses and contacts, chiropractic, acupuncture, certain weight loss programs, and even mileage to and from appointments. I see very, very few investors keeping this log, and it's free money for anyone with a real medical year.
- Never pay retail for prescriptions. GoodRx coupons and Cost Plus Drugs (costplusdrugs.com) routinely beat insurance pricing, and plenty of medications cost less over the counter abroad than your copay at home.
- Know the health-share fine print. Health shares are cheaper for healthy families, but they're not legally insurance: premiums aren't tax-deductible (unlike actual health insurance for the self-employed), reimbursement isn't guaranteed, and members can be dropped. We know of someone removed from their share after a cancer diagnosis, which is the exact moment coverage was the point. We used one for years with open eyes; go in with yours open too.
I'm not a CPA, insurance broker, or financial advisor, and this isn't tax or insurance advice. Subsidy rules and thresholds change annually; verify everything for your situation with your own professionals.
