Use Health Insurance Efficiently

For working-age households with the cash flow to absorb a deductible-level year, the structural defaults are straightforward:

HDHP plus HSA as the default.

Choose the high-deductible health plan if your employer offers it and pair it with a maxed-out Health Savings Account (HSA) (section “Health Savings Account (HSA)”). The triple-tax-advantaged HSA is the single most efficient retirement wrapper in the US system, and it underwrites itself: even at the 2026 family HDHP minimum deductible of $3,400 ( Table 18.2), the premium savings versus a low-deductible plan combined with the HSA tax benefit typically wins for any household with the cash flow to absorb a deductible-level year out of pocket. Tier 1 cash from chapter “Emergency Fund” sized for the deductible reset on January 1 closes the financial-risk side of the trade. Do not reimburse current medical expenses from the HSA; pay them from cash and let the HSA compound. section “Health Savings Account (HSA)” covers the receipt-banking strategy.

Concierge medicine and direct primary care.

Layer a concierge or direct-primary-care (DPC) membership on top of catastrophic-grade insurance for access quality. A typical concierge retainer of $2,000–$5,000 per year buys same-day appointments, longer visits, direct physician access by phone, and coordination of specialty referrals through the physician’s professional network. DPC models replace insurance for primary care entirely with a flat monthly subscription. Pair either with a high-deductible major-medical plan to retain coverage for the catastrophic outcomes the retainer does not cover. For working-age readers, this is the same architecture you will use again in retirement with Original Medicare plus Plan G plus an opted-out concierge primary (section “Medicare”); building the relationship with a concierge physician at age 45 means you walk into Medicare with continuity of care, not a cold start.

OBBBA §71308 changed the economics of this bullet as of January 1, 2026. Enrolling in a qualifying DPC arrangement no longer counts as disqualifying “other coverage” for HSA purposes, and the periodic DPC fee is itself a qualified expense payable from the HSA — subject to a monthly dollar cap and to the arrangement meeting the statutory definition (primary care only; the carve-out does not extend to a concierge retainer that bundles specialty care or procedures). Before 2026 the reader who wanted both an HSA and a DPC relationship had a compliance problem and paid the retainer with after-tax dollars. Now the retainer is pre-tax and the HDHP-plus-HSA stack survives it. Read the DPC agreement against the statutory definition before assuming yours qualifies; the market is full of hybrid retainers that do not.

Employer pre-tax FSA, but only if you cannot use the HSA.

If your employer plan is HDHP-eligible and you fund the HSA, you cannot simultaneously fund a general-purpose FSA. A limited-purpose FSA (covering only dental and vision) does pair with an HSA and is worth funding to the IRS limit if your family runs predictable annual dental or vision expenses. Premium-conversion (the pre-tax-premium-deduction wrapper on the insurance contribution itself) does not interact with the HSA and is essentially always worth electing.

COBRA and the bridge to Medicare.

Federal COBRA (ERISA §§601–608, codified at 29 U.S.C. §§1161–1168, and IRC §4980B, “Failure to satisfy continuation coverage requirements”) extends an employer plan for 18 months after separation (29 months in disability cases, 36 months for dependents after qualifying events) at the full unsubsidized premium plus a 2% administrative load — rising to 150% of the premium for the disability-extension months 19–29. The premium is high in absolute dollars — often $2,000–$3,500 per month for a family — because it reflects the true cost the employer was previously hiding. For readers planning an early retirement before age 65, the realistic options are COBRA (capped at 18 months and ends well before Medicare eligibility for any retiree under 63 ½), an ACA marketplace plan, or a private direct-pay arrangement with a concierge practice plus a high-deductible major-medical policy.

Two things changed on January 1, 2026 and they point in opposite directions. First, the good news: under OBBBA §71307, bronze and catastrophic exchange plans are now treated as HSA-qualified HDHPs, on or off the exchange. The bridge-years reader can run an ACA bronze plan and keep funding an HSA — which was not reliably possible before and makes the marketplace route materially better than it was. Second, the bad news: the enhanced premium tax credits from the American Rescue Plan expired on December 31, 2025 and the hard subsidy cliff at 400% of the federal poverty level came back for 2026 — roughly $62,600 for a single filer and $128,600 for a family of four in the continental US, with the expected-contribution percentage rising to as much as 9.96% below the cliff. This is not a phase-out. One dollar of MAGI over the line zeroes the credit for the entire year, which for a 60-year-old couple is frequently a $20,000–$30,000 swing on a single dollar of realized gain. It is the same cliff geometry as IRMAA (section “IRMAA: The Stealth Tax with Cliffs”), arriving fifteen years earlier and hitting harder. Sequence Roth conversions and capital-gain realizations to land under the threshold during the bridge years, or — if the conversion ladder is worth more than the credit, which above roughly $3M of pre-tax balances it often is — blow through it deliberately and treat the forgone subsidy as the price of the conversion. What you must not do is discover it in April.

Long-term care.

The standalone decision is in section “Long Term Care Insurance”. The integration point with the rest of health coverage: HSA dollars can pay LTC insurance premiums up to age-based caps, which is one of the cleanest uses of HSA balances in early retirement.