What are your health insurance options after selling a business before 65?

Step 1: What date does your business health coverage actually stop?

Your coverage ends on the date written in the benefits termination notice, and that date may be your last workday, the end of the month or the closing date. The buyer, the seller and the plan administrator can each use a different one.

Gather the termination notice first. Then write three dates on one calendar: the group-plan end date, the COBRA election deadline and the spouse-plan enrollment deadline.

The slip at this step is treating the closing date as the coverage end date without reading the notice. If the plan actually ends a few days earlier, you can have a gap with a medical claim sitting in it.

Step 2: Read the COBRA notice as a rule, not a sales pitch

COBRA generally lets you keep the group plan for up to 18 months after an employment-related loss of coverage. It can cost up to 102 percent of the full group premium, and you get at least 60 days to elect it.

The shorthand "you have 60 days of coverage" is wrong. The 60 days is generally the election period. If you elect and pay, the coverage is retroactive to the date the group plan ended.

That means waiting to see whether a medical claim shows up may be allowed inside the election window. But once the deadline passes, the option is gone, and nobody can reopen it for you.

Step 3: Gather the numbers before comparing monthly premiums

Premiums alone don't tell you which plan is cheaper, because the sale changes the income that marketplace pricing depends on. So gather the paperwork first, and know where each piece comes from.

The COBRA election notice comes from the plan administrator. The spouse-plan summary and the payroll deduction amount come from your spouse's HR department. Marketplace estimates come from the application itself.

For income, pull the draft purchase agreement or letter of intent, last year's return, this year's profit-and-loss statement, brokerage 1099 information and any consulting payments you expect from the buyer. Together they let you estimate household MAGI for the coverage year.

Include tax-exempt interest and the sale gain in that estimate. Using wages alone is the slip here, and it can make advance premium credits far too large.

Step 4: How can a sale change marketplace coverage costs?

A sale can sharply raise marketplace costs. Premium tax credits depend on the household's modified adjusted gross income in the year the coverage runs, and that figure includes capital gains and tax-exempt interest. Advance credits are reconciled on IRS Form 8962 when you file.

A hypothetical household, Raj and Sharon, 47 and 45, with three children under 15, shows how this plays out. Raj co-owns an IT managed-services firm with an unrelated 50/50 partner, and his $2,000,000 buyout ends his job-based family coverage on June 30. For illustration, assume their ordinary income before the transaction is $180,000 and the taxable gain is $1,820,000.

Their estimated marketplace MAGI is $180,000 + $1,820,000 = $2,000,000, before other income. At that level they don't count on advance marketplace credits for the sale year. Their COBRA notice shows $1,000 per month, so six months costs $1,000 × 6 = $6,000.

They pay that $6,000 from their HSA for qualified COBRA premiums, so no new cash leaves the household. Then they revisit marketplace coverage for the next calendar year, when projected income is $120,000. Our calculator can run the same kind of income estimate with your own figures.

The sale year is a poor marketplace assumption even though next year's ongoing income is much lower. Marketplace pricing follows the year the coverage is in, not the year you'd like it to follow.

Two things get confused here. Paying COBRA from an HSA uses dollars that already had a tax advantage. Moving sale income into a later year, say through an installment structure, changes timing and may not reduce the total tax cost. Business sale tax planning is where that second question gets answered with real numbers.

And the slip: applying with last year's income and never updating a changed estimate. It can mean repaying credits when Form 8962 is filed.

The sale-year income trap

Deduction versus deferral

Step 5: Put COBRA, a spouse plan, and marketplace coverage on the same page

Compare the three options on the same six points: coverage start date, doctors and prescriptions, monthly premium, deductible, network and sensitivity to sale-year income. The comparison below uses general rules, so fill in your own numbers from the notices.

The task list afterward gives each piece of the work an owner and a deadline. It assumes a June 30 loss of group coverage.

One rule trips people up. If you drop COBRA voluntarily before open enrollment, that usually won't qualify you for a marketplace special enrollment period. Losing job-based coverage does qualify, and it gives you 60 days to apply.

Step 5 task list: who does what, and when

Nobody in this process will chase you, so the household has to own the calendar. The tax preparer matters more than owners expect, because the income estimate drives one of the three choices.

Step 6: Can HSA money cover the bridge?

Yes. HSA funds can pay COBRA premiums tax-free when the distribution covers qualified medical coverage, so the account can fund a bridge. List the available HSA balance next to the total COBRA premium and see how many months it covers. Treat it as a bill-paying account for this stretch, not an investment account.

Step 7: Don't follow "always take COBRA first" too literally

Treating "take COBRA for 18 months" as universal advice can lock a seller into a full group premium for months after a spouse plan or marketplace option would cost less. Generic articles repeat it because it's safe. It isn't always cheap.

Put a number on it. Take your household's actual monthly COBRA premium and multiply by the remaining months. If that's $1,000 per month with 12 months left, the cost is $12,000. Then compare networks and deductibles, because a switch is worth it only if the savings beat the added out-of-pocket exposure and the disruption.

Take the choices in deadline order. Preserve COBRA while it's available, check the spouse plan's special enrollment rules, then decide whether a marketplace application rests on a credible full-year income estimate. Returns are never certain, and neither are medical costs, so keep the cheaper plan from becoming the more expensive one in a bad year.

Step 8: What changes if you sell at 63 or 64?

A sale at 63 or 64 can raise your Medicare Part B premium at 65, because Medicare looks back two years at income. Medicare's 2026 premiums use 2024 MAGI, so if the sale year becomes your lookback year, the gain counts.

As an illustration with the 2026 figures: the standard Part B premium is $202.90 per month, while the total reaches $689.90 per month at joint MAGI of $750,000 and above. That gap is $487.00 per month ($689.90 − $202.90), or $5,844 per year ($487.00 × 12).

Don't choose coverage solely to avoid that surcharge. Compare the premium increase with the sale terms, the tax cost and the value of waiting. For what to do with the proceeds themselves, see Wealth after a business sale.

Step 9: Bring the coverage calendar to Apollon Wealth Management

Bring the COBRA notice, spouse-plan materials, HSA balance, sale-income estimate and your last two filed returns. Apollon Wealth Management can put the deadlines beside the income estimate and name which decision comes first. Confirm eligibility and tax reporting with the plan, the marketplace and your tax professional too; this page covers the gap before Medicare, not supplements, Part D or a disputed termination.