Rising Health Premiums Lead Some Workers to Reduce Retirement Contributions, LIMRA Study Shows

With open enrollment beginning, a new LIMRA Retirement Income Institute paper says aligning healthcare and income choices can save retirees thousands of dollars each year.

WINDSOR, Conn. /PRNewswire/ -- One in eight workers who saw their health insurance premiums rise this year said they responded by putting less money into retirement savings, according to new LIMRA research. As employees weigh coverage and benefits during open enrollment, the findings underscore how healthcare choices made now can affect retirement security later.

The results also support a central point in LIMRA Retirement Income Institute's new paper, Redefining Advice: Integrating Healthcare Into Retirement Planning, which argues that healthcare should be treated as a core part of retirement planning rather than a separate issue.

LIMRA's 2026 Benefits and Employee Attitude Tracker (BEAT) Study found that more than three-quarters of employees enrolled in workplace medical coverage, or 77%, saw their premiums increase in 2026, including 17% whose premiums climbed by more than 10%. Roughly half of those affected changed their spending or benefits choices in response:

• 20% cut back on everyday spending.
• 12% reduced retirement savings contributions.
• 16% lowered spending on other employee benefits.
• 16% moved to a less expensive medical plan.
• 9% decided not to enroll in other benefits.

Younger workers were the fastest to act. Nearly three in four Gen Z employees whose premiums went up took some action, and 21% reduced retirement contributions, even though they have the most time to benefit from long-term growth.

“As consumers evaluate healthcare options during open enrollment, it is important to recognize the link between healthcare decisions and retirement readiness. Rising healthcare costs can strain household budgets now while making it harder to save for the retirement people want later,” said Kimberly Landry, Research Director, Workplace Benefits Research at LIMRA and LOMA.

Fast decisions with lasting consequences

Open enrollment choices can shape household finances for years, yet LIMRA found that 63% of workers spend less than an hour reviewing options and enrolling, and more than a quarter spend under 30 minutes.

Those decisions are being made under financial pressure. Nearly half of workers, or 49%, are very or extremely concerned about healthcare and health insurance costs, and 57% are more worried about those expenses than they were a year earlier. Forty-two percent are concerned about whether they will save enough for retirement. In addition, 55% said they would need to borrow or finance an unexpected $2,000 medical bill not covered by insurance, or would not be able to pay it at all.

Benefit budgets are tight. Workers said they are willing to spend a median of $150 a month on workplace benefits, excluding retirement savings. That is about a quarter of the $571 average monthly worker contribution for family medical coverage, according to KFF. As more of that budget goes toward premiums, less remains for other priorities and protections such as life and disability insurance.

Why healthcare belongs in retirement planning

Jae W. Oh, M.B.A., CFP®, author of the paper and a fellow of the LIMRA Retirement Income Institute, examines how healthcare costs, taxes and retirement income decisions interact and ultimately affect how much retirees have available to spend.

“Successful retirement planning should focus not just on how much income someone generates, but on how much is left after taxes and healthcare expenses,” Oh said. “That is why healthcare needs to be part of the plan from the start.”

The connection is especially important because healthcare costs are tied to income. Premium subsidies for Affordable Care Act marketplace coverage fall as income rises. With enhanced ACA subsidies having expired at the end of 2025, households with income above 400% of the federal poverty level no longer qualify for any premium tax credit, creating a subsidy cliff that can make a single retirement account withdrawal or Roth conversion costly.

Five steps consumers can take during open enrollment

1. Look beyond the premium. Compare deductibles, prescription coverage, provider networks and total possible out-of-pocket costs, not just the monthly price.
2. Protect retirement savings if possible. Cutting contributions may help in the short term, but it can create a larger gap later, especially for younger workers who have more time for savings to grow. If contributions must be reduced, try to keep enough going to capture any employer match.
3. If retiring before 65, monitor income closely. For marketplace coverage, an IRA withdrawal or Roth conversion that pushes household income above 400% of the federal poverty level can eliminate premium subsidies entirely.
4. If Medicare is approaching, plan two years ahead. Medicare uses income from two years earlier to determine whether higher Part B and D premiums apply, so a large withdrawal or conversion can affect premiums at 65.
5. Make the Medigap choice carefully at 65. In most states, the guaranteed right to buy a Medigap policy without medical underwriting typically comes only once, so switching later may not be possible.

With Medicare open enrollment underway, ACA marketplace enrollment set to open soon, and many employer-sponsored benefits enrollment periods taking place before year-end, LIMRA's research highlights a key point for consumers: healthcare decisions affect more than what people pay today. They also influence how much money can be saved now and spent in retirement.

Read the research:

Redefining Advice: Integrating Healthcare Into Retirement Planning, linked here.

2026 BEAT Study, linked here.

About the BEAT Study: In January 2026, LIMRA conducted an online survey of 4,052 full- and part-time U.S. workers aged 18 to 64. The sample was weighted to be representative of U.S. employees based on Census Bureau data.

About the LIMRA Retirement Income Institute

Advancing retirement income security through research and collaboration, the LIMRA Retirement Income Institute provides insights and solutions, guided by leading retirement scholars and institute fellows, to help Americans retire with less risk and greater confidence. Visit www.limraconsumer.com/retirement-income-institute.

About LIMRA

Serving the industry since 1916, LIMRA offers industry knowledge, insights, connections and solutions to help more than 600 financial services member organizations navigate change with confidence. Visit LIMRA at www.limra.com.

SOURCE LIMRA