Published
New LIMRA research shows how higher healthcare costs are forcing workers to reconsider spending, benefits, and retirement contributions. Higher health insurance premiums are affecting more than workers’ take-home pay. For some, they are also reducing the money set aside for retirement.
According to LIMRA’s 2026 Benefits and Employee Attitude Tracker, 77% of employees enrolled in workplace medical coverage saw their premiums increase in 2026. Seventeen percent reported increases exceeding 10%.
Among workers facing higher premiums, approximately one in eight reduced their retirement savings contributions.
The findings highlight a connection that can be overlooked during open enrollment: decisions about healthcare coverage can influence financial security long after a worker leaves the workforce.
Higher Premiums Force Tradeoffs
About half of employees whose premiums increased changed their spending or benefits decisions in response.
| Response to higher premiums | Share of affected workers |
|---|---|
| Reduced everyday spending | 20% |
| Reduced spending on other employee benefits | 16% |
| Switched to a less expensive medical plan | 16% |
| Reduced retirement savings contributions | 12% |
| Did not enroll in other benefits | 9% |
Source: LIMRA’s 2026 BEAT Study. Responses are not mutually exclusive.
Younger workers were particularly likely to adjust. Nearly three-quarters of Gen Z employees facing premium increases took some action, and 21% reduced their retirement contributions.
That creates a difficult tradeoff for people early in their careers. Reducing contributions can relieve immediate budget pressure, but it also leaves less money invested during years when savings have considerable time to grow.
“As consumers evaluate their healthcare options during open enrollment, it's important to recognize the connection between healthcare decisions and retirement readiness,” said Kimberly Landry, research director of Workplace Benefits Research at LIMRA and LOMA.
“Increasing healthcare costs can put pressure on household budgets today while making it more challenging to save for the retirement people envision tomorrow.”
Important Benefits Decisions Often Receive Little Time
Despite the financial consequences, many workers move through open enrollment quickly.
LIMRA found that 63% spend less than an hour reviewing their options and enrolling, including more than one-quarter who spend less than 30 minutes.
Meanwhile, concern about healthcare expenses is widespread:
- 49% are very or extremely concerned about healthcare and health insurance costs.
- 57% are more worried about those costs than a year earlier.
- 42% are concerned about saving enough for retirement.
- 55% would need to borrow or finance an unexpected, uninsured $2,000 medical bill, or could not pay it at all.
Those findings suggest that many employees are making consequential coverage decisions while already operating with limited financial flexibility.
A lower premium may ease the monthly budget, but evaluating coverage also requires attention to deductibles, out-of-pocket exposure, prescription coverage, and access to providers.
Medical Coverage Can Crowd Out Other Protection
Workers told LIMRA they were willing to spend a median of $150 per month on workplace benefits, excluding retirement savings.
For context, LIMRA cited KFF’s estimate of a $571 average monthly worker contribution for family medical coverage. The figures describe different measures and populations, so they are not a direct comparison. Nevertheless, they illustrate the tension between what employees hope to spend and what family coverage can require.
As medical premiums absorb more of a household’s available income, other priorities can receive less funding. That may include retirement contributions or benefits such as life and disability insurance.
Healthcare Belongs in the Retirement Conversation
The findings reinforce the argument in the LIMRA Retirement Income Institute paper Redefining Advice: Integrating Healthcare Into Retirement Planning.
Author Jae W. Oh, M.B.A., CFP®, a fellow of the institute, examines how healthcare expenses, taxes, and retirement income decisions interact.
“Successful retirement planning should focus not simply on how much income someone generates, but how much remains after taxes and healthcare expenses,” Oh said. “That's why healthcare needs to be part of the plan from the beginning.”
The paper also highlights the importance of considering how retirement account withdrawals and Roth conversions can affect income-related healthcare costs and assistance.
For workers, the connection begins well before retirement. Open enrollment is an opportunity to consider healthcare coverage, emergency savings, other insurance protection, and retirement contributions together.
A benefits decision that solves this year’s budget problem can carry consequences for future financial security.