A LIMRA survey of 4,052 workers finds 12% cut retirement contributions after medical premiums rose, and Gen Z reacted most
When a health insurance premium goes up, something else in a worker’s budget has to come down. For some employees, that something is their 401(k).
A survey of 4,052 U.S. employees by LIMRA, the insurance and financial services research group based in Windsor, Connecticut, found that 12 percent reduced their retirement savings contributions in response to higher medical premiums.
LIMRA released findings from its 2026 Benefits and Employee Attitude Tracker (BEAT) Study on June 10, 2026. The survey ran in January and found that more than three-quarters of workers saw higher medical premiums in 2026. Half changed something in response. Sixteen percent cut spending on other benefits, and 12 percent reduced retirement contributions.
Gen Z took the biggest hit
Nearly three-quarters of Gen Z workers took some action when premiums rose, the highest share of any age group, LIMRA said. They were also the most likely to cut overall benefit spending.
Kimberly Landry, research director at LIMRA in Windsor, Connecticut, put numbers on what that can cost. A Gen Z worker earning $50,000 who drops a 5 percent contribution rate by a single point saves $500 less a year. Over a 40-year career, that’s at least $20,000 less in retirement savings, before employer matches, raises or investment returns.
“Even small reductions in retirement contributions can have significant long-term effects,” Landry said.
Many workers don’t have much room to absorb a bill, either. Only 45 percent of employees could pay an unexpected $2,000 medical bill, LIMRA found.
Premiums are climbing faster than paychecks
Workers with employer family coverage now pay an average of $7,471 a year toward premiums, up 9 percent from 2025, KFF’s 2026 Employer Health Benefits Survey found when it was released Oct. 22. Total family premiums rose 5 percent to $28,303. Over the same period, wages grew 3.7 percent and inflation ran at 2.7 percent.
Employers are feeling it too. Marsh, the benefits consultancy formerly known as Mercer, projects employer health costs will rise 8.2 percent per employee in 2027, the steepest jump since 2003, according to HRD America’s report on employer health costs rising 8.2 percent in 2027. Marsh surveyed more than 1,800 U.S. employers between June 10 and Aug. 10. They said costs would climb 11 percent if they did nothing, and 59 percent plan cost-cutting changes such as higher deductibles.
A separate Marsh survey found about two-thirds of employers with 500 or more workers expect to raise employees’ share of premiums, so many paycheck deductions will rise by more than the average, HRD America reported.
Marsh’s actuaries put roughly one percentage point of the 2027 increase on each of three drivers: glucagon-like peptide-1 (GLP-1) weight loss drugs, artificial intelligence-enabled claims submission software and disputes under the No Surprises Act’s independent dispute resolution process. Marsh’s projections for 2027 health benefit costs cover those drivers in detail.
More employers are carrying the risk themselves
Since Affordable Care Act subsidies expired, self-funded employer plans have grown as the individual market shrank, HRD America reported. That leaves more employers paying claims directly.
LIMRA also found that employers and workers see benefits differently. Landry said employers overestimate how well their benefits meet workers’ needs, which can leave them less likely to improve them and more likely to lose talent to competitors.
