A new study from LIMRA reveals that rising medical insurance premiums are prompting a significant portion of American workers to scale back retirement savings and other workplace benefits. The 2026 Benefits and Employee Attitude Tracker (BEAT) Study, which surveyed 4,052 U.S. employees in January, found that more than three-quarters of workers reported an increase in their medical insurance premiums this year, with some facing hikes exceeding 10%.
Among those who experienced premium increases, half made financial trade-offs in other areas, according to LIMRA. Specifically, 16% cut spending on other benefits, and 12% reduced contributions to their retirement accounts. Kimberly Landry, research director at LIMRA, noted the particular vulnerability of younger workers: “It is concerning that some workers, especially Gen Z, are reducing their 401(k) contributions due to rising medical insurance premiums.” She illustrated the long-term impact with an example: a Gen Z worker earning $50,000 annually who contributes 5% to retirement and reduces that rate by just 1% would lose $500 in yearly savings, potentially amounting to at least $20,000 less over a 40-year career, not accounting for employer matches, salary growth, or investment returns.
Gen Z workers were the most likely to take action when premiums rose, with nearly three-quarters of them making some adjustment—the highest rate of any age cohort. The study also identified Gen Z as the most likely group to reduce overall benefit spending. This aligns with a separate 2025 Allianz Life survey, which found that 51% of Americans had stopped or reduced retirement savings in the prior six months due to economic conditions, with Gen Z (62%) and Millennials (62%) far more likely than Gen X (46%) or Boomers (36%) to do so. That same Allianz study reported that 59% of Americans now prioritize saving for healthcare expenses over other financial goals because of anticipated premium hikes.
The LIMRA study also highlighted a broader protection gap. A majority of households would struggle to cover living expenses within several months if a breadwinner’s income were lost, and only 45% of employees said they could pay an unexpected $2,000 medical bill. This underscores the importance of disability insurance, life insurance, and supplemental health coverage. The Employee Benefit Research Institute’s (EBRI) recent Consumer Engagement in Health Care Survey, conducted with Greenwald Research, found that four in 10 privately insured adults reported higher healthcare expenses over the past year. Among those facing higher costs, more than half cut discretionary spending, about one-third had difficulty paying other bills, and one-quarter reduced retirement contributions. Paul Fronstin, director of health benefits research at EBRI, commented: “When higher health care costs lead people to cut spending, struggle with bills, or reduce retirement contributions, it highlights how affordability shapes both access to care and longer-term financial security.”
One nuanced finding from the LIMRA research involves worker satisfaction. Overall satisfaction with benefits has risen year-over-year, with 45% of workers now describing themselves as very satisfied. LIMRA attributes part of this shift to “job-hugging,” where workers in a cooling labor market view their existing benefits more favorably because they feel less able or inclined to leave for better opportunities. This creates a hidden risk: employers may significantly overestimate how well their benefit offerings actually meet workers’ needs. For advisors, these trends underscore the importance of addressing clients’ healthcare cost concerns within retirement planning. As BlackRock data shows, emergency savings gaps often drive 401(k) raids and stifle new contributions, a pattern that rising premiums may exacerbate.
The findings also echo broader industry data. AmeriLife’s survey found that only 47% of peak-earning Americans feel on track for retirement, while BlackRock’s survey indicated that 68% of workers feel on track, but savings replace only half of expected income. As medical premiums continue to climb, the trade-off between healthcare costs and retirement savings is likely to remain a critical issue for financial advisors and their clients.
