Health premium increases are cutting workers’ 401(k) savings

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.