New Update: Healthcare Costs Increasing by Over 60% in Some States. Will you be impacted?

Blue Cross Blue Shield Employees Earning $150K+: New Roth Catch-Up Rules Begin in 2026

Healthcare Provider Update: Healthcare Provider Information for Blue Cross Blue Shield Blue Cross Blue Shield (BCBS) operates as a federation of independent health insurance companies across the United States. Each individual organization under the BCBS umbrella serves specific geographical regions, offering a range of health insurance products and services, including individual and group health plans, dental and vision coverage, and more. Notable regional affiliates include Blue Cross Blue Shield of Illinois, Blue Cross Blue Shield of Texas, and Blue Cross Blue Shield of Florida, among others, facilitating comprehensive healthcare management and coverage options for millions of members nationwide. Healthcare Cost Increases in 2026 In 2026, significant increases in health insurance premiums are anticipated, particularly for plans available through the Affordable Care Act (ACA) marketplaces. Record hikes, as high as 66% in some states, are expected as a result of rising medical costs, the potential expiration of enhanced federal premium subsidies, and aggressive rate adjustments by major insurers like Blue Cross Blue Shield. The Kaiser Family Foundation warns that a staggering 92% of marketplace enrollees could see their out-of-pocket premiums surge by over 75% due to this confluence of factors, which will likely price many middle-income Americans out of affordable health coverage. Click here to learn more

'With mandatory Roth catch-up contributions beginning in 2026 for higher earners, Blue Cross Blue Shield employees should take a coordinated approach to their 401(k), HSA, and IRA strategies to align income, timing, and long-term retirement goals,' – Wesley Boudreaux, a representative of The Retirement Group, a division of Wealth Enhancement.

'As Roth catch-up rules reshape contribution strategies for higher earners in 2026, Blue Cross Blue Shield employees should revisit how their workplace plans, HSAs, and IRA options fit together within a broader retirement framework,' – Patrick Ray, a representative of The Retirement Group, a division of Wealth Enhancement.

In this article, we will discuss:

(1) How the SECURE 2.0 Act changed catch-up contribution rules beginning in 2026.

(2) What mandatory Roth treatment for higher earners means for workplace retirement planning.

(3) Additional tax-advantaged strategies Blue Cross Blue Shield employees may want to review as part of a broader retirement planning approach.

The way some higher-income employees make catch-up contributions to their employer retirement plans has changed beginning in 2026. This may directly impact many Blue Cross Blue Shield employees who are age 50 or older and earning above certain compensation thresholds.

Several legislative provisions that broaden or mandate Roth treatment in specific situations—such as requiring Roth catch-up contributions for certain higher earners—were included in the SECURE 2.0 Act of 2022 (Division T of the Consolidated Appropriations Act, 2023).

The IRS has issued guidance clarifying the implementation timeline and wage threshold under Section 603 of SECURE 2.0.

What Is the New Rule Regarding Catch-Up Contributions to 401(k)s?

If you are age 50 or older and your prior year Federal Insurance Contributions Act (FICA) wages from the employer sponsoring your retirement plan exceed the applicable threshold, your catch-up contributions must now be made as Roth contributions.

For 2026 catch-up treatment purposes, the threshold is based on 2025 FICA wages exceeding $150,000 (indexed for inflation in future years). ¹

Roth 401(k) contributions are made with after-tax dollars, meaning they are not deductible in the current tax year. However, if eligible Roth 401(k) distributions are taken after the five-year holding period and after age 59½, due to disability, or after death, those distributions are generally tax-free.

2026 Contribution and Catch-Up Amounts

2026 Limits: ²

- Employee elective deferral limit: $24,500
- Catch-up (age 50+): $7,500
- Catch-up (age 60–63): $11,250 (if permitted by the plan)

The total annual defined contribution limit (employee + employer contributions) for 2026 will be $72,000, excluding catch-up contributions.

If 2025 FICA wages exceed $150,000, 2026 catch-up contributions must be made on a Roth basis.

Under current law, this Roth catch-up requirement is a statutory change that does not expire unless amended by Congress.

Plans that do not offer designated Roth contributions may be unable to allow catch-up contributions once the IRS transition period concludes, which generally began in 2026.

If prior year FICA wages are below the threshold, the required Roth rule does not apply.

Other Factors to Consider When Planning for Retirement

If the catch-up rule change affects your strategy, it may be worth reviewing other tax-advantaged options available to Blue Cross Blue Shield employees.

1. Consider a Health Savings Account (HSA)

If enrolled in an HSA-eligible health plan, an HSA offers several tax features:

Contributions are not subject to federal income tax.
Earnings grow tax-free.
Withdrawals for qualified medical expenses are tax-free.

Contributions made through payroll deduction are generally not subject to FICA or FUTA taxes.

After age 65, HSA funds may be used for non-medical expenses without penalty, though withdrawals are taxed as ordinary income.

HSA Contribution Limits

2026: ³

- $4,400 (individual)
- $8,750 (family)

Individuals age 55 or older who are not enrolled in Medicare may contribute an additional $1,000 catch-up amount.
2. Increase Regular 401(k) Contributions

The employee elective deferral limit increases to $24,500 in 2026.

This limit applies only to employee contributions and does not include employer matching contributions.

3. Review Partial Roth IRA Contributions

Eligibility for Roth IRA contributions is based on modified adjusted gross income (MAGI).

2026 Phase-Out Ranges: ²
Single: $153,000 to $168,000

Married filing jointly: $242,000 to $252,000
Direct Roth IRA contributions are not permitted above the upper phase-out limit. Contributions for a prior tax year may generally be made up until the tax filing deadline of the following year.

Roth 401(k)s and Roth IRAs each have separate five-year aging requirements for qualified distributions.

4. Review a Traditional IRA

For 2026, the IRA contribution limit is $7,500, with a $1,100 catch-up for those age 50 or older.

Even if participating in a workplace retirement plan, non-deductible contributions may still be made to a traditional IRA up to the annual limit. Earnings grow tax-deferred, though non-deductible contributions do not reduce current taxable income.

5. Consider a “Backdoor” Roth IRA Strategy

A “backdoor” Roth IRA involves making a non-deductible contribution to a traditional IRA and then converting it to a Roth IRA.

Owning other traditional IRAs with pre-tax assets can affect the tax treatment of conversions due to pro-rata rules.

Converted Roth amounts must meet a separate five-year aging rule to avoid certain penalties.

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Why Professional Guidance Matters for Blue Cross Blue Shield Employees

Changes to catch-up contribution rules and shifting contribution limits can influence long-term retirement planning decisions. Coordinating 401(k) contributions, IRAs, HSAs, and Roth strategies often involves detailed analysis of income levels, plan design, and tax considerations—particularly for Blue Cross Blue Shield employees with higher earnings.

The Retirement Group can help you understand how these new regulations apply to your personal situation and assist in building a retirement strategy aligned with your long-term goals. To speak with a retirement planning professional, call (800) 900-5867.

Sources:

1. Kelley R. Taylor. “Roth 401(k) Changes: New Rules to Know for 2025 and 2026 Taxes.” Kiplinger , 2 Feb. 2026, www.kiplinger.com/taxes/roth-401k-changes-what-you-should-know .

2. United States, Department of the Treasury, Internal Revenue Service. “401(k) Limit Increases to $24,500 for 2026, IRA Limit Increases to $7,500.” IRS Newsroom , 13 Nov. 2025, www.irs.gov/newsroom/401k-limit-increases-to-24500-for-2026-ira-limit-increases-to-7500 .

3. Cross, Diane. “2026 Benefit Limits: HSA, HDHP, and ACA.” Sequoia , 15 May 2025, www.sequoia.com/2025/05/2026-benefit-limits-hsa-hdhp-and-aca/ .

What type of retirement savings plan does Blue Cross Blue Shield offer to its employees?

Blue Cross Blue Shield offers a 401(k) retirement savings plan to help employees save for their future.

How can employees of Blue Cross Blue Shield enroll in the 401(k) plan?

Employees can enroll in the Blue Cross Blue Shield 401(k) plan by completing the enrollment process through the company’s HR portal.

Does Blue Cross Blue Shield provide any matching contributions to the 401(k) plan?

Yes, Blue Cross Blue Shield offers a matching contribution to the 401(k) plan, which helps employees maximize their retirement savings.

What is the eligibility requirement for employees to participate in Blue Cross Blue Shield's 401(k) plan?

Employees are typically eligible to participate in Blue Cross Blue Shield's 401(k) plan after completing a specified period of service, as outlined in the plan documents.

Can employees of Blue Cross Blue Shield change their contribution percentage to the 401(k) plan?

Yes, employees can change their contribution percentage to the Blue Cross Blue Shield 401(k) plan at any time, subject to the plan's guidelines.

What investment options are available in Blue Cross Blue Shield's 401(k) plan?

Blue Cross Blue Shield offers a variety of investment options in its 401(k) plan, including mutual funds, target-date funds, and other investment vehicles.

Is there a vesting schedule for the employer match in Blue Cross Blue Shield's 401(k) plan?

Yes, Blue Cross Blue Shield has a vesting schedule for employer matching contributions, which determines when employees gain full ownership of those funds.

How can employees access their 401(k) account information at Blue Cross Blue Shield?

Employees can access their 401(k) account information through the online portal provided by Blue Cross Blue Shield’s retirement plan administrator.

Are there any fees associated with Blue Cross Blue Shield's 401(k) plan?

Yes, there may be administrative fees associated with the Blue Cross Blue Shield 401(k) plan, which are disclosed in the plan documents.

What happens to an employee's 401(k) balance if they leave Blue Cross Blue Shield?

If an employee leaves Blue Cross Blue Shield, they have several options for their 401(k) balance, including rolling it over to another retirement account or leaving it in the Blue Cross Blue Shield plan if permitted.

With the current political climate we are in it is important to keep up with current news and remain knowledgeable about your benefits.

Blue Cross Blue Shield offers both a traditional defined benefit pension plan and a defined contribution 401(k) plan. The defined benefit plan provides retirement income based on years of service and final average pay. The 401(k) plan features company matching contributions and various investment options, including target-date funds and mutual funds. Blue Cross Blue Shield provides financial planning resources and tools to help employees manage their retirement savings.

Blue Cross Blue Shield companies have announced several rounds of layoffs in 2023-2024. Blue Cross Blue Shield of Michigan laid off 80 employees and offered voluntary separation packages to reduce workforce costs. Blue Cross Blue Shield of Minnesota also laid off 80 employees as part of its ongoing restructuring efforts to better align with strategic goals. These layoffs come amid financial challenges, including increased medical and pharmacy claims costs. Despite these issues, Blue Cross Blue Shield companies continue to focus on stabilizing their financial performance and enhancing operational efficiency.

Blue Cross Blue Shield provides RSUs to employees, which vest over time and convert into shares. Stock options are also available, allowing employees to purchase shares at a set price.

Blue Cross Blue Shield (BCBS) has consistently updated its healthcare benefits to ensure comprehensive coverage and support for its members. In 2023, BCBS introduced several key updates, including enhanced preventive care services and wellness incentives. Members can earn a $150 MyBlue Wellness Card for completing their annual physical, which can be used for qualified medical expenses. Additionally, BCBS increased the number of free. For 2024, BCBS has further enhanced its offerings with new wellness incentives and expanded coverage options. Members can earn up to $150 in Healthy Rewards by completing activities such as health assessments and lifestyle programs. The plans also include comprehensive coverage for preventive care, maternity services, and chronic condition management. With $0 copays for many telehealth services and competitive rates, BCBS remains committed to supporting the health and financial security of its members, which is particularly crucial given the current economic and political landscape.

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For more information you can reach the plan administrator for Blue Cross Blue Shield at "225 north michigan ave. " Chicago, IL 60601; or by calling them at 888-630-2583.

https://www.bcbs.com/documents/pension-plan-2022.pdf - Page 5, https://www.bcbs.com/documents/pension-plan-2023.pdf - Page 12, https://www.bcbs.com/documents/pension-plan-2024.pdf - Page 15, https://www.bcbs.com/documents/401k-plan-2022.pdf - Page 8, https://www.bcbs.com/documents/401k-plan-2023.pdf - Page 22, https://www.bcbs.com/documents/401k-plan-2024.pdf - Page 28, https://www.bcbs.com/documents/rsu-plan-2022.pdf - Page 20, https://www.bcbs.com/documents/rsu-plan-2023.pdf - Page 14, https://www.bcbs.com/documents/rsu-plan-2024.pdf - Page 17, https://www.bcbs.com/documents/healthcare-plan-2022.pdf - Page 23