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Healthcare Provider Update: For the University of California, the primary healthcare provider is Kaiser Permanente, which is part of a network that offers comprehensive medical services to faculty and staff. They participate in programs designed to provide quality health care as well as manage costs effectively. Looking ahead to 2026, healthcare costs for University of California employees are projected to rise significantly. Premiums in the Affordable Care Act (ACA) marketplace are expected to increase sharply, with some states anticipating hikes exceeding 60%. This situation may result in more than 22 million marketplace enrollees facing increases in their out-of-pocket premiums by over 75% due to the potential expiration of enhanced federal subsidies. The combination of escalating medical costs and these subsidy changes will likely strain budgets and access, prompting employees to reevaluate their healthcare options for the upcoming year. Click here to learn more
'University of California employees anticipating rising health care expenses should take a proactive approach by reviewing their income plans and health care budgets now, as thoughtful preparation can help reduce uncertainty during subsidy transitions.' – Paul Bergeron, a representative of The Retirement Group, a division of Wealth Enhancement.
'University of California employees facing potential changes to ACA subsidies should revisit their retirement income and health care strategies now, as early planning can help them stay adaptable amid evolving costs.' – Tyson Mavar, a representative of The Retirement Group, a division of Wealth Enhancement.
In this article, we will discuss:
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How ACA subsidies expiring in 2025 could affect health care costs for University of California employees and retirees.
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Why 2026 health insurance premiums may increase dramatically for pre-Medicare retirees.
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What steps individuals can take now to prepare and manage future health care expenses.
The ACA Shockwave: What University of California Employees, Families, and Retirees May Expect from Increasing Health Insurance Costs
Each fall, millions of Americans, including those transitioning from University of California, prepare for open enrollment—the period when health insurance options can be reviewed and selected. In most states, open enrollment for Affordable Care Act (ACA) marketplace plans begins on November 1.
Final elections must be submitted by December 15, 2025 for coverage beginning January 1, 2026. Coverage will start on February 1 for those who enroll or make changes between December 16 and January 16. Early enrollees still have the option to adjust plans any time before the enrollment window closes.
What Is the Main Concern for 2026?
Enhanced premium tax credits, which began in 2021 and are scheduled through 2025, currently lower what households pay for ACA coverage. If these enhanced subsidies expire on December 31, 2025, many University of California retirees using ACA coverage before Medicare eligibility could face significantly higher premiums.
According to research from KFF, average net premiums—what individuals pay after subsidies—could rise by roughly 114% in 2026 if current subsidies are not renewed. 1
Of the 24.3 million Americans expected to enroll in ACA marketplace plans for 2025, about 22 million qualify for premium subsidies. 2
Analysts caution about a potential “coverage cliff,” where individuals drop health care plans due to affordability concerns. The Urban Institute notes that millions could lose insurance coverage if current subsidy enhancements end. 3
How This May Impact Households and Retirees
Financial professionals report rising concern among retirees, small business owners, and individuals who rely on ACA coverage before turning 65. Higher premiums may lead to adjustments in retirement timing, withdrawal strategies, or monthly spending.
Even those not enrolled in ACA plans could be affected. If healthier individuals leave the marketplace due to cost increases, the remaining pool becomes older and less healthy, which may lead to higher premiums for others.
Why Timing Matters
The ACA enrollment period runs from November 1 to January 15. If Congress extends subsidies, individuals can select a plan based on available data and adjust their selection before December 15. Policyholders still retain the ability to make changes any time before the enrollment window closes.
Why Retirees Could Be Most Vulnerable
University of California retirees in their early 60s often rely on ACA plans until they reach Medicare eligibility at age 65. Without extended subsidies, these retirees may need to revise budgets, modify withdrawal plans, or consider part-time employment to maintain coverage.
What You Can Do Right Now
Stay Updated Through Reliable Sources
Follow updates from HealthCare.gov and KFF.
Review Budget Scenarios
Compare premium costs with and without subsidies to understand the potential effect on monthly expenses.
Evaluate Your Health Care Strategy
Make sure your medical, dental, and prescription benefits work together effectively.
Maintain Coverage
Unexpected medical expenses can be difficult to manage without at least basic health insurance.
Plan Tax and Withdrawal Strategies Carefully
Because ACA subsidies are based on adjusted gross income, retirees may continue to qualify by using approaches such as Roth conversions or structured IRA withdrawals.
Support from The Retirement Group
The Retirement Group works with current and former University of California employees to review how health care expenses may relate to pension choices, income distribution, tax planning, and Social Security. For more information, call (800) 900-5867.
Looking Ahead
Policies and markets may shift, even if subsidies are not extended. Reviewing health care costs annually and remaining flexible may help retirees adapt to future changes.
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Sources:
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1. Cox, Cynthia, Karen Pollitz, and Justin Lo. ACA Marketplace Premium Payments Would More than Double on Average Next Year If Enhanced Premium Tax Credits Expire . KFF, 30 Sept. 2025.
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2. yahoo!news. ' Millions could go without health care coverage in 2026 ,' by Karissa Waddick and Stephanie Innes. 19 Nov. 2025.
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3. Buettgens, Matthew, Clare Pan, and Christine Monahan. 4.8 Million People Will Lose Coverage in 2026 if Enhanced Premium Tax Credits Expire . Urban Institute, Sept. 2025.
- Other Resources:
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1. Centers for Medicare & Medicaid Services. Health Insurance Exchanges 2025 Open Enrollment Report. U.S. Department of Health & Human Services, 2025.
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2. Fernandez, Bernadette. Enhanced Premium Tax Credit Expiration: Frequently Asked Questions. Congressional Research Service, 24 Sept. 2025.
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3. Ku, Leighton, et al. Expiring ACA Premium Tax Credits Could Lead to Nearly 340,000 Jobs Lost Across the U.S. in 2026. The Commonwealth Fund, 16 Oct. 2025.
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How does the University of California Retirement Plan (UCRP) define service credit for members, and how does it impact retirement benefits? In what ways can University of California employees potentially enhance their service credit, thereby influencing their retirement income upon leaving the University of California?
Service Credit in UCRP: Service credit is essential in determining retirement eligibility and the amount of retirement benefits for University of California employees. It is based on the period of employment in an eligible position and covered compensation during that time. Employees earn service credit proportionate to their work time, and unused sick leave can convert to additional service credit upon retirement. Employees can enhance their service credit through methods like purchasing service credit for unpaid leaves or sabbatical periods(University of Californi…).
Regarding the contribution limits for the University of California’s defined contribution plans, how do these limits for 2024 compare to previous years, and what implications do they have for current employees of the University of California in their retirement planning strategies? How can understanding these limits lead University of California employees to make more informed decisions about their retirement savings?
Contribution Limits for UC Defined Contribution Plans in 2024: Contribution limits for defined contribution plans, such as the University of California's DC Plan, often adjust yearly due to IRS regulations. Increases in these limits allow employees to maximize their retirement savings. For 2024, employees can compare the current limits with previous years to understand how much they can contribute tax-deferred, potentially increasing their long-term savings and tax advantages(University of Californi…).
What are the eligibility criteria for the various death benefits associated with the University of California Retirement Plan? Specifically, how does being married or in a domestic partnership influence the eligibility of beneficiaries for University of California employees' retirement and survivor benefits?
Eligibility for UCRP Death Benefits: Death benefits under UCRP depend on factors like length of service, eligibility to retire, and marital or domestic partnership status. Being married or in a registered domestic partnership allows a spouse or partner to receive survivor benefits, which might include lifetime income. In some cases, other beneficiaries like children or dependent parents may be eligible(University of Californi…).
In the context of retirement planning for University of California employees, what are the tax implications associated with rolling over benefits from their defined benefit plan to an individual retirement account (IRA)? How do these rules differ depending on whether the employee chooses a direct rollover or receives a distribution first before rolling it over into an IRA?
Tax Implications of Rolling Over UCRP Benefits: Rolling over benefits from UCRP to an IRA can offer tax advantages. A direct rollover avoids immediate taxes, while receiving a distribution first and rolling it into an IRA later may result in withholding and potential penalties. UC employees should consult tax professionals to ensure they follow the IRS rules that suit their financial goals(University of Californi…).
What are the different payment options available to University of California retirees when selecting their retirement income, and how does choosing a contingent annuitant affect their monthly benefit amount? What factors should University of California employees consider when deciding on the best payment option for their individual financial situations?
Retirement Payment Options: UC retirees can choose from various payment options, including a single life annuity or joint life annuity with a contingent annuitant. Selecting a contingent annuitant reduces the retiree's monthly income but provides benefits for another person after their death. Factors like age, life expectancy, and financial needs should guide this decision(University of Californi…).
What steps must University of California employees take to prepare for retirement regarding their defined contribution accounts, and how can they efficiently consolidate their benefits? In what ways does the process of managing multiple accounts influence the overall financial health of employees during their retirement?
Preparation for Retirement: UC employees nearing retirement must evaluate their defined contribution accounts and consider consolidating their benefits for easier management. Properly managing multiple accounts ensures they can maximize their income and minimize fees, thus contributing to their financial health during retirement(University of Californi…).
How do the rules around capital accumulation payments (CAP) impact University of California employees, and what choices do they have regarding their payment structures upon retirement? What considerations might encourage a University of California employee to opt for a lump-sum cashout versus a traditional monthly pension distribution?
Capital Accumulation Payments (CAP): CAP is a supplemental benefit that certain UCRP members receive upon leaving the University. UC employees can choose between a lump sum cashout or a traditional monthly pension. Those considering a lump sum might prefer immediate access to funds, but the traditional option offers ongoing, stable income(University of Californi…)(University of Californi…).
As a University of California employee planning for retirement, what resources are available for understanding and navigating the complexities of the retirement benefits offered? How can University of California employees make use of online platforms or contact university representatives for personalized assistance regarding their retirement plans?
Resources for UC Employees' Retirement Planning: UC offers extensive online resources, such as UCnet and UCRAYS, where employees can manage their retirement plans. Personalized assistance is also available through local benefits offices and the UC Retirement Administration Service Center(University of Californi…).
What unique challenges do University of California employees face with regard to healthcare and retirement planning, particularly in terms of post-retirement health benefits? How do these benefits compare to other state retirement systems, and what should employees of the University of California be aware of when planning for their medical expenses after retirement?
Healthcare and Retirement Planning Challenges: Post-retirement healthcare benefits are crucial for UC employees, especially as healthcare costs rise. UC’s retirement health benefits offer significant support, often more comprehensive than other state systems. However, employees should still prepare for potential gaps and rising costs in their post-retirement planning(University of Californi…).
How can University of California employees initiate contact to learn more about their retirement benefits, and what specific information should they request when reaching out? What methods of communication are recommended for efficient resolution of inquiries related to their retirement plans within the University of California system?
Contacting UC for Retirement Information: UC employees can contact the UC Retirement Administration Service Center for assistance with retirement benefits. It is recommended to request information on service credits, pension benefits, and health benefits. Communication via the UCRAYS platform ensures secure and efficient resolution of inquiries(University of Californi…).
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