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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 facing rising health care costs can benefit from reviewing their broader income and coverage strategies early given that policy changes may create uncertainty.” – Wesley Boudreaux, a representative of The Retirement Group, a division of Wealth Enhancement.
“University of California employees navigating potential premium increases may find it helpful to reassess their long-term health care and budget plans early, as preparation can provide clearer direction during periods of policy uncertainty.” – Patrick Ray, a representative of The Retirement Group, a division of Wealth Enhancement.
In this article, we will discuss:
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How the expiration of enhanced ACA subsidies may affect 2026 premiums.
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Why many households are delaying enrollment decisions.
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What retirees and pre-Medicare individuals should consider when reviewing coverage options.
Why Many Americans May Have Trouble Paying 2026 Premiums When Health Care Costs Increase
Households that rely on premium subsidies under the Affordable Care Act are preparing for significant changes. Unless Congress acts, the ACA’s enhanced premium tax credits, extended under the Inflation Reduction Act and expanded by the American Rescue Plan, will expire after the 2025 plan year. If these subsidies lapse, estimates show average net premiums may increase by roughly 75–115% in 2026, 1 creating financial strain for millions of Americans.
“When a household sees its premium rise dramatically, families can be forced into difficult choices about how to allocate limited income,” explains Wesley Boudreaux, a financial advisor at Wealth Enhancement.
Consumer Uncertainty and Enrollment Pressures
Many University of California households are delaying their 2026 Marketplace enrollment decisions as they wait to see if Congress will renew the enhanced subsidies. Postponing enrollment increases the risk of missing deadlines and entering the new plan year without coverage.
Some states, such as Pennsylvania, estimate that if subsidies end in 2026, nearly one-third of current enrollees may drop coverage. 2 These estimates reflect affordability concerns, not confirmed enrollment data.
According to Wesley, households are navigating uncertainty rather than disengaging: “Families must make difficult decisions about their health coverage when premiums rise significantly.”
Less Expensive Options May Have Drawbacks
When premiums climb, some University of California employees may turn to lower-cost alternatives outside the ACA. However, short-term limited duration insurance and other non-ACA-compliant policies often exclude pre-existing conditions, impose annual or lifetime limits, and may not include guaranteed comprehensive benefits. These gaps may leave individuals exposed to significant medical bills during serious illness.
“Lower premiums only matter if the coverage is there when you need it,” Wesley emphasizes. Many non-ACA policies lack essential health benefits and pre-existing condition protections.
Challenging Decisions for Important Groups
If subsidies are not renewed, households may find themselves evaluating difficult choices:
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- Moving to ACA plans with higher deductibles
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- Paying substantially more in premiums
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- Dropping coverage entirely
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- Considering non-ACA options with limited protections
Middle-class families, self-employed individuals, and pre-Medicare retirees may feel the greatest financial pressure if enhanced subsidies disappear.
“Many responsible, hardworking families are severely strained by large premium increases,” observes Wesley.
The Function of Subsidies in a Changing Market
Many households currently benefit from subsidies that may reduce premiums by hundreds of dollars each month. If enhanced subsidies expire, out-of-pocket expenses could increase sharply. Insurers have already priced 2026 plans based on current law, contributing to the “sticker shock” consumers are experiencing, even if Congress ultimately restores subsidies.
In this unsettled environment, reviewing coverage options and planning ahead becomes even more important.
How The Retirement Group Can Assist
For individuals not yet eligible for Medicare—including those leaving the University of California workforce—health care costs remain a major part of retirement planning.
The Retirement Group can help you review your health insurance choices in the context of your broader retirement income strategy.
Call (800) 900-5867
to speak with someone about preparing for rising health care expenses.
Create a Plan Before Policies Change Again
Marketplace premiums for 2026 reflect a combination of insurer cost increases and legislative uncertainty, and future health care policies may continue evolving. Thoughtful preparation can help households reduce the likelihood of coverage gaps and build a clearer understanding of the alternatives available to them.
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Sources:
1. Peterson-KFF. ' How much and why ACA Marketplace premiums are going up in 2026 ,' by J. Ortaliza et al. Aug. 6, 2025.
2. The Hospital and Healthsystem Association of Pennsylvania. “5 Things to Know: Pennie Open Enrollment.” HAP Blog , 30 Oct. 2025, www.haponline.org/News/HAP-News-Articles/HAP-Blog/5-things-to-know-pennie-open-enrollment-1 .
Other Resources:
1. Center on Budget and Policy Priorities. “Five Key Changes to ACA Marketplaces Amid Uncertainty over Premium Tax Credit Enhancements.” Written by Jennifer Sullivan and Nicole Rapfogel, 22 Sept. 2025, www.cbpp.org/research/health/five-key-changes-to-aca-marketplaces-amid-uncertainty-over-premium-tax-credit .
2. Evans, Michael. “2026 Health Insurance Hike Sparks Concern Among Early Retirees: ‘We Cannot Afford This.’” Investopedia , 12 Sept. 2025, www.investopedia.com/2026-health-insurance-hike-sparks-concern-among-early-retirees-we-cannot-afford-this-11808938 .
3. KFF. “Calculator: ACA Enhanced Premium Tax Credit.” KFF, 29 Oct. 2025, www.kff.org/interactive/calculator-aca-enhanced-premium-tax-credit/ .
4. United States Departments of the Treasury, Labor, and Health and Human Services. “Short-Term, Limited-Duration Insurance.” Federal Register , 21 Feb. 2018, www.federalregister.gov/documents/2018/02/21/2018-03208/short-term-limited-duration-insurance .
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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