The Funding Status of Retiree Health Plans in the Public Sector

38 Pages Posted: 12 Oct 2010

See all articles by Robert L. Clark

Robert L. Clark

North Carolina State University - Poole College of Management

Melinda Sandler Morrill

North Carolina State University - Department of Economics

Date Written: October 2010

Abstract

While no longer common in the private sector, most public sector employers offer retiree health insurance (RHI) as a retirement benefit to their employees. While these plans are thought to be an important tool for employers to attract, retain, motivate, and ultimately retire workers, they represent a large and growing cost. This paper reviews what is currently known about RHI in the public sector, while highlighting many important unanswered research questions. The analysis is informed by detailed data from states on their liabilities associated with RHI, which were produced in accordance with the 2004 Government Accounting Standards Board Rule 45 (GASB 45). We consider the extent of the unfunded liabilities states face and explore what factors may explain the variation in liabilities across states. The importance and sustainability of RHI plans in the public sector ultimately depends on how workers view and value this post-retirement benefit, yet little is known about how RHI directly impacts the public sector labor market. We conclude with a discussion of the future of RHI plans in the public sector.

Suggested Citation

Clark, Robert L. and Morrill, Melinda Sandler, The Funding Status of Retiree Health Plans in the Public Sector (October 2010). NBER Working Paper No. w16450. Available at SSRN: https://ssrn.com/abstract=1689381

Robert L. Clark (Contact Author)

North Carolina State University - Poole College of Management ( email )

Hillsborough Street
Raleigh, NC 27695-8614
United States
919-515-5560 (Phone)
919-515-5564 (Fax)

Melinda Sandler Morrill

North Carolina State University - Department of Economics ( email )

Raleigh, NC 27695-8110
United States
9195150331 (Phone)

HOME PAGE: http://www4.ncsu.edu/~msmorril

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