Private Health Insurance
State Government Retiree Health Benefits: Current Status and Potential Impact of New Accounting Standards
Research Report
Stan Wisniewski, Ph.D. J.D., Workplace Economics, Inc.
Lorel Wisniewski, Ph.D., Workplace Economics, Inc.
July 2004
The offer of retiree health benefits is more prevalent in state and local governments than in other economic sectors. While there are common influences on public and private sector employers and their benefit decisions, there are also differences; one such difference is that public and private sector employers are subject to different accounting standards. The Governmental Accounting Standards Board has adopted new standards for state and local governments that offer retiree health benefits that will require changes in reporting on the costs of these benefits.
This research was undertaken to provide a snapshot of state governments' retiree health benefits under current accounting standards, describe current accounting rules and how they will change under the new standards, and explore the potential impact the new standards may have on state governments and retiree health benefits. The research found the following:
- Retiree health programs available to state government retirees in FY 2003 varied significantly in terms of the number and types of plans offered, premium costs and contributions, cost-sharing, and drug plan features.
- A total of 41 states reported providing a financial contribution to the costs of state retiree health insurance, covering more than 1.7 million retirees in FY 2001 and totaling approximately $4.4 billion.>
- Of the states contributing to the cost of retiree health benefits in FY 2001, 30 finance the costs on a pay-as-you-go basis and 11 report a prefunding arrangement.
- Financial reports based on the new standards will make information on the long-term costs of retiree health benefits to state and local governments more readily available.
The appendices contain 10 tables with information by state on benefit eligibility and options, plan characteristics, and data from financial reports.
This Issue Paper was written by Stan Wisniewski and Lorel Wisniewski of Workplace Economics, Inc., and commissioned by the AARP Public Policy Institute. For further information, please contact Gerry Smolka at 202/434-3849. (105 pages)
Download Report
Report (without Appendices)
(PDF, 29 pages)
Appendix A: Key Characteristics
of State Government Retiree Health Insurance Plans (PDF, 41
pages)
Appendix B: State Retiree Health
Insurance Program Financial Report Data (PDF, 27 pages)
Pub ID: 2004-08