Retiree Health Care Benefits for State Employees in Fiscal Year 2015

Source: Alex Brown, National Association of State Retirement Administrators, NASRA Issue Brief, May 2017

From the overview:
Other Postemployment Benefits (OPEB) is an umbrella term that characterizes retirement benefits, other than pensions, that are offered to employees of state agencies and participating political subdivisions who meet designated age and/or service related eligibility criteria. The most significant costs associated with OPEB benefits are for employer-subsidized health care for retired employees.
The brief discusses how different plan designs, coverage levels, and financing arrangements are associated with varying costs for sponsoring state governments.

Among the findings:
– Most states provide retiree health benefits to retired state employees, and benefits vary in design and delivery;
– More than three-fourths of the cumulative $585 billion in unfunded state OPEB liabilities are held by ten states;
– State spending on retiree health benefits was equal to 1.4 percent of total FY 15 state fund expenditures.

As state and local governments seek to reduce their liabilities, many public employers continue to accumulate assets to prefund future retiree health benefits and to reduce OPEB through program and policy changes.