States Shifting Retiree Health Care Costs to Employees

The report, “Spotlight on Retiree Health Care Benefits for State Employees in 2013,” released by the Center for State and Local Government Excellence and National Association of State Retirement Administrators, used recent data to review the health benefits that states offered their retired employees, approaches that states are taking to pay for retiree health care, policy and program changes that states have made to retiree health benefits and a number of related issues.

Findings of the report include:

• States use a variety of methods to reduce their retiree health care costs, most commonly shifting more costs to employees and retirees;
• Fewer state government units offer retiree health care benefits now compared to 10 years ago;
• Health care, as a portion of overall public employee wage and benefit compensation, has increased from 10% in 2004 to 12% in 2012;
• Retiree health care obligations on a per capita basis vary widely among states; and
• Unfunded retiree health care liabilities are concentrated in a minority of states. Of all such liabilities, 80% are attributable to 12 states.

According to the report, the data indicates “health benefits for public retirees are being offered by fewer state government units with participating retired public employees likely receiving less and/or paying a larger portion of the cost of that benefit. These two trends will likely continue to change the landscape of state employee retiree health care moving forward.”

The report can be downloaded here.