Accounting Board To Approve Rules To Require Public Employers To Report Retiree Health Benefit Costs
The Governmental Accounting Standards Board, an independent not-for-profit organization, is set to give final approval this week to new rules that will require state and local governments to measure and report the long-term costs of providing retiree health benefits to employees, the New York Times reports. Currently, most public employers do not report the cost of providing health benefits to retirees until they actually pay for them, frequently many years after employees have retired. The new rules will require employers to acknowledge the assets and liabilities of retiree health plans while the employees are still working. The employers also will have to calculate the amount of annual contributions that will be needed over time to provide the benefits. Supporters of the new rules say they will help government officials, investors and the public "understand the magnitude of these commitments to current and future retirees," the Times reports. Employee benefits experts add that the rules will also encourage state and local governments to set aside money in trust funds for the purpose of providing retiree health coverage. However, critics -- including many public employees -- say the rules will contribute to the erosion of retiree health insurance in the public sector. They point to similar rules for private companies enacted by the Financial Accounting Standards Board in 1990, noting that many companies have cited the rules in cutting benefits in recent years. The new accounting rules "will accelerate those trends," Melvyn Aaronson of the United Federation of Teachers said (Pear, New York Times, 6/21).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.