Other postemployment benefits, or OPEB, are the long-term costs for retiree health insurance and other non-pension benefits promised to public employees in New York City and State. This page covers CBC’s work on retiree health benefit liabilities, the Retiree Health Benefits Trust, premium cost-sharing reforms, Medicare Part B reimbursements, and the fiscal impact of public employee benefit enhancements.
This page was created with AICBC Insights uses AI to group, analyze and present data and recommendations from CBC's publications. Always reference the cited sources to verify important details..
The City should build and maintain adequate reserves by not drawing down the rainy day fund or Retiree Health Benefits Trust (RHBT) and including $1 billion of in-year reserves to protect against economic downturns.
The Charter should be revised to establish the RHBT, ensuring there is a fund to accumulate resources to pay for the City’s long-term OPEB liability.
The Charter should require annual deposits into the fund of at least the PAYGO amount, so that it no longer serves as a de-facto rainy day fund, plus some additional deposit (a percentage of the annual cost or liability), or the normal cost, whichever is less, to address OPEB funding.
The Charter should limit withdrawals from the RHBT to the amount needed to pay for the current-year cost of the retiree health benefits.
The Charter should establish the Retiree Health Benefits Trust to ensure it is available to accumulate resources to pay for the City’s long-term liability for retiree benefits.
The Charter should require annual deposits sufficient to pay the current year cost of retiree benefits plus some additional deposit, so the City’s massive long-term liability starts to get funded.
The Charter should not allow the Retiree Health Benefits Trust to be used as a de-facto rainy day fund, since we now have a true one.
Key Data
As of March 2026, New York City faced a $102 billion other postemployment benefit (OPEB) liability, which the Retiree Health Benefits Trust (RHBT) is intended to accumulate resources against.
In December 2025, the Metropolitan Transportation Authority (MTA) had a $21 billion OPEB liability, with the OPEB Trust projected to have $1.1 billion at the end of 2029.
An agreement between New York City and the Municipal Labor Committee to transition retirees to a Medicare Advantage plan was projected in January 2023 to reduce the City's annual costs by around $600 million.
In October 2021, retiree health and welfare benefits were projected to cost New York City $3.1 billion annually, which included $2.6 billion for pre-Medicare insurance, Medicare Part B reimbursement, and Medigap plans.
Proposed changes to New York City's Rainy Day Fund rules should ensure that the Retiree Health Benefits Trust is not treated as a general reserve, but is instead preserved for its intended purpose. This trust should be dedicated solely to addressing the city's outstanding retiree health insurance liability, which exceeds $100 billion.
Recommendations related to Other postemployment benefits (OPEB)
The Retiree Health Benefits Trust should be limited to its intended purpose: to offset the City’s $100-billion-plus liability for retiree health insurance, a massive future liability for which the City should set aside financial resources.
Key Data
$100-billion-plus
— The City's liability for retiree health insurance, which the Retiree Health Benefits Trust is intended to offset.
The city's fiscal plan relies on inappropriate drawdowns from the Retiree Health Benefits Trust, which is intended to offset a $102 billion liability for other postemployment benefits. Instead of using these funds to cover near-term budget gaps, the city should prioritize structural reforms and maintain reserves to ensure long-term fiscal stability.
Recommendations related to Other postemployment benefits (OPEB)
The City should build and maintain adequate reserves by not drawing down the rainy day fund or Retiree Health Benefits Trust (RHBT) and including $1 billion of in-year reserves to protect against economic downturns.
Key Data
$102 billion
— The total other postemployment benefit (OPEB) liability the Retiree Health Benefits Trust is intended to accumulate resources against.
$1.2 billion
— The amount the City plans to draw down from the rainy day fund and the Retiree Health Benefits Trust (RHBT) to close the budget gap.
The MTA plans to deposit $37 million into its Other Postemployment Benefits (OPEB) trust in 2026, while subsequently withdrawing funds to cover budget gaps in 2028 and 2029. This practice deviates from the fund's intended purpose of accumulating resources to address the MTA's $21.0 billion OPEB liability.
Key Data
$37 million
— Amount the MTA will deposit into the OPEB Trust fund in 2026.
$100 million
— Amount the MTA plans to use from the OPEB Trust fund to reduce budget gaps in 2028.
$300 million
— Amount the MTA plans to use from the OPEB Trust fund to reduce budget gaps in 2029.
$1.1 billion
— Projected balance remaining in the OPEB Trust at the end of 2029.
$21.0 billion
— Total MTA OPEB liability that the trust fund should be accumulating resources to cover.
New York City's current approach to funding retiree health and other postemployment benefits relies on a trust that is significantly underfunded, covering only a small fraction of the $100.3 billion liability. Establishing this trust within the City Charter with mandatory deposit and withdrawal rules would ensure long-term fiscal health and prevent the fund from being used as a de-facto rainy day account.
Recommendations related to Other postemployment benefits (OPEB)
The Charter should be revised to establish the RHBT, ensuring there is a fund to accumulate resources to pay for the City’s long-term OPEB liability.
The Charter should require annual deposits into the fund of at least the PAYGO amount, so that it no longer serves as a de-facto rainy day fund, plus some additional deposit (a percentage of the annual cost or liability), or the normal cost, whichever is less, to address OPEB funding.
The Charter should limit withdrawals from the RHBT to the amount needed to pay for the current-year cost of the retiree health benefits.
Key Data
$100.3 billion
— The City's total long-term OPEB liability.
$4.8 billion
— The current balance of the Retiree Health Benefits Trust (RHBT).
4.8 percent
— The portion of the City's OPEB liability covered by the current RHBT balance.
$3.7 billion
— The annual additional deposit required to fund the normal cost of retiree benefits.
The New York City Charter should be amended to formally establish the Retiree Health Benefits Trust, ensuring it is dedicated to funding long-term retiree liabilities rather than serving as a rainy day fund. This change would mandate annual deposits sufficient to cover current retiree benefit costs while actively addressing the City's significant long-term financial obligations.
Recommendations related to Other postemployment benefits (OPEB)
The Charter should establish the Retiree Health Benefits Trust to ensure it is available to accumulate resources to pay for the City’s long-term liability for retiree benefits.
The Charter should require annual deposits sufficient to pay the current year cost of retiree benefits plus some additional deposit, so the City’s massive long-term liability starts to get funded.
The Charter should not allow the Retiree Health Benefits Trust to be used as a de-facto rainy day fund, since we now have a true one.
New York State faces a significant $67 billion unfunded liability for retiree health care and other postemployment benefits, which creates both fiscal risk and unfairness for taxpayers. To address this, the state should enact reforms, including eliminating certain Medicare Part B premium reimbursements and establishing a tiered cost-sharing system for future retirees.
Recommendations related to Other postemployment benefits (OPEB)
The State should enact OPEB reforms, such as the IRMAA cost elimination, to provide recurring savings.
The budget should include prior proposals to freeze Medicare Part B premiums to help reduce annual costs.
The State should create a tiered cost-sharing system for future retirees, which would significantly reduce the growing unfunded OPEB liability.
Key Data
$67 billion
— The current OPEB liability totals $67 billion.
$24 million
— The elimination of IRMAA reimbursement would provide savings of $24 million in the first full year of implementation.
$103,000
— The elimination of IRMAA reimbursement applies to recipients with qualifying incomes in excess of $103,000 annually.
New York City's health insurance costs are projected to rise by 8.5 percent annually through 2026, necessitating structural changes to manage the city's long-term financial liabilities. Proposed reforms include implementing the Medicare Advantage Plus plan, introducing premium sharing for employees and pre-Medicare retirees, and consolidating union welfare fund benefits to reduce the city's other postemployment benefit (OPEB) obligations.
Recommendations related to Other postemployment benefits (OPEB)
The City should implement the agreement with the Municipal Labor Committee to move forward with the Medicare Advantage Plus plan, which is beneficial in restraining cost growth and reducing the City’s other postemployment benefit (OPEB) liability.
Introduction 874 should be repealed because this level of benefit specificity should not be codified.
The City and the Municipal Labor Committee should undertake a comprehensive review of health and welfare benefits for employees and retirees to agree on policy changes that reduce costs.
The City should implement premium sharing for employees and pre-Medicare retirees to bring benefits more in line with other public and private sector workers.
The City should pursue the elimination of some or all of the Medicare Part B reimbursement as part of a broader effort to reduce costs to more manageable levels.
The City should pursue the consolidation of union welfare fund benefits to help reduce the City's costs.
Key Data
8.5 percent
— Annual rate at which health insurance costs are budgeted to increase between fiscal years 2023 and 2026.
$200
— Roughly monthly premium for retirees who choose to remain in their current Medigap program.
$600 million
— Estimated annual reduction in City costs if the Medicare Advantage plan is implemented.
The state legislature passed 20 bills that increase public employee benefits, including pension, disability, and death benefits, without identifying offsetting savings or providing complete fiscal notes. These measures, which have grown in frequency since 2018, impose immediate and long-term costs on the state and local governments that should be rejected.
Recommendations related to Other postemployment benefits (OPEB)
The Governor should veto the 20 bills because they enhance benefits and increase costs to New York State and local governments outside of the budget process.
The Governor should veto the five bills that lack a complete fiscal note, as this is a sufficient basis for rejection.
The Legislature should stop passing targeted benefit enhancements that increase public costs and encourage further expansions.
Key Data
$78.6 million
— Estimated immediate costs for 15 bills with fiscal notes attached.
$21.0 million
— Estimated annual costs for 15 bills with fiscal notes attached.
20
— Number of benefit sweetener bills passed by the Legislature in 2022.
12
— Number of benefit sweetener bills passed by the Legislature in 2018.
$55.6 million
— Estimated immediate past service costs for the 20-year retirement plan for certain State law enforcement positions.
$15.2 million
— Estimated immediate past service costs for extending a one-year final average salary calculation to Tier 6 members of the Police and Fire Retirement system.
The fiscal year 2023 budget agreement includes a $750 million deposit into the Retiree Health Benefits Trust fund, which serves as a positive step toward addressing the city's long-term liability for other postemployment benefits. This allocation represents a specific effort to manage future obligations amidst broader budget increases and economic uncertainty.
Key Data
$750 million
— The amount deposited in the Retiree Health Benefits Trust fund to address the long-term liability for other postemployment benefits.
The City has identified $4.5 billion in additional revenue for fiscal years 2022 and 2023, which should be used to bolster the Rainy Day Fund, restore labor reserves, and fund one-time actions like the Retiree Health Benefit Trust. Prioritizing these deposits and fiscal rules will help protect essential services against future revenue shortfalls and economic instability.
Recommendations related to Other postemployment benefits (OPEB)
The remaining monies should be used for pay-as-you-go capital programs, to build up the Retiree Health Benefit Trust fund, or other one-time actions.
New York State holds one of the largest unfunded other post-employment benefit liabilities in the nation, representing a significant fiscal misstep and a failure in intergenerational equity. To address this, the state should support the Governor's proposals to increase deposits and improve the structure of the Retiree Health Benefits Trust.
Recommendations related to Other postemployment benefits (OPEB)
The Legislature should support the Governor’s proposals to increase deposits and similarly improve the structure of the Retiree Health Benefits Trust.
New York City faces a $122 billion long-term fiscal liability for other postemployment benefits, driven by generous retiree health benefits that lack premium-sharing. Implementing modest cost-sharing reforms and consolidating union-managed welfare funds are essential steps to reduce these unsustainable costs and improve the city's long-term fiscal stability.
Recommendations related to Other postemployment benefits (OPEB)
Reforms such as modest retiree health benefit cost sharing would substantially reduce the City’s annual cost and long-term liability.
The City should also bring health and welfare benefit costs to sustainable levels, which requires negotiating changes with municipal labor unions.
Consolidating these welfare funds could provide comparable or better benefits at lower costs, due to administrative economies of scale and group purchasing power.
Key Data
$122 billion
— City long-term fiscal liability for other postemployment benefits (OPEB).
$7.2 billion
— Total annual City costs for employee and retiree health benefits.
4.2 percent
— Average annual growth rate of City health and welfare benefit costs since fiscal year 2014.
New York City's retiree health benefits, which carry a $122 billion liability, are being restructured through a new Medicare Advantage plan that fails to reduce the city's operating budget because savings are diverted to a stabilization fund. While the shift in financing is a positive step, the city should ensure that such savings directly benefit the bottom line rather than subsidizing other labor-related costs.
Recommendations related to Other postemployment benefits (OPEB)
The City should reduce the cost of retiree health benefits by 50 percent by implementing options such as premium sharing for Medicare and pre-Medicare eligible retirees.
The City should pursue the elimination or reduction of Part B premium reimbursement to help rein in spending.
The City should ensure that savings from retiree health benefit changes flow to the City’s bottom line as part of the annual budget process rather than being used to bolster other labor-related costs.
The City should leverage the new financing structure to pave the way for employee premium contributions for health insurance coverage.
Key Data
$122 billion
— The City’s current liability for retiree health benefits, also known as other postemployment benefits (OPEB).
$3.1 billion
— Total cost of retiree health and welfare benefits for the current year.
$600 million
— Annual reduction in the City’s cost of retiree health insurance under the new approach.
$2.6 billion
— Cost for pre-Medicare insurance, Medicare Part B reimbursement, and Medigap plans.
$504 million
— Cost for union-administered welfare fund contributions for retirees.
5.5 percent
— Average annual growth of retiree health insurance costs from fiscal year 2014 to fiscal year 2022.
At this time last year, New York State estimated that tax receipts would fall short of pre-pandemic estimates by $15 billion annually on average, totaling $60 billion over four years. Receipts, however, have been much stronger than expected. By April 2021, the State reduced its four-year tax receipt shortfall estimate by 80 percent, to $11.8 billion. Over the four-year period, the State also will receive at least $21.1 billion of targeted and general federal fiscal…
The Metropolitan Transportation Authority faces a significant structural fiscal imbalance and should implement operational reforms, including productivity improvements and health care cost-sharing adjustments, to achieve up to $2.9 billion in annual savings by 2024. These reforms include aligning retiree health care contributions with state standards, increasing active employee premium cost-sharing, and adopting modern operating practices like one-person train operation and proof-of-payment systems.
Recommendations related to Other postemployment benefits (OPEB)
The MTA should apply the State’s current cost-sharing agreement for retired New York State employees to its own retired workforce to generate savings.
The agency should increase active employee premium cost-sharing to the 18 percent level paid by non-represented employees.
The MTA should implement a value-based plan redesign modeled on the NYC Municipal Labor Committee’s target savings.
The MTA should implement one-person train operation (OPTO) on subways to reduce conductor staffing needs.
The MTA should implement proof-of-payment on commuter rail to reduce the need for conductors.
Key Data
$2.9 billion
— Total annual savings from all proposed reforms by 2024.
$663 million
— Total annual savings from health care reforms by 2024.
$263 million
— Annual savings from applying state retiree premium cost-sharing parity.
$130 million
— Annual savings from increasing active employee premium cost-sharing.
$270 million
— Annual savings from a value-based health plan redesign.
13,000
— Total workforce reduction by 2024 from all proposed reforms.
The next New York City Comptroller will play a critical role not only in holding the next Administration and agencies accountable, investing and managing five pension funds with $248 billion in assets, and partnering in $13 billion City debt issuance, but also in spotlighting and promoting New York City’s fiscal…
New York currently carries an unfunded liability of over $50 billion for retiree health care benefits, as it is one of 19 states that do not pre-fund these obligations. To address this, the state should adopt proposed reforms including freezing Medicare Part B premium cost-sharing, eliminating reimbursements for high-income beneficiaries, and implementing tiered cost-sharing for future retirees.
Recommendations related to Other postemployment benefits (OPEB)
The Legislature should support the proposal to eliminate State reimbursement for the Medicare Part B surcharge on high income beneficiaries.
The Legislature should support the proposal to freeze the State’s cost-sharing for Medicare Part B premiums.
The Legislature should support the proposal to implement a tiered cost-sharing structure for future retirees.
The Legislature should support the overall proposal to reform the State’s funding and cost-sharing for OPEB liabilities to reduce the State's outstanding liability.
Key Data
19
— Number of states that do not pre-fund any portion of health care benefits for retirees.
$50 billion
— The amount of the State's current unfunded OPEB liability.
New York City faces a $105 billion long-term liability for retiree health and welfare benefits, known as other postemployment benefits (OPEB). To address fiscal challenges, the city should implement reforms such as requiring premium contributions from pre-Medicare retirees and eliminating Medicare Part B premium reimbursements for high-income retirees.
Recommendations related to Other postemployment benefits (OPEB)
A contribution of 16 percent of the premium for pre-Medicare retirees in fiscal year 2021 would save about $224 million.
The City should require retirees to contribute 50 percent of the premium for pre-Medicare health insurance.
Elimination of Medicare Part B premium reimbursement and the income-related monthly adjustment amount (IRMAA) would save the City about $400 million a year.
The City should require pre-Medicare retirees who are eligible for insurance through an employer (either their own or their spouses’) to enroll in that plan.
The years of service required to be eligible for health insurance could be increased for current employees.
Key Data
$105 Billion
— New York City’s long-term liability for retiree health and welfare benefits, referred to as other postemployment benefits or OPEB.
$2.2 Billion
— The annual cost of pre-Medicare retiree health insurance benefits in fiscal year 2020.
$400 Million
— The annual savings from eliminating Medicare Part B premium reimbursement and the income-related monthly adjustment amount (IRMAA).
$224 Million
— The savings from a 16 percent premium contribution for pre-Medicare retirees in fiscal year 2021.
$700 Million
— The savings from requiring retirees to contribute 50 percent of the premium for pre-Medicare health insurance.
The City's liability for retiree health benefits, known as other postemployment benefits (OPEB), stands at $105 billion. This significant long-term obligation is highlighted in the context of the fiscal year 2021 budget, which relied on drawing down the Retiree Health Benefits Trust Fund to help close budget gaps.
Key Data
$105 billion
— The City's total liability for retiree health benefits, commonly known as other postemployment benefits (OPEB).
New York State's liability for retiree health insurance benefits, known as other postemployment benefits (OPEB), reached $65.1 billion in fiscal year 2019, amounting to approximately $3,345 per resident. Proposed budget reforms, including tiered benefits for future employees and changes to Medicare Part B reimbursements, aim to reduce this liability by $8 billion and lower annual budget costs by $48 million by fiscal year 2023.
Recommendations related to Other postemployment benefits (OPEB)
The State should prospectively implement a tiered retiree health benefit based on years of service for future employees to reduce OPEB liability.
The State should eliminate the reimbursement of the Medicare Part B surcharge for high-income retirees to manage OPEB costs.
The State should cap Medicare Part B premium-sharing to help reduce the State's OPEB liability.
Key Data
$65.1 billion
— New York State's other postemployment benefits (OPEB) liability in fiscal year 2019.
$3,345
— The cost of other postemployment benefits (OPEB) per resident in fiscal year 2019.
$8 billion
— The projected reduction in OPEB liability if proposed retiree health benefit reforms are implemented.
$48 million
— The annual reduction in budget costs by fiscal year 2023 resulting from proposed OPEB reforms.
Proposed reforms to retiree health insurance benefits aim to increase the progressivity of eligibility, which would generate minimal savings in fiscal year 2021 but grow significantly in future years. These changes are projected to reduce the state's outstanding other post-employment benefit (OPEB) liability by at least $5.6 billion.
Recommendations related to Other postemployment benefits (OPEB)
The Legislature should adopt reforms to retiree health insurance benefits that will increase the progressivity of eligibility for benefits while reducing current other post-employment benefit (OPEB) costs and future liabilities.
Key Data
$2.2 million
— Minimal savings in fiscal year 2021 from proposed retiree health insurance reforms.
$5.6 billion
— Reduction in the State’s outstanding other post-employment benefit (OPEB) liability.
New York State should implement reforms to retiree health insurance benefits to increase eligibility progressivity and reduce long-term liabilities. These changes would save the state approximately $26 million annually and decrease outstanding long-term Other Post-Employment Benefits (OPEB) by $28.2 billion, or 36 percent.
Recommendations related to Other postemployment benefits (OPEB)
Governor Cuomo should again propose, and the Legislature should adopt, reforms to retiree health insurance benefits that will increase the progressivity of eligibility for benefits while reducing current other post-employment benefit costs and future liabilities.
Key Data
$26 million
— Annual savings to the State one year after the adoption of retiree health insurance reforms.
$28.2 billion
— Reduction in the State's outstanding long-term Other Post-Employment Benefits (OPEB) liability.
36 percent
— Percentage reduction in the State's outstanding long-term Other Post-Employment Benefits (OPEB) liability.
New York State is urged to address its fiscal imbalance by focusing on spending restraint rather than tax increases, particularly as the economy faces potential future slowdowns. Specific measures proposed include reforming retiree health benefits to lower long-term liabilities, alongside adjustments to Medicaid, education aid, and economic development spending.
Recommendations related to Other postemployment benefits (OPEB)
Consider reforms to retiree health benefits that were proposed repeatedly in recent Executive Budgets.
The state legislature has passed 18 bills that would increase pension and disability benefits for public employees, carrying a projected first-year cost of at least $71 million. These expansions threaten to undermine previous fiscal reforms and should be vetoed to maintain the integrity of established pension and health insurance compromises.
Recommendations related to Other postemployment benefits (OPEB)
The Governor should veto all 18 bills that would enhance pension or disability benefits without providing enhanced services or offsetting savings.
The Governor should reject these unwarranted expansions of employee and retiree benefits to maintain the integrity of past fiscal reforms.
The Governor should send a strong message that past pension and health insurance reforms will not be overturned by refusing to sign these bills.
Key Data
$71 million
— The projected first-year cost of the 18 bills passed by the Legislature.
$41 million
— The first-year cost of A4431/S5207, which would establish a 20-year retirement plan for certain state law enforcement positions.
$15.7 million
— The first-year cost of A7874-A/S5905-A, which would require New York City paraprofessionals to join the Teachers Retirement System.
$5.6 million
— The annual cost of A7620-A/S5903-A, which would allow New York City police officers to receive retirement credit for time spent as cadets.
$2.76 million
— The first-year cost of A5940/S3659, which would allow Tier 6 uniformed court officers and peace officers to retire without early age reduction.
$1.5 million
— The first-year cost of A5021/S3946, which would allow Nassau County sheriffs, undersheriffs, deputy sheriffs, and correction officers to be eligible for performance of duty disability benefits.
New York City faces significant long-term financial obligations, including a net liability of $98.5 billion for other postemployment benefits (OPEB) as of fiscal year 2018. Additionally, the city maintains a Retiree Health Benefits Trust valued at $4.5 billion to address these future retiree costs.
Key Data
$98.5 Billion
— Net OPEB liability for New York City in fiscal year 2018.
$4.5 Billion
— Value of the Retiree Health Benefits Trust.
The Metropolitan Transportation Authority faces a dire fiscal outlook with projected annual cash deficits reaching $976 million by 2022, necessitating labor cost controls. Implementing changes to retiree medical benefits and increasing employee contributions to health insurance could generate significant savings to help stabilize the authority's finances.
Recommendations related to Other postemployment benefits (OPEB)
The MTA should alter retiree medical benefits through collective bargaining agreements to require contributions, which would save an estimated $136 million to $165 million in 2019.
Key Data
$614 million
— MTA spending on other postemployment benefits (OPEB) in 2018.
$136 million to $165 million
— Estimated annual savings from applying retiree contribution shares to MTA retirees receiving benefits.
New York City's retiree health and welfare benefits, known as other postemployment benefits (OPEB), represent a massive $103.3 billion liability that is largely unfunded. To address this, the City should mandate the Retiree Health Benefits Trust Fund (RHBT) in the Charter, requiring annual deposits and limiting disbursements to ensure the fund is not used as a rainy day fund.
Recommendations related to Other postemployment benefits (OPEB)
The Charter should be amended to mandate the Retiree Health Benefits Trust Fund (RHBT).
The Charter should be amended to require annual deposits into the fund of at least the PAYGO amount plus some percentage, or the normal cost.
The Charter should be amended to limit RHBT disbursements to the PAYGO cost of retiree health and welfare benefits.
Key Data
$103.3 billion
— The total liability for other postemployment benefits (OPEB) at the end of fiscal year 2018.
4.4 percent
— The RHBT balance as a percentage of the $103.3 billion OPEB liability at the end of fiscal year 2018.
$4.5 billion
— The RHBT balance at the end of fiscal year 2018.
$4.9 billion
— The normal cost of the OPEB benefit in fiscal year 2018.
$2.4 billion
— The PAYGO cost of the OPEB benefit in fiscal year 2018.
$1.4 billion
— The RHBT balance in fiscal year 2013.
New York City's Retiree Health Benefit Trust, established to address the $103.3 billion liability for other postemployment benefits, is being inappropriately utilized as a rainy day fund to balance the budget. This practice risks shifting the financial burden of current obligations onto future taxpayers rather than securing the necessary funds for retiree health benefits.
Recommendations related to Other postemployment benefits (OPEB)
The City should cease using the Retiree Health Benefit Trust as a rainy day fund, as this practice inappropriately shifts the burden for current OPEB liabilities to future taxpayers.
Key Data
$103.3 billion
— Estimated liability for other postemployment benefits at the end of fiscal year 2018.
$4.5 billion
— Current balance of the Retiree Health Benefit Trust.
$2.5 billion
— Annual expense for retiree health benefits in fiscal year 2019.
18 percent
— Portion of projected budget gaps that could be covered by the Retiree Health Benefit Trust.
The City's long-term unfunded liability for retiree health insurance and other postemployment benefits has reached nearly $100 billion, posing a significant threat to long-term fiscal health. To address this, the City should increase annual deposits to the Retiree Health Benefits Trust, which currently holds a record $4.8 billion but has only received $100 million in annual deposits over the last two fiscal years.
Recommendations related to Other postemployment benefits (OPEB)
The City should make a deposit to the Retiree Health Benefits Trust to address the long-term unfunded liability for retiree health insurance and other postemployment benefits.
The City should plan for annual deposits to the Retiree Health Benefits Trust at higher levels in each year of the financial plan.
The City should reduce long-term liabilities, such as the nearly $100 billion unfunded liability for retiree health insurance and other postemployment benefits.
Key Data
$4.8 billion
— Record size of the Retiree Health Benefits Trust.
$100 million
— Annual deposits made to the Retiree Health Benefits Trust in each of the last two fiscal years.
$100 billion
— Long-term unfunded liability for retiree health insurance and other postemployment benefits, not including pensions.
The FY 2020 Executive Budget includes reforms to address Other Postemployment Benefits (OPEB) by ending Medicare premium reimbursements for high-income earners and capping reimbursement rates. These measures are projected to reduce the state's $90 billion OPEB liability by $4 billion.
Recommendations related to Other postemployment benefits (OPEB)
End reimbursement of Medicare premiums for high-income earners to provide needed long-term savings.
Cap Medicare reimbursement at current rates to provide needed long-term savings.
Key Data
$90 billion
— The State's total OPEB liability.
$4 billion
— The projected reduction in the State's OPEB liability resulting from the proposed reforms.
New York City's long-term liabilities, including bonded debt, pensions, and other postemployment benefits (OPEB), reached a record $257.3 billion in fiscal year 2018. Specifically, the OPEB liability for retiree health and other nonpension benefits grew by $10.1 billion, reaching a total of $99 billion.
Key Data
$10.1 billion
— The increase in OPEB liability for retiree health and other nonpension benefits.
$99 billion
— The total OPEB liability for retiree health and other nonpension benefits.
New York's unfunded liability for other postemployment benefits (OPEB) grew by 61 percent between fiscal years 2011 and 2017, reaching $91.7 billion. This liability now exceeds $4,700 for every New York State resident, highlighting a significant fiscal challenge compared to the state's well-funded pension commitments.
Key Data
61 percent
— New York’s other postemployment benefits (OPEB) liability grew by 61 percent between fiscal years 2011 and 2017.
$57.0 billion
— New York’s other postemployment benefits (OPEB) liability was $57.0 billion in fiscal year 2011.
$91.7 billion
— New York’s other postemployment benefits (OPEB) liability reached $91.7 billion in fiscal year 2017.
$4,700
— The State’s OPEB liability now exceeds $4,700 per New York State resident.
New York City's unfunded liability for retiree health benefits and other postemployment benefits reached $88.4 billion in fiscal year 2017, with only 5 percent of the total $93.1 billion liability currently funded. To address this, the city should implement a strategy to prefund these obligations and reduce benefit costs by 50 percent through measures like premium sharing and eliminating Medicare Part B reimbursements.
Recommendations related to Other postemployment benefits (OPEB)
The City should establish a goal of cutting OPEB costs by 50 percent.
The City should implement premium sharing for retiree health insurance, eliminate reimbursement of Medicare Part B, and reduce contributions to welfare funds.
The City should develop a policy for deposits and withdrawals to the Retiree Health Benefits Trust (RHBT) to ensure it is used for prefunding rather than as a rainy day fund.
Deposits to the RHBT should equal or exceed the current year pay-as-you-go cost plus the annual service cost.
Withdrawals from the RHBT should be limited to paying annual costs and the fund should not be treated as a rainy day fund.
Key Data
$88.4 billion
— Unfunded OPEB liability at the end of fiscal year 2017.
$93.1 billion
— Total OPEB liability in fiscal year 2017.
5 percent
— Portion of the total OPEB liability that has been funded.
$2.3 billion
— Amount paid for retiree health bills from the City’s annual budget in fiscal year 2017.
$6.9 billion
— Amount the actuary determined was needed in fiscal year 2017 to meet commitments to both current and future retirees.
$126,000
— Unfunded OPEB liability per member in 2016.
New York City's municipal workforce expansion has significantly increased long-term financial liabilities, including an unfunded other postemployment benefits (OPEB) liability of $88.4 billion as of the end of fiscal year 2017. These growing personnel costs, combined with pension obligations, create substantial fiscal pressure that necessitates stricter management of headcount growth to mitigate future budgetary risks.
Key Data
$88.4 billion
— Unfunded other postemployment benefits (OPEB) liability at the end of fiscal year 2017.
$520.5 million
— Estimated long-term costs associated with additional full-time hires in fiscal year 2019, covering both pension and OPEB liabilities.
The City's fiscal year 2019 budget includes a $100 million deposit into the Retiree Health Benefit Trust, which remains significantly underfunded relative to the City's $93 billion liability for retiree health insurance. To address this, the City should prioritize retiree health insurance savings and develop a policy to increase the trust's balance to better manage its long-term other postemployment benefits (OPEB) obligations.
Recommendations related to Other postemployment benefits (OPEB)
Focusing on retiree health insurance benefits can help the City reduce its other postemployment benefits (OPEB) liability, and the City should develop a policy to increase the size of the RHBT to fund this liability.
Key Data
$93 billion
— The City's total liability for providing health insurance to its retirees.
$100 million
— The deposit made into the Retiree Health Benefit Trust (RHBT) in the fiscal year 2019 budget.
$4.35 billion
— The total balance of the Retiree Health Benefit Trust (RHBT) under the de Blasio Administration.
5%
— The portion of the long-term retiree health insurance liability covered by the current RHBT balance, which is less than 5%.
New York City faces a $90 billion obligation for public retiree health benefits, requiring consistent deposits into the Retiree Health Benefits Trust Fund to address long-term fiscal liabilities. Ensuring the fund remains adequately resourced is a critical component of responsible budget management alongside controlling debt and agency spending.
Recommendations related to Other postemployment benefits (OPEB)
The mayor and Council should make a deposit to the Retiree Health Benefits Trust Fund to help defray the city’s $90 billion obligation for the health benefits of public retirees.
Key Data
$90 billion
— city’s obligation for the health benefits of public retirees
$4.25 billion
— current balance of the Retiree Health Benefits Trust Fund
New York State faces $87.3 billion in unfunded retiree health insurance liabilities, commonly known as other postemployment benefits, with no assets reserved to cover these future costs. To help control these expenses, the state should cap retiree health insurance reimbursements at current levels and eliminate IRMAA reimbursements for high-income retirees.
Recommendations related to Other postemployment benefits (OPEB)
The State should cap the amount retirees are reimbursed for health insurance premiums at current levels to help control expenses related to other postemployment benefits.
The State should discontinue Income-Related Monthly Adjustment Amounts (IRMAA) reimbursements for high-income retirees who are most able to afford the costs of health insurance.
Key Data
$87.3 billion
— Total retiree health insurance liabilities, commonly referred to as other postemployment benefits (OPEB), for which the State has no assets reserved.
$170,000
— Income threshold for couples, above which high-income retirees are subject to Income-Related Monthly Adjustment Amounts (IRMAA) for health insurance.
New York City contributes over $1.1 billion annually to union-administered benefit funds that often suffer from excessive administrative costs, unnecessary reserves, and mismanagement. Consolidating these supplemental health and annuity benefits could save the city more than $160 million while improving the quality of services provided to members.
Recommendations related to Other postemployment benefits (OPEB)
The Office of the Comptroller should give higher priority to auditing benefit funds.
The City should develop benchmarks and indicators that can trigger enforcement powers for benefit funds.
The Office of Labor Relations, in negotiation with labor unions, should expand the Comptroller’s oversight and enforcement authority over union-administered benefit funds.
The City should consolidate the provision of supplemental health benefits within the City’s health insurance program.
The City should provide non-health related benefits through a centralized cafeteria plan to allow for benefits to be tailored to an individual rather than an entire union.
Key Data
$1.1 billion
— Projected taxpayer contribution to 108 union-administered benefit funds in fiscal year 2018.
$160 million
— Potential annual savings for the City from restructuring how supplemental benefits are provided.
$109.3 million
— Total administrative expenses spent by 91 benefit funds in fiscal year 2014.
8.9%
— Share of all benefit fund expenditures that went toward administrative expenses in fiscal year 2014.
200%
— Threshold defined as reasonable for reserves; funds exceeding this are considered to have unnecessary reserves.
$44.5 million
— Amount of City contributions to welfare funds subject to an audit between 2009 and 2017.
The post examines the upcoming New York State Fiscal Year 2019 Executive Budget, questioning how the Governor will address a projected budget gap between $4.4 billion and $6.3 billion, as well as potential federal policy changes. It specifically highlights the need for clarity on the state's approach to the Postemployment Benefit Trust Fund, which was created to manage long-term liabilities.
This episode's datapoint is $95 billion, the current value of all of the future retiree benefits, except pensions, already earned by current retirees and employees of NYC. This amount, referred to as OPEB, or 'Other Post-Employment Benefits,' is primarily the cost of health insurance for NYC employees, their spouses and…
New York City faces a $95 billion debt for other post-employment benefits (OPEB), primarily due to a costly retiree health insurance package that is largely unfunded and relies on a pay-as-you-go model. To address this, the city should significantly reduce benefit costs by aligning them with other municipalities and implement systematic prefunding policies to avoid placing an unsustainable burden on future taxpayers.
Recommendations related to Other postemployment benefits (OPEB)
Require workers who retire before Medicare eligibility to pay 50 percent of their health insurance premium.
No longer reimburse for Medicare Part B premiums.
Lower the Medicare Part B reimbursement from full reimbursement to 50 percent reimbursement.
End benefits for spouses of retirees.
Reduce to 50 percent the premium payments for Medicare supplemental insurance.
Replace the full premium payments on behalf of retirees and spouses with a voucher to be used for purchase of insurance.
Increase the retirement age for police and firefighters to match teachers’ retirement age of 55.
Provide a fixed payment to municipal employee unions and authorize them to provide retiree health benefits.
Key Data
$95 billion
— The total OPEB debt New York City has run up.
$30,000
— The current debt for each household in New York City.
$4.9 billion
— The current annual normal cost for OPEB.
$2.5 billion
— The current annual PAYGO amount for OPEB.
$150,000
— The average OPEB liability per member (employees and retirees).
$17,600
— The annual cost for family health insurance policies for retirees not yet eligible for Medicare in fiscal year 2017.
New York ranks 39th in national fiscal health, partly due to high long-term debts and significant unfunded postemployment benefit liabilities. To improve its financial standing, the state must reform post-retirement health benefits and begin contributing to the newly established postemployment benefit trust fund.
Recommendations related to Other postemployment benefits (OPEB)
To improve the State’s financial health, New York’s leaders should focus on decreasing long-term debt and reducing the State’s OPEB liabilities.
The State should adopt proposals to reform post-retirement health benefits rejected by the Legislature.
The State should begin contributing toward the new postemployment benefit trust fund created in the Enacted Budget for Fiscal Year 2018.
Key Data
45th
— New York's rank for outstanding OPEB liability per thousand dollars of income.
10 to 1
— The average state ratio of pension liabilities to OPEB liabilities.
21st
— New York's rank for trust fund solvency, a metric that weighs unfunded pension and OPEB liabilities equally.
New York State faces a $78 billion liability for other post-employment benefits (OPEB), which it currently funds through a 'pay-as-you-go' approach costing $1.3 billion annually. To address this, the state should adopt proposed premium-sharing reforms and establish a formal plan for funding the newly created OPEB trust to ensure long-term fiscal stability.
Recommendations related to Other postemployment benefits (OPEB)
The Legislature should adopt the Executive Budget's proposals to increase employee and retiree premium-sharing to reduce the State’s OPEB liability.
The State should develop a plan to require regular deposits into the proposed OPEB Trust Fund to ensure it is not left empty.
The State should establish a codified deposit and withdrawal policy for the OPEB Trust to maximize its benefits for finance and credit.
Key Data
$78 billion
— The State's total liability for other post-employment benefits (OPEB).
$1.3 billion
— The annual cost of the State's current 'pay-as-you-go' approach to retiree health insurance.
$28.2 billion
— The total reduction in the State's OPEB liability if the three proposed premium-sharing actions are adopted.
$3.3 billion
— The State's projected annual required contribution (ARC) for OPEB as of fiscal year 2016.
$450 million
— The reduction in the State's OPEB liability from eliminating Medicare Part B premium reimbursements for high earners.
$17.6 billion
— The reduction in the State's OPEB liability from creating tiered cost-sharing for future retirees.
New York State should actively save for its Other Post Employment Benefits (OPEB) liabilities by dedicating one-time financial settlements to the fund rather than leaving it empty. Additionally, the state should control rising retiree health care costs by implementing tiered premium contributions based on years of service and discontinuing reimbursements for high-income retirees.
Recommendations related to Other postemployment benefits (OPEB)
The State should save for its OPEB liabilities.
Dedicating one-time settlements to funding Other Post Employment Benefits (OPEB) would provide long-term savings for the state’s taxpayers.
The proposed measures to increase retiree health insurance premium-sharing are reasonable and necessary steps to control these expenses.
Key Data
$170,000
— Income threshold for couples above which IRMAA reimbursements are discontinued.
50 percent
— Maximum share of single coverage premiums for which retirees with 10 years of service would be responsible.
10 percent
— Minimum share of single coverage premiums for which retirees with more than 30 years of service would be responsible.
On February 22, 2017, New York State Budget Director Robert Mujica presented highlights from the New York State Executive Budget for Fiscal Year 2018 to the Citizens Budget Commission.
The Metropolitan Transportation Authority faces a projected deficit exceeding $2.7 billion in 2017 when accounting for non-cash expenses like depreciation and unfunded retiree health care liabilities. To address these financial pressures, the agency is encouraged to reduce these obligations through future collective bargaining while adjusting fare and toll structures to better align with operating expenses.
Recommendations related to Other postemployment benefits (OPEB)
The MTA should seek to reduce the unfunded liabilities related to other postemployment benefits (OPEB) through future collective bargaining.
Key Data
42 percent
— The increase in fringe benefits for employees and retirees over the period since the MTA implemented a fare increase in 2009, which includes **other postemployment benefits (OPEB)**.
$2.7 billion
— The expected MTA deficit in 2017 using Generally Accepted Accounting Principles (GAAP), which includes non-cash expenses of depreciation and **unfunded liabilities related to other postemployment benefits (OPEB)**.
The Metropolitan Transportation Authority faces a significant financial challenge with nearly $14 billion in unfunded other postemployment benefit (OPEB) liabilities as of March 2016, with assets covering less than 2 percent of this total. While the agency plans to make $57 million in trust fund deposits between 2018 and 2020, this amount is insufficient to address the scale of the obligation, necessitating a strategy to increase funding and potentially share health insurance costs with retirees.
Recommendations related to Other postemployment benefits (OPEB)
The MTA should set aside additional resources for the agency’s OPEB trust fund before finalizing its budget proposal.
The MTA should seek reductions in OPEB funding obligations by requiring current and future retirees to share the cost of health insurance premiums.
Key Data
$14 billion
— The MTA’s total OPEB liability as of March 31, 2016.
2%
— The portion of the total outstanding OPEB liability covered by the MTA’s assets.
$608 million
— The amount listed in the financial plan for the 2017 OPEB current payment for retiree health insurance.
$57 million
— The amount planned for deposits into the OPEB trust fund from 2018 to 2020.
New York City faces a $70 billion liability for retiree health benefits, which are largely unfunded and currently rely on a pay-as-you-go approach. To address this, the city must establish explicit guidelines for the Retiree Health Benefits Trust to ensure consistent contributions and protect the fund from being used for other budget relief.
Recommendations related to Other postemployment benefits (OPEB)
Building the resources necessary to tackle the OPEB liability will require consistent contributions and a commitment to protect these gains.
The City should establish explicit guidelines requiring annual deposits and limiting withdrawals only to special circumstances, such as when there are unexpected spikes in retiree health insurance premiums.
Deposits should be calculated based on a share of the annual cost of retiree health benefits.
Mayor de Blasio and the City Council should adopt explicit guidelines as part of the imminent budget agreement.
Key Data
$70 billion
— The total liability for New York City retiree health insurance costs and other post-employment benefits.
$3.7 billion
— The highest balance ever reached by the Retiree Health Benefits Trust.
4 percent
— The portion of the outstanding OPEB liability currently covered by the trust fund.
$2.5 billion
— The initial amount deposited into the Retiree Health Benefits Trust in fiscal years 2006 and 2007.
$2.2 billion
— The amount the city depleted from the trust fund between 2010 and 2014.
$100 million
— The estimated deposit required in fiscal year 2017 if a 5 percent contribution rate were implemented.
New York State's retiree health insurance benefits are significantly more generous than private and most public sector norms, with costs projected to rise to $1.7 billion by fiscal year 2020. To address this, the state should adopt proposed reforms to Medicare premium reimbursements and premium subsidies, which could reduce the $63 billion long-term unfunded liability by approximately $17.5 billion.
Recommendations related to Other postemployment benefits (OPEB)
The Legislature should adopt the Governor’s Executive Budget proposal to reduce the growing costs of retiree health insurance benefits.
The State should end reimbursement for the Income Related Monthly Adjustment Amount (IRMAA), as paying for this additional Medicare premium provides higher income individuals with a larger subsidy than lower income retirees.
The State should freeze reimbursement for the regular Medicare Part B premium at the 2015 rate of $105 monthly.
The State should moderately reduce the premium subsidy for retirees with less than 30 years of service, while retaining current subsidies for those retiring with at least 30 years of service.
Key Data
$1.3 billion
— Cost to taxpayers for retiree health benefits in fiscal year 2016.
$1.7 billion
— Projected cost of retiree health benefits by fiscal year 2020.
$63 billion
— State's long-term unfunded liability for future retiree health benefits.
$17.5 billion
— Potential reduction in the state's long-term unfunded liability for retiree health benefits.
$6 million
— Annual savings from ending reimbursement for the Income Related Monthly Adjustment Amount (IRMAA).
$25 million
— Estimated savings in fiscal year 2020 from reducing premium subsidies for retirees with less than 30 years of service.
The Metropolitan Transportation Authority's financial plan relies on optimistic economic growth projections, leaving it vulnerable to significant revenue shortfalls in the event of a recession. To mitigate these risks, the agency should implement more cautious revenue assumptions, establish a robust rainy day fund, and restrict the diversion of funds designated for other postemployment benefits (OPEB) and capital projects.
Recommendations related to Other postemployment benefits (OPEB)
Greater restrictions on diversion of OPEB funding and a firmer commitment to PAYGO capital allocations would reduce the risks associated with reallocation of those items.
It is desirable and feasible to reduce the OPEB liability by reforming retiree health benefits.
Key Data
$20 billion
— The current unfunded OPEB liability of the MTA.
$1.5 billion
— The amount the unfunded OPEB liability would grow annually without any future funding.
$787 million
— The amount previously set aside to reduce future retiree health benefit costs that was reallocated.
$246 million
— The amount currently in the fund for OPEB purposes.
$28 million
— The total of modest increments added to the OPEB fund in the coming years.
New York City's health insurance costs doubled between fiscal year 2005 and 2015, reaching $5.3 billion and accounting for 6.7 percent of the city budget. While a $3.4 billion savings agreement was established with the Municipal Labor Committee, current savings are largely attributed to lower-than-expected premium increases rather than specific initiatives to improve health care delivery.
Recommendations related to Other postemployment benefits (OPEB)
Initiatives should "bend the cost curve" and achieve recurring savings for City taxpayers by establishing premium-sharing, reducing per enrollee utilization, managing chronic conditions, or lowering provider payments.
Savings should be counted clearly and honestly, ensuring that lower national health care inflation or temporary premium rate freezes are not credited as savings gained under the agreement.
The City should pursue initiatives such as reducing emergency room utilization and improving chronic disease management as the basis for meeting established health savings targets.
Key Data
$2.6 billion
— FY 2005 health insurance cost
$5.3 billion
— FY 2015 health insurance cost
6.7 percent
— Portion of the 2015 budget comprised by health insurance costs
$3.4 billion
— Total savings target between fiscal year 2015 and 2018
The Metropolitan Transportation Authority faces significant financial strain due to the inclusion of Other Post-Employment Benefits (OPEB) as a current expense, with unfunded liabilities reaching $17.8 billion by the end of 2011. To address these fiscal challenges, the proposed financing strategy suggests that funding half of the annual OPEB liability is a practical approach for the agency.
Recommendations related to Other postemployment benefits (OPEB)
The MTA should adopt current funding of half the OPEB liability as a practical approach.
Public officials should seek in collective bargaining to reduce funding obligations for current and future retirees by requiring more cost sharing for premiums from the retirees.
Not fully funding OPEB liabilities can be justified as a reasonable fiscal strategy.
Key Data
$17.8 billion
— Cumulative unfunded OPEB liability for the MTA as of the end of 2011.
$2 billion
— Projected deferred OPEB obligations for the MTA in 2016.
$34 billion
— Total shortfall in annual funding for OPEB obligations across all states in 2010.
$17 billion
— Amount states paid of the $51 billion in OPEB liability accrued in 2010.
$77 million to $92 million
— Annual deposits budgeted in the July 2012 Financial Plan to help cover OPEB obligations.
$1 billion
— Amount that deferred OPEB obligations typically exceed annually.
The New York City Health and Hospitals Corporation faces significant long-term financial liabilities, including $316 million in unfunded actuarial costs for other postemployment benefits (OPEB) in fiscal year 2014. These obligations are part of a broader fiscal challenge where fringe benefits, including pensions and health insurance, are projected to grow to $4.4 billion by fiscal year 2018.
Key Data
$316 million
— The unfunded actuarial cost of other postemployment benefits (OPEB) in fiscal year 2014.
$4.0 billion
— The amount allocated for salaries and fringe benefits, including pensions, health insurance, and other postemployment benefits (OPEB) in fiscal year 2014.
$4.4 billion
— The projected cost for salaries and fringe benefits, including pensions, health insurance, and other postemployment benefits (OPEB) in fiscal year 2018.
New York faces a significant $66.5 billion unfunded liability for retiree health insurance, known as OPEB. To address this looming fiscal challenge, the state should establish a dedicated retiree health insurance trust fund to generate investment returns, similar to the model used by New York City.
Recommendations related to Other postemployment benefits (OPEB)
The state should establish a retiree health insurance trust fund similar to the one maintained by New York City to help improve the looming fiscal crunch represented by unfunded OPEB liabilities.
Key Data
$66.5 billion
— New York's estimated unfunded liability for other postemployment benefits (OPEB).
The Metropolitan Transportation Authority's reliance on cash-based budgeting rather than Generally Accepted Accounting Principles (GAAP) obscures significant long-term fiscal liabilities, including $10 billion in unfunded Other Post-Employment Benefits (OPEB) as of 2013. To ensure future fiscal viability, the agency must transition to GAAP-based budgeting to properly account for and fund these substantial future obligations.
Recommendations related to Other postemployment benefits (OPEB)
A reinvented MTA should balance its budget on a GAAP basis to account for non-cash expenditures like Other Post-Employment Benefits.
The MTA must fund OPEB obligations to avoid leaving the organization vulnerable to large future payments that can be a debilitating drain on its resources.
Key Data
$1.3 billion
— The MTA's unfunded OPEB liability when first reported in 2007.
$10 billion
— The MTA's unfunded OPEB liability at the end of 2013.
$2.1 billion
— The MTA's GAAP-based annual deficit in 2007, the year OPEB obligations were first required to be reported.
New York City's fiscal year 2015 budget includes a $2 billion balance in the Retiree Health Benefits Trust, which was replenished to address the city's $90 billion unfunded liability for future retiree health insurance benefits. To protect these funds from future depletion, the administration should establish clear guidelines for regular deposits and potential withdrawals.
Recommendations related to Other postemployment benefits (OPEB)
The de Blasio Administration should develop guidelines for regular deposits to and potential withdrawals from the Retiree Health Benefits Trust to prevent future raids on the fund.
Key Data
$90 billion
— The city's unfunded liability for future health insurance benefits for retirees, known as other post-employment benefits (OPEB).
$2 billion
— The current balance of the Retiree Health Benefits Trust fund.
$864 million
— The amount added to the Retiree Health Benefits Trust fund under the de Blasio administration.
New York City's unfunded liability for retiree health insurance and other post-employment benefits has reached $83 billion, creating a significant long-term financial burden. Implementing premium-sharing for employees and retirees, alongside the elimination of Medicare Part B reimbursements, could generate $1.8 billion in annual savings by fiscal year 2014.
Recommendations related to Other postemployment benefits (OPEB)
The City should implement premium-sharing by employees to align with private sector and municipal government standards, which would generate significant annual savings.
The City should require premium-sharing by retirees, as few private sector employers offer retiree health insurance and public sector peers typically require higher contributions.
The City should eliminate Medicare Part B reimbursement for retirees and their spouses, as this practice is rare among other state and local governments.
Key Data
$83 billion
— The estimated unfunded liability for retiree health insurance and other post-employment benefits (OPEB) in New York City.
$55 billion
— The estimated unfunded liability for retiree health insurance and other post-employment benefits (OPEB) five years prior to the $83 billion figure.
$1.8 billion
— The total savings in fiscal year 2014 if employee premium-sharing, retiree premium-sharing, and the elimination of Medicare Part B reimbursement are implemented.
$2.2 billion
— The projected total savings in fiscal year 2016 if the proposed health insurance reforms are adopted.
$280 million
— The savings generated by eliminating Medicare Part B reimbursement entirely.
$45 million
— The savings generated by eliminating spousal Medicare Part B reimbursement.
New York State's outstanding Other Post-Employment Benefits (OPEB) liabilities grew significantly from $41.4 billion in 2008 to $59.7 billion in 2010, though recent premium-sharing arrangements helped reduce this burden to $54.3 billion by 2012. To further address these rising costs, the state budget should adopt the Governor's proposal to eliminate supplemental Medicare Part B premium reimbursements for higher-income retirees.
Recommendations related to Other postemployment benefits (OPEB)
The budget should include the Governor’s proposal to eliminate reimbursement for the portion of the Part B premium above the minimum level that is tied to income above $85,000 for singles and $170,000 for couples.
The state should fully eliminate Part B premium reimbursement for retirees to address outstanding OPEB liabilities.
Key Data
$41.4 billion
— New York State reported OPEB liabilities in 2008.
$59.7 billion
— New York State reported OPEB liabilities in 2010.
$54.3 billion
— Outstanding OPEB liability in 2012 after new premium-sharing arrangements took effect.
$4 billion
— Reduction in outstanding OPEB liability by 2012 following new premium-sharing arrangements.
$1.7 million
— Estimated savings in fiscal year 2014-15 from eliminating supplemental Medicare Part B premium reimbursement for higher-income retirees.
$7.0 million
— Estimated savings in fiscal year 2017-18 from eliminating supplemental Medicare Part B premium reimbursement for higher-income retirees.
Mayor de Blasio's preliminary budget for fiscal year 2015 restores $1 billion to the Retiree Health Benefits Trust Fund, which was created to address the city's $92.5 billion retiree health liability. Future withdrawals from this fund should be prohibited until clear guidelines for its use are established to ensure it is not used merely to balance the budget.
Recommendations related to Other postemployment benefits (OPEB)
No further withdrawals from the Retiree Health Benefits Trust Fund should occur unless and until clear guidelines for its use have been established.
Key Data
$1 billion
— Amount of additional tax revenue in the current fiscal year used to restore the Retiree Health Benefits Trust Fund.
$92.5 billion
— The City's total retiree health liability that the Retiree Health Benefits Trust Fund was established to help fund.
New York City has depleted the Retiree Health Benefits Trust Fund to balance its fiscal year 2014 budget, leaving no reserves to address the city's $85 billion unfunded liability for retiree health benefits. This depletion marks the end of a fund originally established in 2006 to manage these long-term obligations.
Key Data
$85 billion
— The City's total unfunded liability for retiree health benefits.
$1 billion
— Amount withdrawn from the Retiree Health Benefits Trust Fund to balance the fiscal year 2014 budget.
Eliminating the reimbursement of additional Medicare Part B premiums for high-income retirees would help lower the costs of providing health insurance to former employees. This policy change is intended to reduce the state's long-term accrued liability for other post-employment benefits.
Recommendations related to Other postemployment benefits (OPEB)
The state should eliminate reimbursement for the additional Medicare Part B premium for high-income participants to reduce the State’s accrued Other Post-Employment Benefits liability.
Key Data
5
— Number of states, including New York, that reimburse most or all of the additional Medicare Part B premiums for retirees.
New York City's health insurance costs for employees and retirees have more than doubled in a decade, contributing to an $83 billion unfunded liability for post-employment benefits. Implementing premium-sharing for employees and retirees, alongside eliminating Medicare Part B reimbursements, could generate billions in savings and align the city with national standards.
Recommendations related to Other postemployment benefits (OPEB)
The City should implement premium-sharing for employees, with a target of 10 percent for single coverage and 25 percent for family coverage, to align with national norms.
The City should require premium-sharing by retirees, specifically a 50 percent contribution, to reduce the taxpayer burden and address long-term financial obligations.
The City should eliminate the reimbursement for Medicare Part B premiums for retirees and their spouses to reduce annual expenditures.
Key Data
$83 billion
— The estimated unfunded liability for retiree health insurance and other post-employment benefits (OPEB).
$55 billion
— The previous estimate of the unfunded OPEB liability just five years prior to the $83 billion figure.
$1.8 billion
— The total savings in fiscal year 2014 if the proposed employee and retiree premium-sharing and Medicare Part B reimbursement elimination are adopted.
$2.2 billion
— The total savings in fiscal year 2016 if the proposed employee and retiree premium-sharing and Medicare Part B reimbursement elimination are adopted.
$280 million
— The cost to the City in fiscal year 2013 for reimbursing retirees and their spouses for the full out-of-pocket cost of Medicare Part B premiums.
$1.4 billion
— The cost to the City for retiree health insurance premiums in fiscal year 2013.
The Metropolitan Transportation Authority faces significant financial challenges, including large recurring deficits driven by rising costs for debt service and other postemployment benefits (OPEB). To address these issues, a new financing formula is proposed that balances costs among transit riders, motorists, and taxpayers, while also advocating for partial funding of OPEB liabilities.
Recommendations related to Other postemployment benefits (OPEB)
The MTA should adopt a policy of funding half of its annual OPEB liability as a practical approach for budgeting purposes.
Public officials should seek in collective bargaining to reduce funding obligations for current and future retirees by requiring more cost sharing for premiums from the retirees.
Key Data
$17.8 billion
— Cumulative unfunded OPEB liability as of the end of 2011.
$77 million to $92 million
— Annual deposits budgeted to the OPEB trust fund in the July 2012 Financial Plan.
$1 billion
— Amount that deferred OPEB obligations typically exceed annually.
$34 billion
— Total shortfall in annual OPEB funding for states in 2010.
$17 billion
— Amount states paid of the $51 billion in OPEB liability accrued in 2010.
Local governments should stop borrowing to cover separation costs like accrued sick leave and vacation days, as these liabilities mirror the much larger and often unfunded obligations for retiree health insurance, known as other postemployment benefits (OPEB), which reached $83.9 billion in New York City alone by 2011. To prevent future fiscal crises, the state should mandate that localities build reserves to fund these accrued liabilities rather than relying on ad hoc borrowing.
Recommendations related to Other postemployment benefits (OPEB)
The Legislature should establish standards for funding more adequately future separation costs and OPEB liabilities among all localities and the State itself.
Towns, cities and villages should be required to fund at least partially their accrued liabilities for separation costs and OPEB.
State officials should develop alternatives to borrowing to cope with the underlying problem of accrued liabilities for separation costs and OPEB.
Preventive policies should be implemented, such as tighter limits on the amount of unused sick leave that can be converted to cash payments.
Preventive policies should be implemented, such as not allowing the lifetime accrual of vacation days.
Key Data
$83.9 billion
— NYC's OPEB liability at the end of the 2011 fiscal year.
$10.6 billion
— NY State's OPEB liability at the end of the 2011 fiscal year.
$3.9 billion
— NYC's accrued liability for vacation and sick leave at the end of the 2011 fiscal year.
$1.2 billion
— NY State's accrued liability for vacation and sick leave at the end of the 2011 fiscal year.
$1.8 million
— Separation costs generated by the retirement of six police officers in Glen Cove.
4%
— Percentage of Glen Cove's $46.6 million annual budget consumed by the retirement of six police officers.
Proposed legislation aims to expand retiree health insurance protections by prohibiting the reduction of benefits and employer contributions for various public employee groups. Specific bills also seek to lower the vesting period for MTA NYC Transit employees from 25 years to 10 years and increase Medicare Part B reimbursement to 100%.
Key Data
10 years
— The proposed vesting period for MTA NYC Transit employees to qualify for retirement health care coverage.
25 years
— The current vesting period for MTA NYC Transit employees to qualify for retirement health care coverage.
100%
— The proposed reimbursement rate for MTA employees' Medicare Part B expenses.
50%
— The current reimbursement rate for MTA employees' Medicare Part B expenses.
New York City's accounting practices have historically masked significant deficits by excluding long-term liabilities like Other Post-Employment Benefits (OPEB) from its balanced budget definition. Adopting more comprehensive accounting standards that recognize these future obligations is essential to ensure current residents do not unfairly impose financial burdens on future generations.
Recommendations related to Other postemployment benefits (OPEB)
New Yorkers should give much more attention to the financial results disclosed under the new GAAP rules to better understand the city's true fiscal condition.
Municipal leaders should move from the current self-deluding standard for a balanced budget to a more meaningful one that accounts for long-term liabilities like OPEB.
The city should adopt the third definition of a balanced budget as the appropriate framework for determining whether current residents are imposing a burden on future New Yorkers.
Key Data
$53.3 billion
— The added expense recognized in fiscal year 2006 when the accumulated liability for Other Post-Employment Benefits (OPEB) was first reported.
$2.3 billion
— The low end of the annual increment for OPEB expenses in the years following the initial recognition of the liability.
$9.4 billion
— The high end of the annual increment for OPEB expenses in the years following the initial recognition of the liability.
New York City could achieve significant fiscal savings by reforming retiree health insurance benefits, specifically by requiring retirees to contribute to premium costs and ending the reimbursement of Medicare Part B premiums. These measures would generate substantial budget relief, with ending Medicare Part B reimbursements alone saving $250 million in fiscal year 2012.
Recommendations related to Other postemployment benefits (OPEB)
Require retirees to pay 50 percent of their premium cost.
End reimbursement of Medicare Part B premiums for retirees over the age of 65.
Key Data
$700 million
— Savings in fiscal year 2012 from requiring a 50 percent premium contribution by retirees.
$250 million
— Savings in fiscal year 2012 from ending the reimbursement of Medicare Part B premiums for retirees.
New York City faces a $70 billion unfunded liability for retiree health benefits, with annual costs projected to reach $2.2 billion by 2015. To address this fiscal challenge without depleting the dedicated trust fund, the City should eliminate Medicare Part B premium reimbursements and implement premium-sharing requirements for retirees.
Recommendations related to Other postemployment benefits (OPEB)
The City should eliminate reimbursement of Medicare Part B premiums to generate recurring savings.
The City should protect the retiree health insurance trust fund from any further drawdowns, including those already scheduled.
The City should increase vesting requirements for retiree health insurance benefits for the rest of the public workforce.
The City should institute premium sharing for retiree health insurance, requiring retirees to contribute to the cost of their premiums.
Key Data
$70 billion
— The unfunded accrued liability for retiree health benefits.
$1.5 billion
— The cost of retiree health insurance in the current year.
$2.2 billion
— Projected cost of retiree health insurance by 2015.
150 percent
— The ten-year growth of retiree health insurance costs.
$3.2 billion
— Total resources in the retiree health insurance trust fund by fiscal year 2009.
$975 million
— The combined value of savings in fiscal year 2012 from eliminating Medicare Part B reimbursement and instituting premium sharing.
New York State and City should eliminate the reimbursement of Medicare Part B premiums for retirees, a costly fringe benefit rarely offered by other public or private employers. Additionally, increasing retiree health insurance premiums to 50 percent of the total cost would help mitigate the burden of rapidly escalating expenses.
Recommendations related to Other postemployment benefits (OPEB)
New York State and City should eliminate the public employee fringe benefit of reimbursement for Medicare Part B premiums.
The State and the City should increase premiums for retiree health insurance to 50 percent of the cost to relieve the burdens of rampant cost escalations.
Key Data
$140 million
— Total costs of State Medicare Part B reimbursements in fiscal year 2010.
$213 million
— Total costs of New York City Medicare Part B reimbursements in fiscal year 2010.
$312 million
— Projected cost of New York City Medicare Part B reimbursements by 2014.
$20 million
— Minor relief provided by the State limiting reimbursements to 90 percent for individual coverage and 75 percent for family coverage.
3,000
— Number of State retirees receiving higher Medicare Part B reimbursements.
4,500
— Number of City retirees receiving higher Medicare Part B reimbursements.
New York faces significant financial pressure from public employee retirement benefits, with unfunded liabilities for retiree health insurance reaching $56 billion for the state and nearly $1 billion in Rochester. Taxpayers currently cover at least three-quarters of the cost for these health insurance premiums, contributing to a broader fiscal challenge that threatens the future provision of essential public services.
Key Data
$56 billion
— The unfunded liability for retiree health insurance benefits for New York State.
almost $1 billion
— The unfunded liability for retiree health insurance benefits in Rochester.
three-quarters
— The portion of retiree health insurance premium costs borne by taxpayers.
New York City faces a $9.4 billion expense for other postemployment benefits (OPEB), which covers retiree health insurance and has grown significantly due to new federal and state mandates. To manage these rising liabilities, the city should implement retiree premium-sharing and establish a formal, protected funding policy for future obligations.
Recommendations related to Other postemployment benefits (OPEB)
The City should require greater retiree contributions toward health insurance premiums to control the fiscal impacts of rising OPEB costs.
Municipal officials should establish a program for funding the future liabilities associated with retiree health benefits.
The City should institute premium-sharing for retirees, with an appropriate goal of having retirees pay 50 percent of their premiums.
The Mayor and the City Council should agree to a policy that determines the basis for future contributions and limits the conditions and purposes of future withdrawals from the Retiree Health Benefits Trust.
Key Data
$9.4 billion
— New York City's recognized expense for other postemployment benefits (OPEB) in fiscal year 2010.
$2.3 billion
— The OPEB expense incurred by New York City in fiscal year 2009.
$1.6 billion
— Premium payments made by the City for retiree health insurance in fiscal year 2010.
$2.4 billion
— Projected premium payments for retiree health insurance by 2014.
$11 billion
— The actuarially determined contribution needed for the City to fully fund its 2010 OPEB obligation.
$2.5 billion
— Total amount deposited into the Retiree Health Benefits Trust (RHBT) fund over fiscal years 2006 and 2007.
New York City's fiscal year 2011 budget relies on depleting past surpluses to cover rising expenditures, necessitating significant agency cuts and service reductions. To address long-term fiscal challenges, the city should reform public employee fringe benefits by aligning them with private sector standards and implementing higher contribution requirements for health care and pensions.
Recommendations related to Other postemployment benefits (OPEB)
The City should take a stronger stance on reforming health care and retirement benefits for its workers.
The City should bring public employee benefits more in line with those of the private sector to achieve significant savings.
The City should require employee contributions to health care premiums of 10 percent for individuals, 25 percent for families, and 50 percent for retirees to save over $1 billion annually.
The City should create a new pension tier that requires greater employee contributions and a longer vesting period to save $200 million annually.
Key Data
$1 billion
— Annual savings from requiring employee contributions to health care premiums of 10 percent for individuals, 25 percent for families, and 50 percent for retirees.
$200 million
— Annual savings from creating a new pension tier that requires greater employee contributions and a longer vesting period.
5%
— Average annual growth rate for city employee pension and fringe benefits during the plan years.
New York State faces significant long-term financial pressure, with its combined unfunded pension and other postemployment benefit (OPEB) liabilities reaching more than $48.1 billion. This debt burden, which ranks third highest in the nation, highlights the critical need for states to accurately measure and fully fund these long-term obligations to ensure fiscal sustainability.
Recommendations related to Other postemployment benefits (OPEB)
States should add unfunded pension obligations and unfunded obligations for other post-employment benefits (OPEB) to their bonded debt when assessing long-term financial health.
To exit the 'danger zone' threshold, New York would need to lower its long-term liabilities from the 2008 level of $120.0 billion by $20.4 billion.
Governments should work toward full funding of pension plans to avoid difficult budget choices in the future.
Key Data
$50.8 billion
— New York's unfunded OPEB liability, which ranks second only to California.
$48.1 billion
— New York's combined unfunded pension and OPEB liability, ranking third highest in the nation.
$600 billion to $1.6 trillion
— The estimated range of total unfunded OPEB liability for state and local pension plans in 2008.
New York City's budget relies on one-shot measures, such as a $395 million drawdown from a retiree health insurance trust fund, and fails to account for $200 million in new pollution-remediation operating expenses. Despite higher-than-expected tax revenue, the city must prioritize structural cost-cutting rather than relying on temporary fixes to address the projected $4.1 billion budget gap.
Recommendations related to Other postemployment benefits (OPEB)
The city should avoid using one-shot measures, such as the $395 million drawdown from a retiree health insurance trust fund, to balance the budget.
Key Data
$4.1 billion
— The currently projected budget gap for New York City.
$395 million
— The amount of the drawdown from a retiree health insurance trust fund used as a one-shot measure.
New York State's current budgetary process relies on an outdated General Fund construct that fails to capture the full scope of government spending and liabilities. To improve transparency and fiscal accuracy, the state should adopt a unified reporting approach that accounts for all governmental activities, including previously uncounted long-term retirement liabilities like Other Post Employment Benefits (OPEB).
Recommendations related to Other postemployment benefits (OPEB)
The basis for reporting and budget reform should be broadened to encompass all of the activities of state government, including a fuller accounting of long-term retirement liabilities that were previously uncounted (Other Post Employment Benefits, or OPEB).
The State should adopt a unified presentation that includes all funds used to support governmental activities, which requires a fuller accounting of the cost of using capital assets in the provision of services (depreciation) and of long-term retirement liabilities that were previously uncounted (Other Post Employment Benefits, or OPEB).
New York State should veto bill A4628, which prevents school districts from adjusting retiree health insurance benefits without union approval, as this mandate restricts local efforts to manage rising costs. Eliminating such costly mandates is essential to reducing the tax burden on residents and businesses during periods of fiscal hardship.
Recommendations related to Other postemployment benefits (OPEB)
We ask that you veto A4628, a bill that would renew the provision that prohibits school districts from reducing the health insurance benefits offered to retirees unless the changes are approved by the local teachers union.
State leaders should not stand in the way of school district managers that find ways to provide satisfactory benefits at reduced costs.
New York should, whenever the opportunity arises, roll back costly mandates regarding retiree health insurance benefits.
New York's state legislature passed a bill that prevents local officials from negotiating retiree health insurance benefits, effectively imposing an unfunded mandate that increases local tax burdens. Governor Paterson is urged to veto this legislation to restore local control over these escalating costs, which are tied to massive future liabilities.
Recommendations related to Other postemployment benefits (OPEB)
Governor David Paterson should veto the legislation (A9393A/S6457A) to prevent the imposition of an unfunded mandate on local governments.
Local government leaders should retain the flexibility in negotiating with unions to better manage the escalating expenses of retiree health insurance.
The state should allow retiree benefits to be negotiated between local governments and local unions rather than having them decreed by state officials.
Key Data
79%
— New York's local taxes are 79% above the national average statewide.
$49.7 billion
— The state's liability for government retiree health insurance is estimated at $49.7 billion.
$57.8 billion
— New York City's liability for government retiree health insurance is estimated at $57.8 billion.
New York City and State retirement benefits, including pensions and retiree health insurance, have become increasingly expensive and generous compared to private sector standards, necessitating a redesign to ensure long-term fiscal sustainability. The proposed reforms include shifting to defined contribution plans, increasing employee contributions, raising retirement age requirements, and reducing the government's share of retiree health insurance premiums.
Recommendations related to Other postemployment benefits (OPEB)
Require retirees to pay 50 percent of the premium for health insurance for themselves and their dependents.
Stop reimbursing retirees for Medicare Part B premiums, as this practice is out-of-line with benefits provided by other large employers.
The long-run goal of pension reform should be to convert from defined benefit to defined contribution plans.
The New York systems should increase required employee contributions and not limit them to ten years.
The New York system should raise the minimum age requirement for retirement to align with federal Social Security thresholds.
The pension systems should base pension benefits on a more standard definition of final average salary, excluding overtime and other supplements.
The current system should define work-related disabilities more rigorously to set more standard criteria.
The City should eliminate the variable supplements available to some retired New York City uniformed workers.
Key Data
$4.7 billion
— Projected required City pension fund contributions for fiscal year 2008.
$1.4 billion
— Projected required State pension fund contributions for fiscal year 2008.
$6.3 billion
— Projected combined cost of health insurance for the City and State in 2008.
$325 million
— Estimated savings for the City in fiscal year 2004 had a 50 percent retiree health insurance premium contribution policy been in effect.
$131 million
— Estimated savings for the City in 2004 if it stopped reimbursing retirees for Medicare Part B premiums.
$12,000
— The amount of the annual variable supplement payment, or 'Christmas bonus,' for some retired New York City uniformed workers.
No results for your current filters. Manually edit your filters, or
clear the filters.
Share Feedback
Give a star rating, write a comment of at least 10 words, or both.
