The Retiree Health Benefits Trust is a fund established by New York City to help finance the long-term costs of health insurance and other post-employment benefits provided to retired municipal employees. This page covers CBC’s work on the trust's funding levels, the city’s unfunded retiree health liabilities, the use of trust assets for budget relief, proposals for mandatory deposit policies, and strategies for reforming retiree health benefit costs.
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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.
The Charter also 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 be amended to mandate the Retiree Health Benefits Trust (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
As of June 2024, New York City's other postemployment benefits (OPEB) liability totaled $100.3 billion, while the RHBT balance of $4.8 billion covered only 4.8% of that liability.
A June 2024 memorandum highlighted that funding the actuarially estimated normal cost of future benefits would require an annual additional deposit of $3.7 billion.
In 2006, the City created the Retiree Health Benefits Trust (RHBT) in local law to pay the current-year cost of retiree benefits and accumulate resources for future payments.
In June 2022, the City's adopted budget reflected a $750 million deposit into the RHBT to set aside funds for future liabilities rather than current-year spending.
In April 2020, during the fiscal crisis triggered by the pandemic, the City's Executive Budget relied on diverting $2.6 billion from the RHBT to help balance the budget.
The Retiree Health Benefits Trust currently holds $4.8 billion, covering only 4.8 percent of the city's $100.3 billion liability for retiree health and other postemployment benefits. To ensure long-term fiscal health, the City Charter should be revised to mandate annual deposits into the trust and restrict withdrawals strictly to the cost of current-year retiree health benefits.
Recommendations related to Retiree Health Benefits Trust (RHBT)
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.
The Charter also 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
— Total OPEB liability that the City needs to offset.
$4.8 billion
— Current balance of the Retiree Health Benefits Trust.
4.8 percent
— Portion of the total OPEB liability covered by the current RHBT balance.
$3.7 billion
— Annual additional deposit required to fund the normal cost of future benefits.
The New York State Fiscal Year 2024 Executive Budget utilizes a portion of the projected $8.7 Billion fiscal year 2023 surplus to accelerate $600 Million in deposits into the Retiree Health Benefit Trust. This allocation represents 7% of the total surplus funds designated for prepaying planned reserve deposits and debt service costs.
Key Data
$600 Million
— The amount of the fiscal year 2023 surplus proposed to accelerate planned Retiree Health Benefit Trust deposits, representing 7% of the total surplus funds designated for prepayments.
With New York City experiencing $4.5 billion in unexpected revenues for fiscal years 2022 and 2023, city leaders are urged to use these temporary resources to strengthen long-term fiscal health rather than expanding recurring programs. Specifically, these funds should be used to deposit $2.3 billion into the Rainy Day Fund, add $1.7 billion to the labor reserve, and direct the remaining resources toward one-time actions like building up the Retiree Health Benefit Trust.
Recommendations related to Retiree Health Benefits Trust (RHBT)
The City should use remaining non-recurring resources for pay-as-you-go capital programs, to build up the Retiree Health Benefit Trust fund, or other one-time actions.
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 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 City is utilizing $1.6 billion from the Retiree Health Benefits Trust to help balance the fiscal year 2021 budget amidst a significant decline in tax revenue. This reliance on non-recurring resources, including the trust fund, contributes to a projected $5 billion budget gap for fiscal year 2022 that will require future resolution.
Key Data
$1.6 billion
— Resources used from the Retiree Health Benefits Trust to support the fiscal year 2021 budget.
$4.2 billion
— Fiscal year 2021 expenses prepaid in fiscal year 2020, made possible by tapping the Retiree Health Benefits Trust.
New York City's fiscal year 2021 executive budget addresses the economic crisis by diverting $2.6 billion from the Retiree Health Benefits Trust and $1.4 billion from other reserves. While these actions provide a necessary bridge, they lack long-term recurring value and leave a looming $5.0 billion gap in fiscal year 2022.
Key Data
$2.6 billion
— amount diverted from the Retiree Health Benefits Trust (RHBT) in the fiscal year 2021 executive budget
Using funds from the Retiree Health Benefits Trust to address immediate budget gaps is a short-sighted strategy that fails to improve long-term fiscal stability. Instead, the city should prioritize generating recurring savings through increased efficiency and reduced non-critical spending to manage the economic impact of the pandemic.
Recommendations related to Retiree Health Benefits Trust (RHBT)
The city should avoid using funds from the Retiree Health Benefits Trust, as it is a short-sighted measure that does little to improve the soundness of city finances.
The Fiscal Year 2020 Adopted Budget includes a $100 million deposit into the Retiree Health Benefits Trust (RHBT), continuing a practice of annual contributions that began in 2014. While this action is considered prudent, the budget agreement prioritizes service expansion and new spending initiatives over further strengthening the City's fiscal reserves.
Key Data
$100 million
— The amount added to the Retiree Health Benefits Trust (RHBT) in the Fiscal Year 2020 Adopted Budget.
New York City should establish a formal Rainy Day Fund to manage economic downturns, as the current practice of using the Retiree Health Benefits Trust as a de facto reserve fund is unfair to future generations. A well-designed fund could help mitigate the impact of a projected three-year revenue shortfall from a recession, which could reach $15 billion to $20 billion.
New York City's Retiree Health Benefits Trust should be preserved exclusively for its intended purpose of funding future retiree health costs rather than being misclassified as general budget reserves. Miscounting these dedicated funds as available reserves obscures the city's true financial position in the event of an economic downturn.
Recommendations related to Retiree Health Benefits Trust (RHBT)
The city should ensure that the Retiree Health Benefits Trust fund is saved for its designed purpose—to pay future retiree health costs—and not be considered reserves to be used if the economy contracts.
New York City maintains a Retiree Health Benefits Trust valued at $4.5 billion to address long-term obligations. This fund serves as a component of the city's broader financial planning and liability management strategy.
Key Data
$4.5 Billion
— The amount held in the Retiree Health Benefits Trust.
The Retiree Health Benefits Trust (RHBT) has been inconsistently funded and used as a de facto rainy day fund, with its balance fluctuating significantly between 2008 and 2013. To ensure long-term fiscal health, the Charter should be amended to mandate the fund, require consistent annual deposits, and restrict disbursements to the actual cost of retiree health and welfare benefits.
Recommendations related to Retiree Health Benefits Trust (RHBT)
The Charter should be amended to mandate the Retiree Health Benefits Trust (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
$3.2 billion
— RHBT balance in fiscal year 2008.
$1.4 billion
— RHBT balance in fiscal year 2013.
$4.5 billion
— Current RHBT balance.
4.4 percent
— RHBT balance as a percentage of the $103.3 billion liability at the end of fiscal year 2018.
$103.3 billion
— OPEB liability at the end of fiscal year 2018.
$4.9 billion
— Normal cost of the OPEB benefit in fiscal year 2018.
New York City's Retiree Health Benefits Trust has reached a record $4.8 billion, yet the city's long-term unfunded liability for retiree health insurance and other postemployment benefits remains nearly $100 billion. To address this significant fiscal threat, the city should increase its annual deposits to the trust beyond the $100 million levels seen in recent years.
Recommendations related to Retiree Health Benefits Trust (RHBT)
The City should plan for annual deposits to the Retiree Health Benefits Trust at higher levels in each year of the financial plan.
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.
nearly $100 billion
— Long-term unfunded liability for retiree health insurance and other postemployment benefits, excluding pensions.
New York City faces a massive $88.4 billion unfunded liability for retiree health benefits, yet the Retiree Health Benefits Trust lacks a formal policy to mandate deposits or limit withdrawals, often functioning merely as a rainy day fund. To address this, the city should implement a strategy to prefund these liabilities, including cutting costs by 50 percent through measures like premium sharing and eliminating Medicare Part B reimbursements.
Recommendations related to Retiree Health Benefits Trust (RHBT)
The city should establish a policy for deposits and withdrawals to the Retiree Health Benefits Trust, ensuring deposits equal or exceed the current year pay-as-you-go cost plus the annual service cost.
Withdrawals from the Retiree Health Benefits Trust should be strictly limited to paying annual costs, rather than treating the fund as a rainy day reserve.
The city should establish a goal of cutting retiree health benefit costs by 50 percent through actions such as implementing premium sharing, eliminating Medicare Part B reimbursement, and reducing welfare fund contributions.
Key Data
$88.4 billion
— The city's unfunded liability for other postemployment benefits (OPEB) at the end of fiscal year 2017.
$4.4 billion
— Total assets in the Retiree Health Benefits Trust as of fiscal year 2017.
$2.3 billion
— Amount paid from the city's annual budget for retiree health bills 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.
$2.5 billion
— Total contributions made to the Retiree Health Benefits Trust by the de Blasio Administration since fiscal year 2014.
The City's Retiree Health Benefit Trust (RHBT) currently holds a balance of $4.35 billion, which covers less than 5 percent of the $93 billion liability for providing retiree health insurance. To address this, the City should implement a policy to increase the size of the RHBT to better fund these long-term obligations.
Recommendations related to Retiree Health Benefits Trust (RHBT)
The City should develop a policy to increase the size of the RHBT to fund this liability.
Key Data
$100 million
— Deposit made into the Retiree Health Benefit Trust (RHBT) in the fiscal year 2019 budget.
$93 billion
— Total liability for providing health insurance to City retirees.
$4.35 billion
— Total balance of the Retiree Health Benefit Trust (RHBT).
5 percent
— Portion of the long-term retiree health insurance liability covered by the current RHBT balance.
$225 billion is the total amount added to reserves and the retiree health benefits trust fund in the recently adopted budget. In contrast, the City added more than $2 billion in new spending, far outpacing what was set aside. NYC Comptroller Scott Stringer joined the podcast to discuss the adequacy…
The City Council and Mayor should prioritize fiscal responsibility by making a deposit into the Retiree Health Benefits Trust Fund to address the city's $90 billion liability for public retiree health benefits. Maintaining this practice is essential for managing long-term fiscal burdens, especially given the fund's current balance of $4.25 billion.
Recommendations related to Retiree Health Benefits Trust (RHBT)
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.
The mayor and Council should continue the practice of making annual deposits to the Retiree Health Benefits Trust Fund to ensure the city remains on a path of fiscal responsibility.
Key Data
$90 billion
— The city's total obligation for the health benefits of public retirees.
$4.25 billion
— The current balance of the Retiree Health Benefits Trust Fund.
The New York City Preliminary Budget for Fiscal Year 2019 fails to make progress on building financial reserves, specifically neglecting to make any additions to the Retiree Health Benefit Trust. This budget approach continues a pattern of avoiding necessary fiscal adjustments despite ongoing concerns regarding spending growth and the precarious financial state of major city agencies.
New York State's $78 billion liability for retiree health benefits, the second largest in the nation, requires significant reform to ensure long-term fiscal stability. Adopting proposed cost-sharing measures and establishing a funded trust for these obligations would reduce the state's liability by approximately $28.2 billion.
Recommendations related to Retiree Health Benefits Trust (RHBT)
The Legislature should adopt the Executive Budget's proposals to reduce the State's OPEB liability and develop a plan to require regular deposits to the OPEB Trust Fund.
The State should develop a plan for making regular deposits into the OPEB Trust to ensure it effectively finances the liability.
The State should implement tiered cost-sharing for future retirees to align retiree health insurance with pensions and reduce long-term liabilities.
The State should eliminate additional Medicare Part B premium reimbursements for high earners to generate budget savings and reduce OPEB liability.
The State should freeze Medicare Part B premium reimbursements at 2015 levels for those enrolled in Medicare prior to January 1, 2016.
Key Data
$18.8 million
— Savings in fiscal year 2018 from the three proposals to reduce the State’s cost of providing retiree health insurance.
$78 billion
— Total OPEB liability for providing retiree health coverage to employees, retirees, and their dependents.
$1.3 billion
— Annual cost of the State's 'pay-as-you-go' approach to paying retiree health insurance premiums.
$450 million
— Reduction in the State’s OPEB liability from eliminating additional Medicare Part B premium reimbursements for high earners.
$10.6 billion
— Reduction in the State’s OPEB liability from freezing Medicare Part B premium reimbursements.
$17.6 billion
— Reduction in the State’s OPEB liability from creating tiered cost-sharing for future retirees.
New York City faces a $70 billion liability for retiree health insurance costs, yet the Retiree Health Benefits Trust currently holds only 4 percent of the necessary funds to cover these obligations. To ensure long-term fiscal stability, the city must establish explicit guidelines for consistent annual deposits and restrict withdrawals to prevent the fund from being used for general budget relief.
Recommendations related to Retiree Health Benefits Trust (RHBT)
Building the resources necessary to tackle the OPEB liability will require consistent contributions and a commitment to protect these gains.
There should be 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 City of New York's total liability for retiree health insurance costs and other post-employment benefits (OPEB).
$3.7 billion
— The projected highest balance ever for the Retiree Health Benefits Trust.
4 percent
— The portion of the outstanding OPEB liability currently covered by the fund.
$100 million
— The approximate deposit required in fiscal year 2017 based on a 5 percent contribution rate.
$82 billion
— The total annual budget of New York City.
$2.2 billion
— The amount depleted from the RHBT between 2010 and 2014.
The Retiree Health Benefits Trust currently holds around $3.1 billion, a reserve that should be preserved rather than used for immediate budget relief. Maintaining this trust is essential for long-term fiscal stability, despite pressures to utilize these funds for other budgetary needs.
Recommendations related to Retiree Health Benefits Trust (RHBT)
The temptation to raid the Retiree Health Benefits Trust should be resisted.
Key Data
$3.1 billion
— The Retiree Health Benefits Trust contains around $3.1 billion.
The Retiree Health Benefits Trust, which holds funds for future retiree health insurance liabilities, was recently replenished with $864 million to reach a balance of approximately $2 billion. To protect these assets from being used to cover operating deficits, the city should establish formal guidelines for future deposits and withdrawals.
Recommendations related to Retiree Health Benefits Trust (RHBT)
The de Blasio Administration should develop guidelines for regular deposits to and potential withdrawals from the RHBT in order to prevent future raids on the fund.
Key Data
$2.5 billion
— Amount placed in the newly created RHBT fund during the late 2000s.
$1 billion
— The final amount from the RHBT fund that was scheduled to be used in fiscal year 2014.
$864 million
— Amount added to the RHBT fund under Mayor de Blasio.
$2 billion
— The approximate balance of the RHBT fund following the addition of $864 million.
$90 billion
— The City's unfunded liability for future health insurance benefits for retirees.
The fiscal year 2015 preliminary budget restores $1 billion to the Retiree Health Benefits Trust Fund, which has been used since 2010 to help balance the budget. This action addresses a portion of the city's $92.5 billion retiree health liability, though future withdrawals from the fund should be restricted until clear usage guidelines are established.
Recommendations related to Retiree Health Benefits Trust (RHBT)
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 restored to the Retiree Health Benefits Trust Fund in the fiscal year 2015 preliminary budget.
$92.5 billion
— The City's total retiree health liability.
New York City's fiscal year 2014 budget relies on $2.8 billion in surplus funds from 2013 and a $1 billion withdrawal from the Retiree Health Benefits Trust Fund. This depletion of the trust leaves the city without resources to address its $85 billion unfunded liability for retiree health benefits.
Key Data
$2.8 billion
— Surplus funds from fiscal year 2013 used to balance the 2014 budget.
$1 billion
— Amount withdrawn from the Retiree Health Benefits Trust Fund to balance the 2014 budget.
$85 billion
— The City's unfunded liability for retiree health benefits.
The City's plan to withdraw $1 billion annually from the Retiree Health Benefits Trust (RHBT) in fiscal years 2013 and 2014 provides only temporary budget relief while exacerbating the city's $90 billion unfunded liability for retiree health benefits. To address this, the City should implement structural reforms, such as phasing out the reimbursement of Medicare Part B premiums and introducing premium-sharing arrangements for employees and retirees.
Recommendations related to Retiree Health Benefits Trust (RHBT)
The Council should tie the depletion of the Retiree Health Benefits Trust (RHBT) fund to health insurance reforms, most importantly, phasing out the reimbursement of Medicare Part B premiums.
The Council should use its authority to phase out the reimbursement of Medicare Part B premiums through local legislation, which would save $280 million in fiscal year 2013 and grow to $380 million by fiscal year 2016.
The City should support the Mayor in seeking premium-sharing arrangements for employees and retirees to reduce the City’s unfunded liability.
Premium contributions for retirees under age 65 should be phased in over the course of the financial plan.
Key Data
$1 billion
— Amount the financial plan proposes withdrawing from the Retiree Health Benefits Trust (RHBT) each year in fiscal years 2013 and 2014.
$90 billion
— The City's total unfunded liability for retiree health benefits.
$280 million
— Savings in fiscal year 2013 from phasing out the reimbursement of Medicare Part B premiums.
$380 million
— Projected savings by fiscal year 2016 from phasing out the reimbursement of Medicare Part B premiums.
$700 million
— Annual savings if employee contributions of 10 percent for single coverage and 25 percent for family coverage were implemented.
$700 million
— Annual savings from a 50 percent premium contribution for retirees under age 65.
New York City is relying on one-time resources, including $1 billion from the retiree health insurance trust fund, to balance the fiscal year 2013 budget as tax revenue surpluses have disappeared. Addressing the city's generous health insurance policies for municipal employees and retirees may become necessary to manage long-term budget growth and deficits.
Recommendations related to Retiree Health Benefits Trust (RHBT)
Tackling spending arrangements, especially the City's generous health insurance policies for municipal employees and retirees, may be unavoidable to address budget growth and out-year deficits.
Key Data
$1 billion
— Amount drawn from the retiree health insurance trust fund to balance the fiscal year 2013 budget.
New York City is relying on $1 billion from the retiree health insurance trust fund to help balance the fiscal year 2013 budget. This one-shot resource is being used alongside other temporary measures as the city faces a decline in unanticipated tax revenues that previously supported budget balancing.
Key Data
$1 billion
— Amount drawn from the retiree health insurance trust fund to balance the fiscal year 2013 budget.
New York City's expenses for other postemployment benefits (OPEB) have risen sharply, reaching $9.4 billion in fiscal year 2010 due to new federal and state mandates regarding health insurance coverage. To manage these growing liabilities, the City should implement premium-sharing for retirees and establish a disciplined funding policy for the Retiree Health Benefits Trust to prevent it from being used as a discretionary rainy day fund.
Recommendations related to Retiree Health Benefits Trust (RHBT)
The City should require greater retiree contributions toward health insurance premiums to control fiscal impacts.
The City should institute premium-sharing for retirees, with an appropriate goal for retirees to pay 50 percent of their premiums.
The City should develop a policy for responsibly funding the costs of OPEB liabilities.
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 recognized expense for other postemployment benefits (OPEB) in fiscal year 2010.
$2.3 billion
— 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 to be made by the City by 2014.
$11 billion
— 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) over fiscal years 2006 and 2007.
The city established the Retiree Health Benefits Trust to fund future health insurance premiums, but has since diverted funds from it to balance the budget. To ensure fiscal sustainability, the city should stop using these trust funds for operating expenses and require retirees to contribute more toward their health insurance premiums.
Recommendations related to Retiree Health Benefits Trust (RHBT)
The imprudent diversion of funds from the Retiree Health Benefits Trust should be eliminated from the Executive Budget.
The city should require retirees to pay a substantial share of their health insurance premiums to reduce the burden of future costs.
Key Data
$65 billion
— The estimated actuarial value of future health insurance premiums for retirees and their dependents.
$2.5 billion
— The amount deposited into the Retiree Health Benefits Trust from surplus revenue over two years starting in 2006.
$1.2 billion
— The amount from the Retiree Health Benefits Trust planned to be used to balance the budget in fiscal years 2011 to 2013.
$1.1 billion
— The amount of additional tax revenue forecasted in each fiscal year from 2011 to 2013.
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