What are the generational considerations?
Retiree health benefits, like salaries, are earned during an employees working years. The benefits, however, are paid out after retirement. Unless enough funds (with assumed, future investment earnings) are set aside to cover normal costs of benefits while an employee is working, future taxpayers will pay all or a part of the costs of the employees healthcare after retirement.For example, take a state employee earning a $25,000 salary in 1985. In addition to this salary compensation, the employee was promised in 1985 that the state would pay 100 percent of his or her health benefits during retirement (if the employee worked at least 20 years). The state, however, did not set aside any funds for those future health costs in 1985 or in any year thereafter. If that employee retires this year, taxpayers of today and the future must pay about $5,000 per year for the employees retirement health costs.While these benefits were earned by the prior generation of taxpayers, the current generatio
