The Uncertain Promise of Retiree Health Benefits.

• Author: Marcis, John G.

The Employee Retirement Income Security Act of 1974 (ERISA) established a federal program to insure that an employee received promised pension benefits when the employee's pension plan is underfunded. Unfortunately, the protections provided by ERISA do not extend to retiree health benefits. With the aging of the working population and the rising cost of health care, employers are questioning their ability to continue offering retiree health benefits at the level which had been provided in the past. The central issue of this book is the certainty of the promise of retiree health benefits.

The main body of the book consists of ten chapters and a brief appendix by Warshawsky. After the text by Warshawsky, the book also presents the views of both academic and business experts on the future availability of retiree health benefits. The eight commentaries presented were based on a seminar held at the American Enterprise Institute to explore the implications of Warskawsky's findings.

After an introductory chapter, the text by Warshawsky is divided into three sections. The first section describes the institutional environment surrounding retiree health benefit plans. Chapter Two describes the features of a typical group health plan, the coordination of a retiree's health benefits with Medicare and the favorable treatment of certain prefunding provisions of health benefits in the federal tax code. This discussion serves as the foundation for the remainder of the text. Chapter Three reviews the statutory requirements of retiree health plans. The first part of this chapter reviews the guidelines and laws pertaining to such benefit plans. The second part of this chapter examines the Retiree Benefits Bankruptcy Protection Act of 1988 that applies to the provision of retiree benefits when an employer has entered bankruptcy proceedings. Prior to this law, retirees were often last in the creditor queue in bankruptcy court. This act placed retiree health benefits among the first issues to be addressed in such proceedings. Chapter Four examines an employer's rights to terminate or amend retiree health benefit plans. This chapter discusses the three views which have emerged from federal court decisions pertaining to such actions and reviews the more important court decisions. Chapter Five examines the financial accounting standards which evolved during the 1980s regarding retiree health benefits. Although the Financial Accounting Standards Board (FASB) viewed...