The actuarial estimated cost of retirement health care benefits for current employees and their dependents is $653 million in todays dollars, according to Robert Kasdin, outgoing executive vice president and chief financial officer. This amount is a future liability that isnt booked and for which money needs to be set aside to cover the accruing benefit, Kasdin said in a meeting of the Senate Advisory Committee on University Affairs (SACUA) April 29.
The issue of health care benefits for retirees and dependents of retirees is a very serious one that should be carefully explored, Kasdin said.
Future financial strain will be reduced or eliminated, Kasdin estimates, if major cost sharing for the dependents of prospective employees is implemented. He stressed that this potential solution would only apply to future employees, not to current employees.
The cost of health insurance for current retirees for the upcoming fiscal year will be $27 million, Kasdin noted. The $653 million figure is the total value of this benefit for existing employees, in todays dollars, as estimated by the actuarial firm AON. Of the $653 million, approximately 40 percent will be attributed to the cost of dependent health care benefits, he said.
The economic consequences to the University for accounting purposes are pretty serious, Kasdin said. For as long as you dont act, the bigger the problem becomes.
Kasdin said his hope is that there will be a joint exploration of the issue between SACUA and the administration. He said he thinks SACUA should be provided with all the information that the administration has on the matter.
Kasdin recommended setting a deadline to help ensure that momentum is not lost. Although SACUA Vice Chair John Gobetti expressed a willingness to explore this issue further with Barbara Butterfield, associate vice president for human resources and affirmative action and chief human resources officer, it was agreed that no action will be taken until SACUA members have an opportunity to discuss the issue further, both among themselves and with Interim Provost Paul Courant.