News Archive

"This case will limit ADA claims by retirees against their former employers, but ... Justice Gorsuch opined ... that retired employees may be able to proceed with ADA claims if they can plead and prove that they were disabled and a 'qualified individual' under the ADA when their employer adopted a discriminatory retirement benefits policy, even if they later happen to be retired when they bring suit." [Stanley v. City of Sanford, FL, No. 23-997 (S. Ct. Jun. 20, 2025)]  MORE >>

"Recent analysis highlights that a man will need to have saved $191,000, and a woman will need to have saved $226,000 just to have a 90% chance of meeting their healthcare spending needs in retirement. As medical costs continue to rise faster than inflation and life expectancy is higher than ever, planning for healthcare in retirement ... should be viewed as a 'core liability' alongside housing, food, and other necessities."  MORE >>

"Employers typically finance OPEB obligations through either: [1] a Pay-As-You-Go (PayGo) approach; or [2] prefunding through a dedicated trust. In this article, we will compare these two approaches by highlighting their advantages and drawbacks, and comparing their financial impact through a practical case study. This article is intended to increase awareness in the advantages of prefunding OPEB benefits, while also balancing current budget priorities with long-term fiscal sustainability."  MORE >>

"The IRS National Office recently released a legal memorandum ... relating to pre-funding post-retirement medical benefits in a welfare benefit fund.... [T]he memorandum holds that funding an allowable post-retirement medical reserve may NOT take into account periods of coverage before an actual severance from employment.... The position in this legal memo is not particularly surprising given the language of the statute. But, it potentially reflects a more restrictive position than the IRS has previously followed in rulings describing allowable funding policies for Code section 401(h) post-retirement medical benefit funding."  MORE >>

"Plan A provides that a covered employee will be eligible to receive medical benefits upon attainment of a specified age, which Plan A refers to as the employee's 'retirement age'. These medical benefits are available upon attainment of that age without regard to severance from employment with Company X.... The section 419A(c)(2) addition to a reserve for post-retirement medical benefits does not include amounts for benefits expected to be provided with respect to an employee prior to the employee's severance from employment with the employer maintaining the plan. Moreover, the addition to the reserve does not include amounts funded more rapidly than on a level basis over the covered employees' working lives. Thus, Company X's contributions to the welfare benefit fund are not deductible under section 419A(c)(2) to the extent they include such amounts."  MORE >>

"Unfunded retiree health care debt is becoming an unsustainable financial burden for state and local governments, as the price tag for Other Post-Employment Benefits (OPEB) grows larger with medical inflation, while assets set aside to pre-fund these obligations remain low.... [A recent analysis] found that states and large municipalities collectively reported $789 billion in unfunded OPEB liabilities, exceeding the $753 billion in unfunded pension liabilities, as of 2022."  MORE >>

"Rising retiree healthcare liabilities strain public sector budgets, but shifting to the individual marketplace with defined contributions offers cost relief and better retiree healthcare."  MORE >>

"[D]elivering retiree healthcare benefits through the individual market presents a significant opportunity for institutions to reduce costs and improve retiree satisfaction. However, it's imperative to allocate sufficient resources to a communication and change management strategy that anticipates and addresses retiree and stakeholder concerns"  MORE >>

"Fidelity Investments' Retiree Health Care Cost Estimate finds that an average 65-year-old couple today will spend upwards of $172,500 on healthcare costs in retirement, representing a 4% increase compared to last year in an overall rising trajectory since Fidelity's inaugural $80,000 estimate in 2002.... [J]ust 23% of Americans are contributing to an HSA to prepare for healthcare costs in retirement, and only three-in-10 are investing their HSA assets."  MORE >>

"SCOTUS ruled that retirees who do not hold or seek employment at the time of the alleged discrimination are not protected under Title I of the ADA. The decision does not necessarily preclude all claims from retirees or all claims about retirement benefits. An ADA plaintiff must plead and prove that at the time of the alleged discrimination, they held or desired a job and could perform its essential functions with or without reasonable accommodation." [Stanley v. City of Sanford, FL, No. 23-997 (S. Ct. Jun. 20, 2025)]   MORE >>

"The Supreme Court ruled that a retired firefighter with Parkinson's disease could not bring claims under the ADA regarding changes to her post-employment health benefits.... The decision clarifies a circuit split by concluding that to have standing under the ADA, plaintiffs must hold or desire a job for which they can perform essential functions, thereby narrowing protections for retired employees." [Stanley v. City of Sanford, FL, No. 23-997 (S. Ct. Jun. 20, 2025)]  MORE >>

"[T]he Strengthening Benefit Plans Act of 2025 ... would allow for overfunded 401(h) retiree pension accounts to be transferred to help pay for active healthcare programs. A 401(h) plan is an employer-sponsored fund for post-retirement medical benefits. By funding these benefits with previously paid contributions, employers would avoid paying additional costs out of pocket."  MORE >>

"Organizations considering VEBA asset reallocations should incorporate long-term strategies, emphasizing regular fiduciary training, continual monitoring of regulatory guidance, and periodic internal compliance reviews. Establishing clear governance structures, including dedicated oversight committees and independent fiduciary advisors, can further bolster compliance and fiduciary prudence. Moreover, proactive participant engagement and transparent communication about any reallocation decisions foster goodwill and reduce potential litigation risks, supporting broader organizational objectives and stability."  MORE >>

"[1] ERISA reporting and disclosure requirements; [2] COBRA coverage continuation requirements; [3] HIPAA privacy and security rules; [4] [ACA] information reporting by health coverage providers."  MORE >>

"Because certain Pension Plan participants will be eligible to receive retirement benefits prior to their separation from employment once they attain age 59½, separation from employment would not be a condition to receiving retirement benefits under the Pension Plan for those participants. Accordingly, the participants covered by the proposed plan amendment who are at least 59½ and still actively employed would not be excluded from being considered eligible to receive retirement benefits under the third sentence of Section 1.401-14(b)(1)."  MORE >>

"[O]nly 24% of employers currently provide subsidized health coverage in retirement.... [T]he average healthy 65-year-old can expect to spend up to $281,000 (male) or $320,000 (female) on healthcare costs in retirement, which translates to $188,000 (or $207,000 for a female) needed in savings today. ... [T]his paper offers a number of effective methods to save for healthcare costs not covered by federal programs such as Medicare. It also provides options for employers that support these strategies."  MORE >>

"The Second Circuit determined that the terms used to describe the duration of benefits in a health plan could be interpreted to suggest benefits vested immediately, even in the absence of vesting language. [This decision] is a reminder of the importance of careful drafting of language with an eye toward end-of-contract situations, particularly where the benefits are negotiated through collective bargaining." [Xerox Corp. v. Loc. 14A, Rochester Regional Joint Bd., Xerographic Div. Workers United, No. 23-0634 (2d Cir. Feb. 5, 2025)]  MORE >>

"If the court rules in favor of the city, then employers would be reassured that they probably won't be held liable for disability discrimination when they make cuts to retiree benefits. If the court rules in favor of the firefighter, then employers may wish to carefully document their decision-making and nondiscriminatory reasons for reducing retiree benefits. They may wish to consider whether potential benefit changes would impact retirees with disabilities differently than retirees without disabilities." [Stanley v. City of Sanford, Florida, No. 22-10002 (11th Cir. Oct. 11, 2023; cert. pet granted No. 23-997, Jun. 24, 2024; oral arg. Jan. 13, 2025; transcript and audio available)]  MORE >>

60 pages. "[H]ealthcare costs pose significant risks to retirees. Individual medical risks are well-insured, but retirees still face fast-rising costs of medical care, which erode the quality of insurance and result in premiums that will take up an increasing share of their income over time. While LTC costs have not grown as fast as medical costs, individuals ...[H]ouseholds have a poor perception of their risks and costs and very few have taken steps to insure themselves against these risks. Advisors have a better sense of their clients' costs and risks but households with advisors are not better prepared[.]"  MORE >>

"Multiple U.S. Supreme Court justices challenged a Florida city government's position ... that a retired firefighter could not sue under the Americans with Disabilities Act over alleged disability discrimination with respect to a retirement healthcare benefit that she earned while working for the city." [Stanley v. City of Sanford, Florida, No. 22-10002 (11th Cir. Oct. 11, 2023; cert. pet granted No. 23-997, Jun. 24, 2024; oral arg. Jan. 13, 2025; transcript and audio available)]  MORE >>

"The Supreme Court on [January 13] appeared sympathetic to a retired Florida firefighter who is seeking to sue her former employer ... Karyn Stanley ... contends that the city violated the law when it changed its policy for subsidizing health insurance for retirees, leaving her to bear the entire cost of her health insurance for 15 years. But some justices questioned whether Stanley's best argument was one that they could consider at all[.]" [Stanley v. City of Sanford, Florida, No. 22-10002 (11th Cir. Oct. 11, 2023; cert. pet granted No. 23-997, Jun. 24, 2024; oral arg. Jan. 13, 2025; transcript and audio available)]  MORE >>

"The letter requests a ruling on the impact of amending a pension plan document to expand employee eligibility for benefits under the plan's section 401(h) retiree medical accounts to include ... certain employees eligible to commence retirement benefits under the plan upon attainment of age 59½.... [IRS concludes] that the payment of medical benefits from the Pension Plan's 401(h) Accounts for Pension Plan participants who are eligible to take pension distributions in accordance with section 401(a)(36) does not violate section 401(h) or Section 1.401-14 or otherwise cause the Pension Plan to lose its tax-qualified status under section 401(a)."  MORE >>

"Unfunded retirement health care obligations for public employees now exceed unfunded pension liabilities, representing a larger share of the long-term fiscal debt held by U.S. states and municipalities. In 2022, the most recent year available with full data, net OPEB liabilities for the largest governments reached $789 billion, surpassing $753 billion in unfunded pension liabilities. This marks a critical shift in the debt composition of American states and local governments"  MORE >>

"[A] retiree who is 65 years old in 2024 will need, on average, $165,000 saved to cover their healthcare and medical expenses throughout retirement. Focusing company benefit dollars in this direction could help address this barrier to retirement. And many of the traditional objections to -- and challenges presented by -- retiree medical in its historical form can be overcome through careful design of Retiree health reimbursement arrangements (RHRAs). Compared to DB or DC plans, RHRAs are more flexible[.]"  MORE >>

"Because a corporate tax on 'book income,' without adjustment, could include income and assets of tax-qualified pension and other post-retirement funds reported on a corporate taxpayer's financial statements, the Act includes an exemption for a covered benefit plan.... [P]roposed regulations detailing the scope of the 15% minimum tax and the required detailed calculations [were issued September 13]."  MORE >>