Jurisdictions Can Leverage Medicare to Lower OPEB Costs

Thursday, April 24, 2014

Many municipal governments can use Medicare to lower their OPEB costs, according to Moody’s Investors Service. As retiree health costs increase with the aging of the workforce, retirement benefits “present an increasing credit risk for many U.S. municipal governments. For retirees over age 65, this liability consists primarily of Medicare premium subsidies and supplemental health insurance benefits.” Leveraging Medicare for these employees is worth considering because “even small reductions in the cost of health benefits for Medicare-eligible retirees can have a considerable impact on future costs because savings compound over retirees’ increasingly long lifetimes.”