Healthcare organizations are feeling the effects of the national shortfall of $645 billion in pension liabilities and are pursuing the 'least bad option' for handling the problem.
The nationwide pension crisis has organizations scrambling to properly fund employee' retirement packages and represents a self-inflicted dilemma that will have a dramatic impact on the healthcare industry without a clear solution.
Given that healthcare organizations typically operate in low-interest environments on thin margins, hospitals are slated to struggle as much as any organization under new federal accounting rules.
This year is a turning point for pension plans, as reduced corporate deduction rates from the tax reform bill passed late last year come into effect, as well as new rules set by the Governmental Accounting Standards Board, which establish reporting requirements for governments regarding healthcare liabilities.
As aging baby boomers get closer to receiving pension benefits, healthcare liabilities are projected to rise, culminating in an estimated shortfall of $645 billion, according to Pew Charitable Trusts.
Yuri Nisenzon, ASA, EA, MAAA, FCA, assistant vice president at Lewis & Ellis, based in Allen, Texas, told HealthLeaders Media that the federal government and health systems must work to align pension contributions to post-retirement income.
"A lot of people realize that the retirement situation in our country is not great," Nisenzon said. "The main vehicle for retirement are defined contribution plans, 401(k) plans, and there's some easy math to show that people are not going to have enough income at retirement based on the average 401(k) balance and people living longer."
Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.