Accrual Budgeting for Military Retirees' Health Care
Abstract
By recognizing the costs of deferred compensation (such as pensions) in the years during which employees are working, rather than when the benefits are actually paid, accrual budgeting can provide decisionmakers with better information about the full costs of labor and better incentives to use labor cost-effectively. Therefore, accrual budgeting is becoming increasingly important in the federal budget. That method of budgeting for the health care costs of military retirees over age 65 will start in 2003, and the Administration has proposed extending it to fund younger military retirees' health care and civil service retirement benefits. This paper, prepared at the request of the House Budget Committee, considers options for implementing accrual budgeting for military retirees' health care. The analysis examines potential changes to the currently planned accrual system, including using different accrual rates for various categories of personnel, requiring DoD's budget to bear the actuarial gains and losses of policy or legislative changes, charging the military personnel accounts (rather than the Defense Health Care Program) for the benefits, extending accrual budgeting to the care provided in the Department of Defense's (DoD's) facilities, and extending accrual budgeting to military retirees under age 65.
Document Details
- Document Type
- Technical Report
- Publication Date
- Mar 01, 2002
- Accession Number
- AD1134763
Entities
People
- Russell Beland
Organizations
- Congressional Budget Office