Retiree Health Benefits as Deferred Compensation: Evidence from the Health and Retirement Study

TitleRetiree Health Benefits as Deferred Compensation: Evidence from the Health and Retirement Study
Publication TypeReport
Year of Publication2012
AuthorsMarton, J, Woodbury, SA
KeywordsIncome, Medicare/Medicaid/Health Insurance, Other, Pensions, Public Policy, Retirement Planning and Satisfaction
Abstract

Are early retiree health benefits (RHBs) a form of deferred compensation binding workers to an employer? Most employers who offer RHBs offer them only to workers who have ten or more years of tenure and have reached age fifty-five. Accordingly, workers in firms offering RHBs have an incentive to stay with a firm in the years before they attain eligibility for RHBs, and a greater incentive than otherwise to retire thereafter. The authors test for such a pattern of incentives by examining the age-specific relationship between workers eligibility for RHBs and retirement. The findings suggest that workers in RHB-offering firms are less likely to retire at ages fifty and fifty-one than similar RHB-ineligible workers. Also, RHB-eligible workers aged sixty and sixty-one are more likely to retire than similar RHB-ineligible workers. These results are consistent with RHBs acting as part of a delayed payment contract of the kind described by Lazear.

Endnote Keywords

Deferred compensation/retirement/health insurance/tax subsidies/compensation methods/Public Policy/Incentives/employee benefits/Eligibility

Endnote ID

69716

Citation Key5938