Money set aside for retireehealth benefits has been used as a rainy-day fund by mayors duringtimes of fiscal stress. (Photo: Bloomberg)

(Bloomberg) –New York City faces future health costs for its retired workers of $103.2billion, an increase of $40 billion over a decade. It has about $5billion set aside to pay the bill.

The so-called “other post-employment benefits” liability wasdisclosed in New York's comprehensive annual financial reportreleased by the city comptroller's office Wednesday.

The city's $98 billion unfunded liability for retiree health care exceeds the city's $93billion of bond debt and $48 billion pension-fund shortfall.

“The numbers are huge,” said Maria Doulis, a vice president atthe Citizens Budget Commission, a budget watchdog group funded bythe business community. “If you're looking at the big threeliabilities, this is the one that's problematic, because there'snothing set aside to address this and there's absolutely nostrategy on the part of the city.”

New York, the most populous U.S. city, has almost 300,000current employees and is responsible for more than 230,000 retireesand their beneficiaries. City employees with 10 years of servicequalify for free retiree health care.

The city's post-employment benefits include health insurance,Medicare Part B reimbursements, and welfare fund contributions.

Medicare Part B covers doctors' services that are received froma federally approved facility or a medical practice. Welfare fundsare administered by unions and provide supplemental benefits suchas prescription drug, vision and dental coverage.

New York City should address its retiree health-care costs byrequiring beneficiaries to share the cost of premiums for healthinsurance, eliminating the reimbursement for Medicare Part B andreducing contributions to the welfare funds, according to theCBC.

“Forget the private sector, this free retiree health insuranceis not a benefit offered in the public sector,” said Doulis.“They're not taking up that challenge. Limiting the growth and costof retiree health insurance has not been on the agenda.”

Unlike debt, which is limited by statute, nothing restricts thelevel of retiree health liabilities.

Money set aside for retiree health benefits has been used as arainy-day fund by mayors during times of fiscal stress, saidDoulis.

The city pays retiree health costs from its general fund budgeton a “pay-as-you-go” basis, at a cost of $2.6 billion last year.The value of assets to pay retiree health care liabilities hasgrown to $4.8 billion from $2.4 billion in June 2014.

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