I’d say you could value it based on today’s prices for similar coverage, but after you discount it for the time value of $$$ and some X factor of your likelihood of actually vesting in it, it’s probably not worth as much as you think. You sort of need a crystal ball…
The other thing is your age upon retirement. Under 65, it’s a valuable ppo plan that could be worth 10k+ annually in today’s dollars. Over 65, it’s a relatively cheap Medicare gap policy…
Questions that you’ll want to figure out for your situation:
Typically the pension plan provides a set percentage of the premium charged by the PPO plans in retirement: Can you find out what this percentage is?
Does 10 years of service really get you health benefits? Or is it 10 years at age 65, more years (25-40 typically) to get benefits before age 65?
What is the funding percentage of the system that pays out the benefit? What level of legal protection does it enjoy in your state?
So, Cal, do you mean the benefit is worth $2000/mo or the rate for retiree is $2000/mo?
I only learned today from someone that we have retirement health “benefit” which in our case means we can buy it at company group rate. For Bluecross that’s over $2k/mo and for Keiser that’s about $1200/mo. Which is still a heck a lot cheaper than buying it on the open market. The eligibility is work for 5 years and over 55.
I have this benefit at the energy company I work for. It didn’t have much value to me when I started at 24 but now at 48 I see what an incredible deal it is for my spouse and I. I think I will qualify for it after I turn 50 with 70 points towards my 80 point pension (Points = Age + Years of Service).
The benefit is worth $2000 a month. See, for instance, LACERS (City of Los Angeles) which offers 25-year retirees over $1,800 a month in dental and medical subsidy. It’s shown on the retirement plan balance sheet as OPEB (Other Post Employment Benefits) and is rarely ever funded close to what the regular pension system is. https://www.lacers.org/aboutlacers/publications-forms/publications/retired/open-enrollment-guides-brochures/2018%20Health%20Benefits%20Guide.pdf
Some agencies make you retire immediately to claim the subsidy; if you don’t take the retirement payout (maybe you are going to the private sector or want to wait a few years to spike the percentage if you feel you have a long life expectancy) then you get zero. The State of California is that way - work 20 years and get free coverage for life and that of your family BUT you have to retire, and you can’t do so until 50. If you work 20 years for the state, go to another state or the private sector, and retire from there, you get nothing towards retiree health care. https://www.calpers.ca.gov/docs/forms-publications/state-health-guide.pdf
Quirks like these are why many people argue pensions are unsustainable. If someone retirees at 50 but prior to doing so marries someone half their age, that person could inherit a pension and retiree health care for their life. Let’s say the happy couple has a few kids, and they are covered until 26. Conceivably 25 years of public service could lead to 45 years of family coverage being paid out. This is in addition to the known loophole in some plans that don’t prorate based on spouse age but pay out a survivor allowance to the spouse regardless of age. In the era before same sex marriage it was not uncommon for a lesbian or gay person to “marry” a close friend’s child prior to retirement, to transmit a lifetime of benefits to them and their children.
retiree health care benefits are not pensions
Pensions and retiree health care benefits are regulated and ran very differently
Further the pensions and benefits of government entities are regulated way differently than private.
Hmm … that sounds like the genesis of a pickup line. Of course, it probably wouldn’t work on anyone under 35 or 40. 
A bit of an update… this story took a while to play out.
Original employer opted to hire another canidate which amazed me. They provided feedback to HR that I was an extremely strong candidate. HR took their feedback and tried to put me in other positions but I never heard anything. After 6 months I ended up taking a management position at a new company instead with higher pay.
After the 2nd day on the new job the federal employer contacted me offering me a 30% pay raise, pension, and lifetime healthcare. I am debating accepting that offer or not. It will definitely burn bridges with the new employer.
I think the lesson I learned through this thread is that it is impossible to value retiree benefits. They could be worth $300,000. Or the government could socialize medicine and make them worthless. I would say it is nice to have but nothing I would count on.
Our company offers a medicare advantage PPO plan for retirees who were hired prior to 2001 (few left qualify but I barely made the cut). The thing is the benefits of the coverage are known but not the premium for some reason. One of my coworkers is 65 and retires in 4 months so he looked into it in detail. Basically, the premium is a function of how many years you worked at the company, and whether you are covering a spouse or not. HR has a 5 page table for the calculation of the premium (% off a base rate basically) so it’s very hard to evaluate the real premium outside of specific cases. For him, after 32 years in the company, he will pay $135 per month for himself and just under $600 per month for his wife who is not yet 65. Once she turns 65 (and when coverage is on top of Medicare), her premium will get down to $225. Once they are both 65, it will save him about $500/month vs similar Medigap he could buy on his own. Not irrelevant money if you end up getting $6k/yr for 30 yrs but not crazy money either.
But caveat, the company is under no obligation to keep offering this plan to retirees. They’ve said for years that they have no intention to drop this retiree benefit but just give it a good recession and it could easily go the way pensions went. So this is an additional risk on top of changes to entitlements (if you’re 35, Medicare WILL change before you’re 65).
Do you mean Fed contractor? AFAIk, the federal government doesn’t offer health benefit after retirement unless you are in services.
At this point, I may very well retire in my current company which does offer discount (group rate) health insurance for retirees. I forgot the exact # but I think it’s about $1200 per month regardless of age. yes, there’s no guarantee they will take this away at any time.
THis point bears repeating I think.
There are really no obligations or guarantees for retirment health benefits. Unlike pensions there aren’t laws forcing employers to keep any retirement health plan funded or guaranteed.
Unless there is a contractual obligation there is nothing keeping the company from yanking a retirement health benefit out from under you. Of course if a company did so they could be challenged in court but its nowhere near as safe or regulated as a pension is.
Further if you have such a bene and your company goes bankrupt then you’re really SOL.
I’m kinda curious under which laws would you challenge the company simply deciding to change or cancel that retiree benefit?
Unless they made a specific promise to never change or cancel those benefits, I don’t think the law obligates them to keep the benefit. Most employers will actually have language spelling this out. Ours specify that the insurer, copays, limits, etc … may change each year and they reserve the right to cancel this benefit altogether.
I was thinking of more a breach of contract lawsuit. It wouldn’t be a violation of any laws I’m aware of otherwise.
But that would only work if there is a contract or other form of commitment/promise on the part of the employer. I’d imagine most employers with these kinds of benefits have safeguarded themselves vs such challenges by noting in communications that the benefit is not a guarantee or similar. OTOH most employers offering such benefits have probably done so for many years and may also be unionized so theres possibly a union contract or just a long standing commitment involved.
One thing to pay attention to for some of those benefit is whether the benefit is still available to new employees. I know for our retiree health benefit plan, it’s only available for employees hired prior to 2001 so they already took steps a long while ago to control this liability (and I’m hoping because of it they won’t need to take extra steps).
Even with unions and CBAs in place, the courts ruled that they are still totally within their rights to yank the retiree health benefits like they did at Honeywell.