Unfunded Health Benefits

Unfunded health benefits are future promises made by governments or organizations to provide healthcare or retirement benefits to employees or retirees, for which they haven't set aside enough current funds. Essentially, they recognize they owe these benefits, but the money to pay for them hasn't been accumulated yet. As a result, these obligations are recorded as liabilities on financial statements, highlighting the potential financial pressure to meet these future commitments. This situation can impact an organization’s or government's fiscal health, as they must plan for and eventually cover these costs when the benefits are due.