Here are a few excerpts from an article posted by the Healthy House Institute at www.healthyhouseinstitute.com.
Residential fiberglass batt insulation contains about 5% resin binder that is capable of outgassing formaldehyde fumes into the air. The pink colored insulation manufactured by Owens-Corning Fiberglas Corporation contains, in addition, about 1% dye that has its own outgassing characteristics. The resin used in insulation is usually a phenol-formaldehyde product, but Manville Corporation uses a urea-extended phenol-formaldehyde resin, which outgasses at a faster rate. Of the major insulation manufacturers, the batt insulation produced by Certainteed Corporation, with 4% phenolformaldehyde resin and no dye, is probably the least potent from an outgassing standpoint, however, it can still bother people sensitive to formaldehyde.
When resin coated fiberglass enters the sinuses or the lungs, there is the possibility that the resin could react with the soft tissues and cause inflammation or damage. It is known that formaldehyde based resins decompose when exposed to heat and humidity, yet no research has been done to explore this mode of exposure.
What should you do if your home is insulated with fiberglass insulation? Most researchers don't believe that it presents enough of a problem to warrant removal. In most installations, the insulation will stay where it is placed in the attic, walls or floor and will cause no problems. The tighter the house is constructed, the less likely that any glass fibers or formaldehyde fumes will migrate into the living space.
If health problems are suspected to be related to insulation, the air in the house should be tested by a reputable firm. Removal of the insulation should only be attempted as a last resort because it is messy, costly, and could result in greater contamination of the house. A better solution would be to caulk and tape shut the pathways through which the insulation is entering the living space.
If you are working with fiberglass insulation, it is important to wear protective clothing such as long sleeves and gloves. A dust mask and/or activated charcoal mask is also recommended. Clothing should be laundered separately to avoid contaminating other garments.
In new installations, it is a good idea to totally separate the insulation from the living space. This can be done by sealing all openings in the walls around electrical outlets, windows, etc. Foil-backed drywall can be used to insure that formaldehyde fumes do not migrate into the house. The result may be a house that needs a fan or other mechanical device to introduce fresh air, but this is preferable to breathing glass fibers and fumes outgassed by the resin binder. Uncontrolled infiltration means that air passes through walls, possibly bringing with it resin coated glass fibers.
It is often necessary to insulate heating and air conditioning ducts. In order to avoid contaminating the airstream, this should always be done on the outside of the ducts. It is also a good idea to tape all of the seams in the ductwork prior to adding the insulation so the fibers or formaldehyde fumes cannot enter.