Satellite observations from above the clouds report only the cloud top pressure of the first cloud layer encountered going downward from the top of the atmosphere. The ISCCP cloud statistics are determined assuming no cloud layer overlap, i.e., the cloud amounts at each level are the actual amounts seen by the satellite. To obtain a better vertical distribution of cloud layers from the satellite results and to study the sensitivity of radiative fluxes and atmospheric radiative heating rate profiles to variations in cloud vertical structure, three different cloud overlap schemes are applied to the ISCCP vertical distribution of clouds in the radiative transfer model from GISS GCM. The results show that the changes in the top-of-atmosphere (TOA) and surface (SRF) radiative fluxes vary among the different schemes, depending on the part of the atmosphere-surface system and spectral band (SW and LW) considered, but that the magnitudes of the changes are generally small. The scheme without a total optical thickness constraint produces opposite signed changes in fluxes (except for the SRF LW flux) and the profile of atmospheric radiative heating rate compared with the schemes with the constraint. The constraint on total optical thickness nearly eliminates all of the effects on the total TOA and SRF radiation budget, significantly reducing the frequency of layer overlap occurrence and thereby reducing the effect of overlap on the radiative heating rate profiles. Even when the assumptions are changed to produce a frequency of occurrence of multi-layer clouds similar to other estimates, the resulting changes in the radiative heating rate profile are quantitatively small. However, the magnitude of these changes is similar to the magnitude of the total overall cloud effect, making the layer overlap critical to accurate determinations of the shape of the radiative heating rate profiles.