Many municipalities, school districts, and other governmental entities have established OPEB trusts as a way of starting to prefund their postretirement benefit promises to employees. In addition to the perceived fiscal responsibility of prefunding OPEB benefits, setting aside assets can also help the plan sponsor’s GASB 45 accounting. This post deals with certain situations where the [...]
In the retiree benefits world, there is a general consensus that several provisions in the Patient Protection and Access to Care Act (PPACA) may cause employer sponsors of retiree health plans to rethink those programs. These changes include: – Filling of the Part D “doughnut hole” (2010-2020) – Guarantee issue insurance with no pre-existing condition [...]
A quick update on the Early Retiree Reinsurance Program (ERRP): Over the past few months, the Department of Health and Human Services (HHS) has been busy gearing up for the implementation of the ERRP. As you may recall from our earlier posts (1, 2, 3), this is a program that’s part of the larger healthcare [...]
GASB 45 requires the measurement of public employers’ retiree health liabilities and many plan sponsors are now entering their second cycle of GASB 45 actuarial valuations. These calculations are highly dependent upon the actuarial assumptions selected by the plan sponsor. Therefore, it’s a good idea to review these assumptions at each valuation cycle. Many times, [...]
We’ve had a couple of initial posts on the new Early Retiree Reinsurance Program (ERRP): the first one gave a quick overview of the amount of funds available, while the second post described options for spending the reimbursement. In this post, I’d like to give a quick overview of some actions plan sponsors can take [...]
Over the past couple of years, the GASB (Governmental Accounting Standards Board – they write the public employer accounting rules) has started the process of updating the accounting rules for public employer pension and retiree health plans. They issued an invitation for ideas/comments in 2009 and now we are getting our first sneak peek at [...]
Last week, the HHS published an interim final rule for the new Early Retiree Reinsurance Program (should we call it ERRP?). In our first post on this, we noted that a lot was still unknown. There still is, but it’s becoming clearer. The White House fact sheet says “Employers can use the savings to either [...]
A full valuation (measurement) of GASB 45 liabilities is required every 2 to 3 years, depending on the size of the employer. In the years when actual measurements are performed, the GASB 45 results (ARC, Annual OPEB Cost, and Net OPEB Obligation) are fairly straightforward to calculate. However, there is often confusion about what to [...]
Many small cities and governmental entities (less than 100 employees) are still figuring out their GASB 45 liability or whether they even have a liability. GASB’s Alternative Measurement Method (AMM) is a simplified alternative to performing a full actuarial valuation, but even the AMM has a cost that some very small entities would prefer to [...]
There’s a great article on funding OPEB liabilities by the MN State Auditor’s office. It’s written for counties, but it applies as well to cities, school districts and other government employers in Minnesota. Whether or not to pre-fund OPEB liabilities isn’t a no-brainer. It’s standard practice for public pensions, and it’s required for private pensions. [...]
