"Retiree Healthcare Costs and OPEB: What to Keep an Eye On"
Public Sector Healthcare Roundtable
November 9, 2011, Alisa Bennett FSA, EA, FCA, MAAA

The impact of many changes due to health care reform are still unknown. Can health trend be brought down to our assumed ultimate level? Will drastic plan design changes be needed to avoid the "Cadillac" excise tax? From an OPEB perspective, how might raising the Medicare age impact retirement patterns? If affordable health insurance exchanges become reality, will early retirees opt for them rather that the employer sponsored plan? Will this cause adverse selection for your plan?

"CMC's Letter to GASB About Problems with Proposed Amendments"
October 6, 2011, by Tom Cavanaugh FSA, FCA, MAAA, EA

CMC's letter to the Governmental Accounting Standards Board (GASB) about proposed amended Statement Nos. 25 and 27 covering the Financial Reporting for Pension Plans (No. 25) and Accounting for Pensions by State and Local Governmental Employers (No. 27) questions the dramatic shift in GASB's beliefs concerning the impact that accounting requirements have on the funding of pensions. We suggest GASB clearly communicate that any discussions of plan funding should focus on the work of the plan's actuary and not the required accounting disclosures. Furthermore, CMC recommends that accounting and funding not be separated. We believe that GASB is focused too narrowly on a concept for accounting to the point that it ignores the serious implications that the proposed statements will have on the governmental pension environment.

"GASB Exposes Problems for Public Pensions"
September 2011, By John Garrett, ASA, FCA, MAAA and Brent Banister, PhD, FSA, FCA, MAAA, EA

Describes how proposed amendments to GASB 25 and 27 could adversely affect public pension plans. Reveals a major departure from current "funding-friendly" accounting policies and explains how the divorce of accounting and funding, coupled with the elimination of the "Annual Required Contribution," could undermine sound funding policies. Explains why amortizing gains and losses differently for active and inactive plan members portends a whole new level of reporting complexity. Illustrates how compliance with these amendments could make pension costs more volatile and plans more difficult and expensive to manage. Encourages everyone involved or interested in public pension plans to study the proposed amendments and express their concerns and opinions to GASB no later than September 30, 2011.

"Managing Drug Expenditures – One Year Later"
Public Sector HealthCare Roundtable
November 2010, by Alisa Bennett, FSA, EA, FCA, MAAA

Explains the impact of Healthcare Reform on Medicare Part D coverage. Among other things, Healthcare Reform eliminates the Medicare Part D "doughnut hole." Since approximately two-thirds of a Medicare-eligible retiree's liability comes from drug costs, it is essential that employers find a way to maximize the benefit of these changes. This presentation explains options available to employers and focuses on the Employer Group Waiver Plan option in which the employer contracts directly with CMS to provide Medicare Part D drug coverage.

"Issues Facing the Public Pension Industry: OPEB Liabilities – Insurance Option"
Southern Conference on Teacher Retirement
April 2010, by Alisa Bennett, FSA, EA, FCA, MAAA

Explains the use of Corporate Owned Life Insurance (COLI) as assets to back employee benefit plans. Reviews the pros and cons of using COLI to fund OPEB liabilities and cautions that, for a non-tax-paying entity, there is no tax savings to offset the cost of insurance (policy costs, profits and commissions).

“The Great GASB”
2009 Enrolled Actuaries Meeting
March 2009, by Alisa Bennett, FSA, EA, FCA, MAAA

Explains valuation procedure options for determining ARC, analyzes interim valuation issues, and discusses economic assumptions. Also reviews how to manage and mitigate OPEB liabilities.

"GASB OPEB"
National Council on Teachers' Retirement Directors' Meeting
June 2007, by Edward A. Macdonald ASA, MAAA, FCA

Reviews GASB 43 and 45, which deal with postemployment healthcare benefits, whether provided separately or through a defined benefit pension plan, as well as other forms of non-pension postemployment benefits (e.g., life insurance, disability, long-term care). Discusses the valuation process, how OPEB plans are generally structured, typical claims costs, liabilities, the impact of pre-funding and plan preservation strategies.

"Actuarial Valuations and Accounting Issues"
Government Finance Officers Association of Alabama
February 2006, by Edward A. Macdonald ASA, MAAA, FCA

A review of the principles of actuarial valuations and the impact of GASB 25 and 27. This presentation describes the work of actuaries; selecting benefit, investment, and funding policies; conducting experience investigations; and addressing unfunded liabilities.

After laying this groundwork, the presentation explains asset valuation options and the reporting requirements of defined contribution and defined benefit plans. A good overview for anyone new to retirement plan management.