Project Pages

Other Postemployment Benefits—Project Plan

Project Description: The objective of this project is to publish an Implementation Guide that would be helpful to plans and employers as they prepare to implement the OPEB reporting and disclosure standards.

Background: Statement No. 43, Financial Reporting for Postemployment Plans Other Than Pensions, was released in April 2004, and Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, was issued in June 2004. Statement 43 is effective for plans in three phases, starting with periods beginning after December 15, 2005, for plans with the largest employers. The Statement 45 effective date follows in the next year for each of the phases.

Current Developments: An advisory committee was formed in February, and staff began work on the document. Discussion of Statement 45-related questions is scheduled for the April meeting.

Work Plan: The projected timetable for the project is as follows:

Other Postemployment Benefits—Recent Developments

June 2005 Board Teleconference

The Board reviewed and cleared for issuance an Implementation Guide for GASB Statements 43 and 45 on other postemployment benefits.

May 2005 Board Meeting

The Board reviewed proposed questions and answers for the OPEB Implementation Guide related to Statement No. 43, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, as well as revised questions and answers related to Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, in the following areas:

• Accounting for unused sick leave to healthcare conversions

• Accounting for disability benefit programs

• Timing and frequency of actuarial valuations

• Benefits to be included (with regard to changes in plan terms that should be included in the actuarial valuation and the employer’s disclosure of subsequent events)

• Exception for certain employers that participate in a community-rated plan.

Discussion focused primarily on revised questions and answers related to Statement 45, especially regarding clarification of the criteria under which an employer participating in a community-rated plan may use unadjusted premiums in the projection of future postemployment healthcare benefit payments for accounting purposes. Individual Board members also made suggestions of an editorial nature for changes to various draft questions and answers. A ballot draft (for Board clearance) is scheduled to be discussed at the Board’s June 2 teleconference.

March 2005 Board Meeting

The Board reviewed a draft of staff-prepared questions and answers related to implementation of Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions. The Board provided editorial suggestions and also provided tentative feedback to staff on the following issues:

• Discussion of the “community-rated plan” exception included in paragraph 13a(2) of Statement 45 should emphasize that, as discussed in footnote 9 of that Statement, the provision had been intended to apply only in circumstances in which the claims experience of any employer’s covered group would not impact the premium rates charged.

• The term time of the valuation refers to the time when the actuary performs an actuarial valuation. An actuary generally should include in the projection of benefits any changes in plan terms that have been made and communicated to plan members through the time when the actuary models the plan as part of the actuarial valuation. However, if the actuarial valuation date (the as-of date of the valuation) coincides with the plan’s financial report date, or if the plan’s financial report date occurs after the actuarial valuation date but during the actuarial valuation work, any change in plan terms that is made and communicated after the plan’s financial report date is a subsequent event and should not be included in the actuarial valuation.

• The Implementation Guide should not include additional interpretation of the provision in paragraph 13a(1) of Statement 45 regarding consideration of the “pattern of sharing of benefit costs between the employer and plan members” to the time of the valuation.

• Staff should evaluate whether Statement 45 provides a clear basis for guidance in this Implementation Guide regarding the method of accounting for the recently enacted Medicare Part D employer subsidy.