The leveraging effect of OPEB liabilities
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February 9, 2011
... retiree health liabilities consist of two pieces: gross health claims (the expected cost of retiree health coverage) and a premium offset (the amount that retirees pay for their coverage). The net OPEB liability is just the difference between these two. The following example illustrates how a small change in either of the input components can have a much larger effect on the net liability result. We call it the "leveraging" effect. ( Read more)
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| ERRP Funds are going fast, but employers still have time to act |
January 19, 2011
$1 billion of the original $5 billion has now been paid out under the Early Retiree Reinsurance Program (ERRP), according to an article this month in Business Insurance. We've been watching the ERRP since its inception (posts 1, 2, 3, 4) and didn't think the $5 billion allocation would last long. (Read more)
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OPEB trust investment return
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November 17, 2010
This post deals with certain situations where the anticipated accounting relief from establishing an OPEB trust isn't as great as expected. This generally occurs when trust assets are invested in very conservative investments and/or a revocable trust is established instead of an irrevocable trust. ( Read more)
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| PPACA starting to impact retiree health plans |
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October 6, 2010
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 exclusions (2014)
- Health insurance exchanges (2014)
(Read more)
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