GASB 75 OPEB valuation and retiree medical consulting

Optimizing Foundations prepares GASB 74 and GASB 75 valuations of retiree medical and other postemployment benefits for governments, from offices in New York and Alpharetta, Georgia. The valuation produces the total OPEB liability, net OPEB liability, service cost, deferred inflows and outflows, and the note disclosures and required supplementary information schedules, in the format of the prior year's financial statements so the finance office and the auditors see the same tables each year.

What is included

• Measurement. Total and net OPEB liability at the measurement date, service cost, changes in the liability by source, and the sensitivity tables for the discount rate and health care trend.
• Implicit subsidy. Pre-65 retirees covered under a blended premium are valued at age-adjusted claims costs built from the plan's own enrollment and claims data, as the standard requires, including for plans where retirees pay the full premium.
• Discount rate. The 20-year tax-exempt municipal bond index rate for unfunded plans, or the blended rate for plans with assets in a qualifying trust, with the projection of fiduciary net position that supports it.
• Disclosures. Note disclosures, RSI schedules, journal entry support and a reconciliation of the liability from the prior year.
• Beyond the valuation. Funding policy, trust strategy and plan design alternatives (Medicare Advantage, exchange-based coverage, contribution caps, eligibility changes) modeled with their effect on the liability, the budget and retirees.

How the work runs

Census, enrollment, claims and asset data arrive through the client portal. Data is reconciled to the prior valuation before the model runs. Assumptions are documented and tied to the government's experience where it is credible. Preliminary results are reviewed with the finance office, and a second credentialed actuary reviews the report before delivery. GASB 74 and 75 require a full valuation at least every two years; the firm performs roll-forwards in the alternate years or annual valuations where the plan is changing.

A recent engagement

A school district's retiree medical plan required a GASB 75 valuation for its June 30 fiscal year, following a change in the Medicare-eligible coverage. The firm valued the implicit subsidy for pre-65 retirees from the district's claims experience, modeled the coverage change and delivered the disclosure tables in the district's existing report format, with a reconciliation of the liability change that the auditors could follow line by line.

Common questions

Our retirees pay the full premium. Do we still have an OPEB liability? Usually yes. If retirees under 65 are in the same risk pool as active employees, the blended premium understates their claims, and GASB 75 requires that implicit subsidy to be valued.

Does funding the plan reduce the reported liability? Trust assets reduce the net liability directly. Funding can also raise the discount rate, because benefit payments the trust is projected to cover are discounted at the expected return on trust assets rather than the municipal bond rate. How much depends on the funding level, the projected cash flows and the rates in effect, so the effect is not automatic.

Can the firm respond to an RFP? Yes. The procurement facts on the contact page list the legal name, offices, year founded and credentials. References are available on request.

Every deliverable described here is reviewed by a second credentialed actuary before delivery. This page is general information about the firm's services and is not advice for any specific plan.