[vc_row][vc_column][vc_column_text]
Author: Gary M. Caporicci, Partner
In mid-2004, the Governmental Accounting Standards Board (“GASB”) issued new statements for Postemployment Benefit Plans Other than Pensions (“OPEB”), setting forth new requirements for financial reporting and accounting. These requirements followed the standards that had earlier been set forth for Pension Plans.
Further historical context, the employers paid the Annual Required Contribution (“ARC”) as established by actuaries. If the ARC was not fully paid, the employer reported an OPEB Obligation in its financial statements and added appropriate disclosures in the Notes to the Financial Statements including, by actuaries estimate, the Unfunded Liability for the OPEB Plans.
In June 2015, GASB researched its position on OPEB Plans and, again following the release of the New Pension Standards, agreed that the Net OPEB Obligation (or Unfunded Liability) should be displayed in the financial statements with appropriate and complete Notes to the Financial Statements. These OPEB standards are consistent with the new pension standards.
Some of the key parts to these New OPEB standards are:
- Overall objective was consistent with the new pension standards and set consistent standards for all postemployment benefits.
- Providing more transparent reporting of the liability (Net OPEB Liability) and more useful information about the liability and costs of benefits.
- These new OPEB standards are effective for the Plans in 2017 and for the employers in 2018.
Some selected key points of these New OPEB Plans:
- Establishes financial reporting and accounting for state and local governmental OPEB Plans
- OPEB Plans include healthcare benefits of medical, dental, vision, hearing and other health-related benefits
- Actuaries determine the OPEB contributions, the total OPEB liability and many note disclosures
- Many OPEB plans, like pension plans, have actuarial valuations within the last two or two and one-half years. This leads the actuaries to estimate the OPEB Plan Assets to one year prior to the date of the financial statements. This is called the Measurement Date.
- The new OPEB standards include an Alternative Measurement Method for OPEB plans that have fewer than 100 plan members (active and inactive). This method for Total OPEB Liability may be done by the employer (with some aid from an actuary).
Measurement of Net OPEB Liability:
Total OPEB Liability – OPEB’s Plan Fiduciary Net Position = Net OPEB Liability
This brief article will make you aware of these New GASB OPEB Standards. Below is a list of the new standards related to OPEB:
No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans
No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions
[/vc_column_text][/vc_column][/vc_row]