OPEB - Frequently Asked Questions
Q - What is OPEB?
A - Other
Postemployment Benefits (OPEB) = postemployment benefits other than
pensions. This includes:
healthcare benefits (medical, dental, vision, hearing, etc.) – whether provided
through a pension plan or separately;
benefits (death benefits, disability, life insurance, long-term care, etc.) –
when provided separately from a pension plan.
Q - Does GASB 74 apply to my local
A – Probably
not. Statement 74 is the financial
reporting requirements for OPEB plans that are administered through a
qualifying trust or equivalent arrangement.
A qualifying trust is one in which all of the following criteria are
to the plan and earnings on those contributions are irrevocable
assets are dedicated to providing benefits to plan members in accordance with
the benefit terms.
assets are legally protected from creditors.
We are not currently
aware of any local governments whose plans meet all three criteria.
Q – Does GASB 75 apply to my local
A – If you
provide OPEB to retirees, then the requirements of GASB 75 are applicable for
the year ended 2018.
pensions, the new OPEB standards will require local governments to report their
OPEB liabilities and related deferred outflows and deferred inflows on the face
of the financial statements.
Q – Where do I get my numbers?
A – From an
actuarial valuation. Unlike pension
plans, most OPEB plans in the state are not centrally administered and there is
no single actuarial valuation like the DRS PEFI for the state’s pension plans. Many employers who provide OPEB will need to
arrange for their own actuarial valuations.
employers participating in the Public Employees Benefits Board (PEBB) program
and LEOFF 1 employers, the Office of the State Actuary is developing on-line valuation
tools. These tools should only be used
by employers with fewer than 100 participating plan members (includes active
employees and retirees).
participating in the Association of Washington Cities (AWC) or Washington
Counties Insurance Fund (WCIF) programs should contact those programs
directly. Employers who need individual
valuations should contact their own actuaries to arrange for a valuation under
the new standards as soon as possible.
Q – I am a participating employer in
the state’s Public Employees Benefits Board (PEBB) plan. Do I provide OPEB?
A – Yes. Participating employers provide OPEB through
the plan’s implicit and explicit rate subsidies for retirees. These subsidies lower the monthly premiums
for retirees, and that is the OPEB benefit.
Q - What is an “implicit rate
A – This is
also known as a “blended premium rate.”
It is caused by the inclusion of retirees in the same cost pool as
active employees. As a result, retirees
have the same premium rates as active employees and the rates for active
employees implicitly subsidize the rates for retirees. This implicit subsidy is OPEB and must be
included in your OPEB liability – even if retirees pay 100% of their premiums.
Q - What is the Alternative Valuation
A – This is
an alternative to a professional actuarial valuation and is specified by
paragraphs 225 and 226 of GASB 75. It
uses simplified assumptions and calculations.
It can be used to measure the total OPEB liability if you have fewer
than 100 plan members (includes active employees and retirees) as of the
beginning of the year.
your member count, consider each plan subscriber to be one member. For example:
Q – What is “census data?” Will there be census data testing?
A – Census
data is information about plan members, such as birthdate, gender, years of
service, compensation, etc. Actuaries
use census data to perform the valuation that determines the total OPEB
will test the completeness and accuracy of census data provided by employers to
Q – Do cash-basis governments who
prepare financial statements have to report OPEB in their annual reports?
A – Yes,
cash basis governments will be required to include note disclosure information
regarding their OPEB plan (type of plan, nature of benefits, etc.). SAO will provide sample note disclosures and
instructions in the BARS Manual.