Other Post-Employment Benefits (OPEB)
In June 2015, the Governmental Accounting Standards Board (GASB) issued two new standards for accounting and financial reporting by state and local governments for post-employment benefits other than pensions.
- Statement No. 74 – Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans – Effective for fiscal years ending June 30, 2017 and after. This is the financial reporting requirements for OPEB plans administered through qualifying trusts. It replaces GASB Statement 43 and is similar to GASB Statement 67 for pension plans.
- Statement No. 75 – Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions – Effective for fiscal years ending June 30, 2018 and after. This is the accounting and reporting requirements for employers who provide OPEB benefits. It replaces GASB Statement 45 and is similar to GASB Statement 68 for employers.
These new standards will make OPEB accounting and reporting consistent with pensions.
See the links on the bottom of this page for more information regarding these new standards. Additional information and resources will be provided as they become available.
To assist local governments in understanding and implementing the new standards, the State Auditor’s Office (SAO) has compiled a list of frequently asked questions, located further down on this page. If you have further questions, please contact the SAO Help Desk.
Here are some additional links for OPEB resources:
GASB (Governmental Accounting Standards Board)
- OPEB project information.pdf
- Statement No. 74, for OPEB plans.pdf
- Statement No. 75, for employers.pdf
- Implementation Guide.pdf
- OPEB Communication Resources.pdf
Frequently Asked Questions about OPEB
What is OPEB?
Other Post-Employment Benefits (OPEB) = post-employment benefits other than pensions. This includes:
- Post-employment healthcare benefits (medical, dental, vision, hearing, etc.) – whether provided through a pension plan or separately;
- Other benefits (death benefits, disability, life insurance, long-term care, etc.) – when provided separately from a pension plan.
Does GASB 74 apply to my local government?
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 met:
- Contributions to the plan and earnings on those contributions are irrevocable;
- Plan assets are dedicated to providing benefits to plan members in accordance with the benefit terms; and
- Plan assets are legally protected from creditors.
We are not currently aware of any local governments whose plans meet all three criteria.
Does GASB 75 apply to my local government?
If you provide OPEB to retirees, then the requirements of GASB 75 are applicable for the year ended 2018.
Just like 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.
Where do I get my numbers?
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.
For employers participating in the Public Employees Benefits Board (PEBB) program and LEOFF 1 employers, the Office of the State Actuary is developing online valuation tools. These tools should only be used by employers with fewer than 100 participating plan members (includes active employees and retirees).
Employers 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.
I am a participating employer in the state’s Public Employees Benefits Board (PEBB) plan. Do I provide OPEB?
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.
What is an “implicit rate subsidy?”
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 percent of their premiums.
What is the Alternative Valuation Method?
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.
To determine your member count, consider each plan subscriber to be one member. For example:
- An active employee = 1
- An active employee and dependents = 1
- A retiree and spouse = 1
What is “census data?” Will there be census data testing?
Census data is information about plan members, such as birth date, gender, years of service, compensation, etc. Actuaries determine what census data he or she needs to perform the valuation that determines the total OPEB liability.
Auditors will test the completeness and accuracy of the data that employers give to the actuary.
Do cash-basis governments who prepare financial statements have to report OPEB in their annual reports?
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.