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Self Insured Plans, LLC
14710 Tamiami Trail N, Ste 201
Naples, FL 34110
239.403.7884

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What We Do

Today's challenging healthcare environment demands new, more effective solutions to stem rising costs. Self Insured Plans works to keep healthcare plan expenses in line and quality care at the forefront. Whether your organization is large or small, we can help create a highly effective self-funded strategy that will control costs, keep you better informed and support happier, healthier employees.

Frequently Asked Questions - GreatGASB Solutions

great gasb Q. What is GASB?

A. GASB (Governmental Accounting Standards Board) is an organization that establishes accounting standards for governmental entitities similar to FASB for private sector organizations. While they have no enforcement powers, failure to comply with their standards is not a realistic option for most governmental entities as it will impact their credit worthiness and their ability to borrow or issue bonds.

Q. What is the purpose of GASB 43/45?

A. GASB 43/45 deals with the manner in which Governmental entities should account for and financially report the long-term liabilities that are associated with Other Post Employment Benefits (OPEB), excluding pensions, offered to retirees.

Q. What is the difference between GASB 43 and GASB 45?

A. GASB 43 addressed the financial reporting for OPEB plans, whereas GASB 45 outlined the accounting rules and reporting requirements for employers.

Q. Why is a change in OPEB accounting practices necessary?

A. Most organizations fund the costs associated with OPEB on a "pay as you go" basis expensing only the current year costs. GASB views this as inappropriate and mandates, in most instances, that the true cost of retiree OPEB's should be accrued on a present value basis and that these long-term obligations should be calculated regularly and reported on the employers income statement.

Q. How are the long-term costs of OPEB's calculated?

A. A certified actuarial valuation is required with the frequency level determined by the number of participants, including all active, retired, beneficiaries and term vested participants. Employers with 200 or more participants must have an actuarial valuation once every two years; 100-200 participants every 3 years and 100 or less participants will be based upon an Alternative Measurement Methodology (Express) recommended by GASB.

Q. What factors will generally be considered by the actuary in determining my OPEB liability?

A. Factors, such as, benefit design, turnover rate, medical inflation rate, mortality, traditional health plan factors such as demographics, the retiree plan design, the status of any union agreements and investment return will all be considered by your actuary.

Q. What is included as OPEB?

A. Other post-employment benefits exclude pension related post-retirement costs, but commonly include retiree health, drugs, vision, long-term care benefits and other eligible 213 (d) expenses.

Q. Is funding of the OPEB liability required by GASB?

A. No, "pay as you go" procedures are still allowed. In most instances, GASB 45 simply requires that the OPEB liability be calculated, disclosed and reported. However, given the potential enormity of the OPEB liability and the potential impact on the governmental entities credit worthiness or ability to issue bonds, many governmental entities are considering plan design and funding alternatives to mitigate their growing financial exposure.

Q. The liability could be substantial. If we choose to fund, must we fund the entire amount at once?

A. No. GASB allows for an amortization period of between 10 and 30 years unless the retiree group is "closed".

Q. If we do not provide any retiree OPEB coverage nor do we allow any retirees to participate in our plan, does GASB apply?

A. Probably not. However, we recommend that you have your plan reviewed to determine your GASB exposure, if any.

Q. Our plan provides OPEB coverage for retirees, but the retiree must pay 100% of their OPEB premium. Does GASB 45 apply?

A. Probably. This is one of the most often misunderstood provisions of GASB 45, due to a concept described by GASB as an Implicit Rate Subsidy (IRS). When actives and retirees are blended together in the same plan, the cost of the blended plan would likely be lower than the cost of a standalone retiree plan, especially with many retirees under age 65. For example, if the rate for the blended plan was $500 and the calculated rate for the standalone retiree plan was $1000, GASB would agrue that the retiree plan was being subsidized by the active plan and would require that the full amount of the subsidy would have to be actuarially determined, accounted for and disclosed on the entities income statement.

Q. Can we use a trust vehicle to help mitigate our costs under GASB 45?

A. Yes, in most instances. We will consider the appropriateness of a VEBA or a Section 115 Government Trust as part of our review process.

Q. When do we have to be in compliance?

A. The following chart outlines the implementation schedule. Annual Revenues are based upon your Fiscal Year immediately following 6/15/1999.

Annual Revenues

First Fiscal Year After:

First Fiscal Year After:

  GASB 43-Plans GASB 45-Employers
$100 Million + 12/15/05 12/15/06
$10 to $100 Million 12/15/06 12/15/07
Under $10 Million 12/15/07 12/15/08

 

Q. What types of services can you provide to help us deal with our GASB 43/45 responsibilities?

A. Our value proposition is that we are able to provide an integrated solution. We will provide consulting services, actuarial evaluations, plan design strategies, funding mitigation strategies and an appropriate trust vehicle, all integrated with a state of the art eligibility and claims reimbursement system, linked, real time, with your investment vehicle.

Disclosure Pursuant to Treasury Regulations in Circular 230: To ensure compliance with requirements imposed by the Internal Revenue Service, we inform you that any tax advice contained in this communication (including any attachments) was not intended or written to be used, and cannot be used, for the purpose of (i) avoiding tax-related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matter(s) addressed herein.

 

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