GASB is the Government Accounting Standards Board. Its statements, including GASB 75, define what is considered to be generally accepted accounting principles (GAAP) for governmental entities. Employers subject to GASB accounting standards include state and local governments, public school districts, public employee retirement systems (PERS), state colleges and universities, state hospitals, utility districts, public transit companies, and other governmental or quasi-governmental employers.

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OPEBs are other [than pension] post-employment benefits. Benefits defined as OPEB include medical, prescription drug, dental, vision, hearing, life insurance, long-term care benefits, and long-term disability benefits (not covered under a pension plan) that are provided after active service by the employer. OPEB does not include pension benefits or termination benefits, which are covered under other GASB accounting standards.

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The disclosures fall into the following basic categories:

• Information about OPEBs: identify the plan, describe the benefit terms, list the number of employees covered by the benefit terms; separately for inactive employees currently receiving benefits, inactive employees entitled to but not receiving benefits, and active employees. A description of the contribution requirements should be included and whether the OPEB plan issues a stand-alone financial report.
• Information about the net OPEB liability: assumptions and inputs used to measure the total OPEB liability, the sources for the assumptions, sensitivity tests on trend and discount rate, and background information on how the discount rate was chosen. Information about the OPEB plan’s fiduciary net position: information about plan assets, deferred inflows and outflows of resources and fiduciary net position. Specifics concerning the changes in the net OPEB liability since the last reporting period
• Required Supplementary Information which includes various 10 year schedules plus notes on any factors that will significantly affect trend in the amounts reported.

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GASB 74 addresses accounting and financial reporting by plans that administer OPEB benefits. GASB 75 addresses accounting and financial reporting by governments that provide OPEB to their employees or employees of other governmental units.

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The provisions in Statement 74 are effective for financial statements for fiscal years beginning after June 15, 2016. The provisions in Statement 75 are effective for fiscal years beginning after June 15, 2017. Earlier application is encouraged.

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GASBhelp™ is an online tool that provides an accurate, low-cost method of valuing nonpension post-employment benefits for organizations that are required to comply with GASB 75 and that have fewer than 100 plan members. Developed by Milliman’s team of experienced healthcare and pension actuaries, this tool guides users through the valuation process using the GASB-approved simplified approach known as the Alternative Measurement Method (AMM).

GASBhelp delivers a complete assessment with a comprehensive report that provides all information necessary to comply with GASB 75 valuation requirements at a low cost. Learn if your small public entity is eligible for the GASB 75 AMM and to use GASBhelp™.

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The alternative measurement method, or AMM, is an approach that includes the same broad measurement steps as an actuarial valuation (projecting benefit payments, discounting projected benefit payments to a present value, and attributing the present value of projected benefit payments to periods using an actuarial cost method). However, it permits simplification of certain assumptions. Qualifying small governmental employers may use the AMM. Learn if your small public entity is eligible for the GASB 75 AMM and to use GASBhelp™.

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GASBhelp™ offers the following services to eligible small public employers:

• Instantaneous results at a low price
• Actuarial calculations required to comply with GASB 75
• A GASB 75 compliant report, which includes data required for your financial statements
• The ability to experiment with results for two years at no additional charge
• An easy-to-use Web interface and step-by-step guidance (much like self-help tax software)
• Access to Milliman GASB experts and actuaries to answer your questions

Learn if your small public entity is eligible for the GASB 75 AMM and to use GASBhelp.

Eligible entities with fewer than 100 plan members can gain complete access to GASBhelp for $3,150 for a two year lease period. Discount codes are available for group purchasing arrangements; for information, contact Milliman and provide the entity names and number of plan members for each of the applying entities.

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Generally it takes between 90 minutes and 4 hours to complete the GASBhelp™ screens, depending on the number and complexity of OPEBs, the number of plan members, and the number of different scenarios you choose to explore. The results are automatically calculated and are immediately available to paid GASBhelp users who have completed all required sections of GASBhelp.

You can also continue to explore scenarios, adjust entries, and use the printed results to comply with GASB 75 requirements.

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GASBhelp™ was built by Milliman in accordance with the actuarial valuation methodologies of the GASB 75 Alternative Measurement Method (AMM). GASBhelp has been tested rigorously by Milliman actuaries to confirm correctness using sample cases in GASB 75 literature as well as other test cases. Results were calculated manually by actuaries and then compared to tool results to verify that answers were identical.

While Milliman can assure that the calculations are appropriate and correct, any result is only as good as the data upon which it is based. It is critical that you ensure the completeness and accuracy of every piece of data keyed in during the calculation process to confidently use the results from GASBhelp. To confirm accuracy and completeness, GASBhelp provides a summary of critical inputs as part of your results report.

The results, like any other financial projection, represent forward-looking estimates based on reasonable assumptions and the best information available at the time the projection is made. Any changes in plan demographics, benefits, economic factors, or other information or assumptions will alter the financial projection and should be identified each time an evaluation is performed.

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GASBhelp™ is for small public employers, with fewer than 100 plan members, that:

• Offer medical, pharmacy, dental, vision, and life as OPEBs. A separate actuarial valuation will need to be completed for any other OPEBs.
• Base benefit cost projections on premiums paid to insurance companies for OPEBs. If premium information is unavailable (e.g., if you have claim data instead), the projection requires calculation outside of GASBhelp.
• Have employer contributions toward benefits based on a fixed-dollar or fixed-percentage contribution. More complex contribution schedules require actuarial consulting outside of GASBhelp.
• Have OPEB eligibility requirements based on: (1) attainment of a particular age when service terminates, (2) attainment of a particular number of years of service when service terminates, or (3) both. Other eligibility requirements require actuarial consulting outside of GASBhelp.
• Qualify to use the streamlined approach known as the Alternative Measurement Method (AMM), to GASB 75. Learn if your small public entity is eligible for the GASB 75 AMM and to use GASBhelp.

Download a checklist of data required to complete GASBhelp.

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If the retirees do not pay the entire premium for OPEBs, and the employer covers some portion of the premium, there is an OPEB liability.

If OPEBs are provided to retirees and active employees under the same premium plan, then regardless of whether the retirees pay all or a portion of the premium, there is an OPEB liability due to the implicit rate subsidy.

If OPEBs are provided separately from active employees, with premiums that reflect the true level of retiree claim costs, and retirees pay the entire premium, then there is no OPEB liability to report.

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GABS75 states that actuarial valuations must be done at least every two years, and more often if significant changes to the plan occur.

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For plans with fewer than 100 plan members, the employer can use the GASB 75 Alternative Measurement Method (AMM) for these calculations or a traditional actuarial valuation. Learn if your small public entity is eligible for the GASB 75 AMM and to use GASBhelp™.

For larger employers or those that don’t qualify for the AMM, an actuarial firm or individual with both pension and health actuarial expertise will be needed to perform an actuarial valuation of the OPEBs. Learn about Milliman’s GASB 75 actuarial valuation services.

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If an employer does not comply with GASB 75, the employer’s auditor will most likely require that the employer hire an actuary to perform a GASB 75 valuation. Non-compliance with GASB 75 may also have a negative impact on the employer’s external audit opinion and bond rating. Under most scenarios, auditors will report qualified or adverse opinions on the financial statements of an entity that does not follow GAAP. Bond rating agencies have stated that not following GASB 74 and GASB 75 could be viewed as a negative management factor.

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GASB 75 does not require public employers to prefund OPEBs, but does require these liabilities to be reported in their financial statements. The intent of GASB 75 is to focus increased attention on non-pension retiree benefits and the need to intelligently manage these costs. Public employers choosing to prefund OPEBs can substantially reduce their long-term liabilities.

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There are a variety of issues that go hand-in-hand with the actuarial valuation, including:

• Forecasting future OPEB benefit payments, liabilities, and expenses
• Employee and retiree communications regarding OPEB
• Medicare Part D integration with GASB requirements
• Cost-reduction strategies, which can include plan design, eligibility, participant cost sharing, Medicare Part D optimization, vendor selection, and other strategies
• Funding options
• Legal implications

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Submit your question to the GASBhelp team.

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