08-08-2022 Council Packet - Laserfiche WebLink

Home Browse Search

City of Orono, Minnesota Notes to the Financial Statements December 31, 2021 Note 5: Postemployment Benefits Other Than Pensions A. Plan Description The City provides a single-employer defined benefit health care plan to eligible retirees and their spouses. The plan offers medical coverage and is administered by Health Partners, Inc.. It is the City’s policy for Council to periodically review its medical coverage, and to obtain requests for proposals in order to provide the most favorable benefits and premiums for City employees and retirees. The City does not issue a publicly available repo rt. Inactive Plan Members or Beneficiaries Currently Receiving Benefit Payments 5 Active Plan Members 53 Total Plan Members 58 B. Funding Policy Retirees receiving benefits contribute 100 percent of their premium costs. Retirees and their spouses contribute to the health care plan at the same rate as City employees. This results in the retirees receiving an implicit rate subsidy. Contribution requirements are established by the City, based on the contract terms with HealthPartners, Inc. The required contributions are based on projected pay-as-you-go financing requirements. For the year ended December 31, 2021, the City’s average contribution rate was .5 percent of covered-employee payroll. For fiscal year 2021, the City contributed $30,694 to the plan. As of January 1, 2021, there were five retirees receiving health benefits from the City’s health plan. C. Actuarial Methods and Assumptions The City’s total OPEB liability of $1,056,792 was measured as of January 1, 2021, and the total OPEB liability used to calculate the total OPEB liability was determined by an actuarial valuation as of January 1, 2020. Roll forward procedures were used to roll forward the total OPEB liability to the measurement date. The total OPEB liability in the January 1, 2021 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement, unless ot herwise specified: Discount Rate 2.74% Expected Long-Term Investment Return N/A 20-Year Municipal Bond Yield 3.30% Inflation Rate 2.50% Salary Increases 3.25% Medical Trend Rate 7.67% in 2020 grading to 5% over 10 years The discount rate used to measure the total OPEB liability was 2.74 percent as of January 1, 2020. Mortality rates were based on the RP-2014 White Collar Mortality Tables (de-trended to 2006) and then projected beyond the valuation date using scale MP-2017. The actuarial assumptions used in the January 1, 2020 valuation were based on input from a variety of published sources of historical and projected future financial data. Each assumption was reviewed for reasonableness with the source information as well as for consistency with the other economic assumptions. DRAFT 78