posted February 9, 2017

Financial Reporting for Healthcare Benefits

by Corey Arvizu, CPA, Managing Partner

The Governmental Accounting Standards Board (GASB) continues to issue accounting and reporting standards that impact governments. With the dust recently settling on the financial reporting of pension benefits governments will soon have to revisit the reporting of other retirement benefits.

The retirement benefits requirement implemented in fiscal year 2016 applied only to the pension benefit element of the retirement plan. The state-wide pension plans also have a healthcare benefit (OPEB benefit) that was not included in this reporting requirement. In addition, many governments have their own healthcare retirement benefit separate from the state-wide plan that will also be included this reporting requirement.

The methodology for determining the net liability for the OPEB benefits will be similar to that applied to the pension benefit in recent years.The OPEB liability will be calculated by an actuary then any plan assets held in trust will be applied to this liability. The remaining net liability to be reported in the financial statements of the government. If the OPEB plan does not use an irrevocable trust to hold assets the total liability will be reported in the financial statements.


It is expected that state-wide plans will manage the determination of the individual employer OPEB liability similar to as they did with the pension liability; however governments are encouraged to monitor this and engage discussions with the state-wide plans as needed.In addition, as many governments have their own supplemental healthcare retirement benefit (single-employer plan) the government will be responsible for determining the OPEB liability for this separate plan.It is recommended that governments begin discussions with their actuary soon to determine the scope and timeline of this service.

The financial reporting for OPEB plan benefits is effective for fiscal year 2018 for government employers. Although many of the implementation issues for OPEB reporting will be similar to those of the pension reporting requirements there will be unique aspects that will need to be worked through, in particular for single-employer plans. We encourage governments to initiate discussions with plan administrators, actuaries, auditors and others in the government to ensure there are no surprises during the audit of their 2018 financial statements.

The content of these pages is for general information purposes only and does not constitute advice. Heinfeld, Meech & Co., P.C. tries to provide content that is true and accurate as of the date of writing; however, we give no assurance or warranty regarding the accuracy, timeliness, or applicability of any of the contents.