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$1 coin being dropped into a piggy bank for OPEB Funding

What is an OPEB Funding Policy?

Bottom Line Up Front An OPEB funding policy is made up of three components: current asset amount, current contributions, and expected future contributions.Adopting a funding policy can increase your discount rate which looks favorable to rating agencies. An OPEB funding policy is intended to be long-term but may be adjusted in the future as your organization’s…
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Woman in a yellow top dropping a coin into a piggy bank for savings

Three GASB 74 Requirements to Remember When Establishing an OPEB Trust

KEY POINTS OPEB plans offer benefits other than pensions for former or retired employees such as healthcare, dental insurance, life insurance, and other ancillary benefits. Many states and municipalities are moving away from a pay-as-you-go model and addressing their growing unfunded OPEB liabilities by establishing a trust.   For a trust account to be considered an…
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Close up shot of two men, a town employee and an actuary, reviewing documents to determine the OPEB Discount Rate

Top 5 Factors that Determine Your OPEB Discount Rate

KEY POINTS Per GASB Statement 75, government entities that sponsor Other Postemployment Benefits (OPEB) Plans are required to get a valuation done at least every other year.  In order to determine your Total OPEB Liability (TOL), an actuary will establish a discount rate that will apply to all future expected benefits payments. As a government…
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Two public sector employees looking at an online calendar to determine when they need to do their OPEB valuation.

How Often Should You Do an OPEB Valuation?

Key Point GASB Statement 75 requires state and local governments that sponsor an Other Post Employment Benefits (OPEB) Plan to complete an OPEB valuation every two years. If you’re reading this, I bet you have the exciting task of managing your town or city’s Other Post Employment Benefits (OPEB) Plan. Right now, you’re probably wondering…
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Government employees discussing actuarial valuation report

10 Key Assumptions or Factors Used to Determine Your OPEB Liability

KEY POINTS OPEB (“Other Postemployment Benefits”) plans offer benefits to former or retired employees other than pensions such as healthcare, life insurance, dental insurance, and sometimes more.  Government entities are required to have an actuary value these benefits for financial statement reporting. It’s important to understand how your actuary determines the assumptions used to calculate…
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FSA vs HSA vs HRA: Which One is Better?

KEY POINTS The 3 most popular employer-sponsored healthcare accounts you can supplement your current healthcare insurance with are Flexible Spending Accounts (FSA), Health Savings Accounts (HSA), and Health Reimbursement Accounts (HRA). FSAs, HSAs, and HRAs all offer tax-free savings that you can use to pay for eligible medical, dental, vision, and sometimes long-term care expenses. …
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Medical professional examines a patient with Medicare Advantage

What’s the Difference Between Medicare Supplement and Medicare Advantage?

KEY POINTS Original Medicare covers a majority of basic health necessities, but not everything. Medicare Supplement (also known as “Medigap”) was designed as a supplemental health insurance policy to cover additional out-of-pocket expenses that Original Medicare doesn’t cover. Medicare Advantage (also known as Part C), is a private insurance alternative to Original Medicare, which can…
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Two people sitting at a desk discussing their town's OPEB funding policies.

What Are the Advantages and Disadvantages of an OPEB Trust?

KEY POINTS A majority of state government entities have large unfunded OPEB liabilities.  Establishing an OPEB Trust can help mitigate your liabilities, increase your credit rating, and enhance generational equity.  You must also keep in mind the costs associated, the time and resources needed to govern the trust, and that the funds can only be…
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A man and a woman reviewing Medicare Advantage Plans

What is Medicare Advantage?

Wading through all of the insurance plans out there can be overwhelming. Have you seen the Joe Namath commercials yet where he hypes up all the benefits of Medicare Advantage? With so many options, Medicare Advantage is a phrase you hear more often than the rest. Mainly because of how it’s funded.   What is Medicare…
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Close up of a man's hands who is dressed in a business suit. His hand has stopped a line of falling blocks from hitting the rest of the blocks still standing.

Pension Contributions at Risk due to COVID-19

As we try to bestow good tidings and wishes onto 2021, we must also weather the aftershocks of 2020 which include a very prevalent global pandemic. According to an article by Pew Trusts, many states are facing budgetary shortfalls due to a loss in revenues coupled with the increasing demand for public health and other…
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2020 OPEB Trend Report

2020 Year-End OPEB Trend Report

Our OPEB experts gathered the data and crunched the numbers to bring you our annual year-end OPEB Trend Report. The latests trends include insights on OPEB funding, municipal bond rates and GASB 74/75 discount rates. Download the report to discover the latest OPEB trends. Learn more about the Odyssey Advisors team.
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Two business professionals look at financial documents and using a calculator

Municipal Borrowing Hits 10-Year High due to COVID-19 and What it Means for You

The Wall Street Journal recently reported that municipal bond issuance hit a 10-year high of $252 billion in 2020 and for the first time in 7 years, the total outstanding municipal debt hit $3.9 trillion. Due to COVID-19 and local governments’ already tight budget constraints, it is likely that this trend will continue. Despite steadily…
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Man reading an iPad

Colrain, MA – Colrain Fully Funds OPEB Liability

Odyssey Advisors was recently featured in The Recorder’s article, “Colrain fully funds OPEB liability”. Odyssey Advisors’ OPEB Evaluation Report shows the different factors to take into account to fund the towns OPEB Trust.
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Healthcare in the World of COVID – What Does This Mean For You?

As we grapple with a global pandemic, the first thought on most people’s minds is probably not “So how much will healthcare rates rise?” While I am sure we all have much larger issues to deal with, this may be a question worth considering. According to a recent study by the Office of the Actuary…
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Man reading a newspaper and text reading, "Featured in the Webster Times"

Webster, MA – OPEB Audit

Odyssey Advisors was recently featured in a Webster Times article, “Webster selectmen OK single tax rate”. We met with the Board of Selectmen of Webster, MA to discuss the details of their OPEB audit. You can read more about it on the link above.
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5 people standing in front of mountain views holding their hands up

GASB 75 – What is OPEB Covered Employee Payroll?

So, it’s time for another OPEB valuation under GASB 75 and the actuary is asking for the “covered employee payroll” for the fiscal year or measurement period. While OPEB benefits are rarely impacted by compensation or covered employee payroll, such a figure is a required disclosure item under GASB 75 and hence that’s why you’re…
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Two colleagues looking over figures from legal marijuana taxes decreasing opeb liabilities.

Legal Marijuana & OPEB in Massachusetts

Legal retail sale of marijuana in Massachusetts is fast approaching and many towns are reviewing whether or not to have a local store. Regardless of your personal views on the legalization, this presents a unique opportunity to help with your OPEB costs. In addition to the sales and state excise taxes, cities and towns will…
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Man reading a newspaper - GASB 75 makes the Wall Street Journal

GASB 75 Makes the Wall Street Journal

The Wall Street Journal recently published an article about the impact of GASB 75 on municipal balance sheets . The estimated nationwide impact will be a $645 billion increase in balance sheet liabilities. The increased attention that GASB 75 brings to Other Post-Employment Benefits (“OPEB”) will lead to increased pressure on municipalities across the country to manage OPEB liabilities. The…
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Government Employee Retiree on a hike

What is the Difference Between GASB 74 and GASB 75?

KEY POINTS Governmental Accounting Standards Board Statement No. 74 (GASB 74), Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans, establishes financial reporting standards for plans that administer OPEB (Other Postemployment Benefits) on behalf of governments. Governmental Accounting Standards Board Statement No. 75 (GASB 75), Accounting and Financial Reporting for Postemployment Benefits Other than…
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How much does a OPEB or GASB 45/75 valuation cost?

This, of course, is one of the key questions that a Treasurer, Auditor, Accountant or School Business manager has when they begin researching the costs of GASB OPEB compliance. Here at Odyssey Advisors, I get this question hundreds of times each year from entities large & small. We understand. Price, among many factors, matters. Especially…
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GE Retiree Health Care Lawsuit Dismissed by Judge

Pay attention to the language in your employee handbook! In summary judgement this week, US District Judge Lynn Adelman in Milwaukee dismissed a suit filed by General Electric (“GE”) retirees claiming the plaintiffs have “not shown that they were cognizably harmed by GE’s fiduciary conduct with respect to the plans.”. In 2012, GE eliminated its…
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Prescription Drugs under Medicare Part D

Medicare Part D – High Cost drugs drive up OPEB costs

So, you’re an employer who generously offers medical benefits to your retirees. If so, you’ve seen prescription drug prices skyrocket over the last several years – increasing by an average of 14% per year from 2011-2015 and continuing through today. Prescription drug spending by retirees enrolled in the Medicare Part D program has been growing…
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OPEB / GASB 75 Lunch-n-Learn – the recap

We had a great “Lunch-n-Learn” session on May 24th with PARS & Vanguard to help demystify the coming changes to OPEB accounting standards for municipal entities as it relates to their retiree medical programs. GASB 74 & GASB 75 represent a significant change from the current standards and we shared the key points about how…
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Image of Bagg Hall building in Princeton, Massachusetts

Actuarial Reports on 'real' liability of town

On April 10, 2017, Parker Elmore met with Princeton, MA’s selectmen, advisory committee members, town treasurer, accountant, and Town Administrator, Nina Nazarian to discuss the Town’s OPEB obligations. Among the topics were GASB 45 and the upcoming need to implement GASB 75, OPEB Trusts (to fund or not to fund) and how to manage these long-term…
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OPEB/GASB 75 Lunch & Learn

You’re Invited To A Complimentary Lunch & Learn Seminar When: Wednesday, May 24, 2017 11:30 am – 1:30 pm Where: Sheraton Framingham Hotel & Conference Center 1657 Worcester Road, Framingham, MA 01707 (508) 270-1927 Please join us for a complimentary educational lunch on timely and trending OPEB topics (retiree healthcare liabilities) Complying with New GASB 75…
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GASB 75 – GASB's explanation for how & why the new OPEB Statement was developed

GASB explains why they adopted GASB 75 and the reasoning behind certain choices As you’re likely aware by now, the Governmental Accounting Standards Board (“GASB”) issued GASB 75 “Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions” in June 2015. This Statement will replace GASB 45 for fiscal years beginning after June 15, 2017.  GASB…
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Changes to MGL Chapter 32B, Section 20 – OPEB Trust rules

Changes effective November 7th As the sponsor of an OPEB Plan in Massachusetts, you’ve likely either begun pre-funding your liabilities or have considered doing so. The upcoming adoption of GASB 74/75 for your OPEB accounting will put further pressure on entities to consider funding these obligations. As you’re likely aware, the Commonwealth has provided legislation…
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2017 social security wage base of $127,200 announced

A 7.3% increase in the Wagebase for 2017 The Social Security Administration has just announced 2017 changes to benefits & taxes. While Social Security recipients will see a 0.3% increase in benefits in 2017, wage earners will see the income subject to Social Security tax increase from $118,500 to $127,200 or a 7.3% increase. Why…
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IRS webinar for the upcoming ACA reporting season – 10/20

We heard from many of our governmental clients last year that the ACA reporting was complex, time consuming & difficult at best. Apparently, the IRS also heard your concerns and has scheduled a webinar for October 20th to better explain the rules and answers your questions. While we can’t guarantee the value of the information they will…
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Your Pension Plan Will Be More Expensive Than You Think

Returns on public sector pension plans reach a record low As the sponsor or contributing member of a public sector pension plan, you’re aware that investment returns have been lagging the assumed rate of return over the last few years. This, along with increased longevity of your retirees, is increasing plan liabilities & required contributions.…
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GASB 67/68 – Pension disclosures for year-end – Audit complete?

As a cost-sharing employer, did the retirement system provide you the necessary year-end disclosures for GASB 67/68? If your retirement system provided you & your auditors all the necessary disclosures, that’s great and there’s nothing for you to see here.  However, if that’s not your situation and we’re hearing it more than we’d expect,  we have…
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Close up of two people sitting at a table reviewing financial documents

GASB 75 – How is Investment Rate of Return Determined?

It’s time to develop an investment policy as you start funding your OPEB obligation. GASB 75 – How do Discount Rates get Calculated? Under GASB 75, the discount rate or investment rate of return will be based on three factors:  Your funding policy – how much you will contribute each year Your investment policy – what…
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OPEB Accounting is changing – a chart to show you how

You’ve read our whitepapers (and more to come), but this chart is meant to put the key elements in one place for you to see With the voluminous GASB pronouncements on the new OPEB accounting standards, it’s easy to get confused and wonder what is really changing.  While we’ve produced several whitepapers on the topic…
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Omnibus spending bill to delay ACA Excise tax by 2 years

2009 page omnibus spending bill has some good news on healthcare costs Congressional leaders agreed late last night, Tuesday, December 15, on an omnibus spending package for the balance of the 2016 fiscal year. While the 2009 page agreement includes various tax issues important to many employers such as making permanent R&D tax credits &…
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GASB 68 – Pension Disclosures for year-end

As a cost-sharing employer, did the retirement system provide you the necessary year-end disclosures for GASB 68? Many housing authorities, utility districts and other smaller members of large retirement systems approach their fiscal year end and face their first time complying with GASB 68 “Accounting & Financial Reporting for Pensions”.  As you’re likely aware, GASB…
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The Cadillac Tax, your health plan and how it impacts you?

Over 25% of employers expected to be hit in 2018 As an employer offering health insurance to your employees, I’m sure you’ve heard about the Affordable Care Act (“ACA”) and the upcoming Excise Tax in 2018.  According to a study from the Kaiser Family Foundation, they expect 26% of employers to be subject to the…
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Introducing GASB 74 & GASB 75

On June 2, 2015, Governmental Accounting Standards Board approved GASB 74 & GASB 75. These two Statements are designed to improve financial accounting and reporting relating to postemployment benefits other than pensions (OPEB). GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans. GASB 74 addresses reporting by OPEB plans that…
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GASB 45 – upcoming changes

With the upcoming pension accounting changes under GASB 67/68, I wanted to make sure you’re abreast of what’s happening on the OPEB front (GASB 45).  As you may be aware, GASB has been working on an OPEB project since 2011 and issued an exposure draft in May 2014 to harmonize the accounting practices between pension…
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GFOA – come to booth

With the GFOA show in Philadelphia only days away, I’m sure you’re excited for all the new content at the event as well as the fun things to do in Philadelphia.  I hope you’ll have a chance to stop by our Odyssey Advisors exhibit at booth 715 in the Exhibit Hall.  We’ve developed a new…
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GASB 45, ACA & the “Excise Tax”

Under the Patient Protection and Affordable Care Act (“PPACA”), an excise tax will be imposed for tax years beginning after December 31, 2017 for high cost employer sponsored health coverage. The law specifies a 40% excise tax to be paid by the provider of such coverage of the excess value beyond a basic dollar amount…
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Pension Obligation Bonds And How They're Viewed

A Pension Obligation Bond has a ripple effect. The key is to thoroughly investigate from the outset whether or not this financial instrument is the most suitable choice. It is a long-term commitment involving a fixed repayment schedule. The rewards forever hold the promise of outweighing the risk. Each municipality has a different degree of…
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GASB 45 Compliance Made Easy

Municipalities should never have to be burdened by the complexities associated with GASB 45. Here is a rundown of some principles to bear in mind. GASB 45 requires governmental organizations to report the long-term liabilities associated with OPEBs being offered to retirees. These do not include pension or deferred compensation plans. GASB 45 focuses on…
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Municipal employees discussing common issues around a conference table

Two Large Issues Municipalities Face

Two of the largest issues facing municipalities today are underfunded pensions and unfunded “other” post-employment obligations (“OPEB “). Historically, public accounting rules have allowed these obligations to be largely hidden or less visible to investors and taxpayers. Change is being phased in through the introduction of new GASB standards that require municipalities to disclose the…
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