When You Are Insured Through ETF and Pay them Directly

Key Benefit ConceptsActuarial, OPEB

Even if you don’t offer an OPEB plan to your retirees and they are only allowed to self-pay medical premiums directly to a state plan (e.g., the ETF plan in Wisconsin), there may still be a liability that needs to be valued. It’s similar to a group health plan that’s fully insured, and retirees pay you, the plan sponsor, the full premiums to remain on the health plan in retirement. Although the payments are going directly to an outside entity in this case (i.e., the state plan), the same principle applies.

Further, this is addressed by the Actuarial Standards Board (ASB). The ASB sets standards for appropriate actuarial practice in the United States through the development and promulgation of Actuarial Standards of Practice (ASOPs). As stated in ASOP NO. 6, “The ASB believes that employers participating in fully pooled health plans for both active participants and retirees, for example, have an implicit subsidy unless the premium charged to retirees is age-rated.” This also applies to plans described as “community-rated”, such as the ETF plan in Wisconsin. As a result, we typically request retiree participant information from employers whose health plans are sponsored through a state plan.

As always, if you have any questions in regards to data we request, please reach out to us. We would be happy to clarify any questions you may have.