2007 HEALTH PLAN FOR THOSE ELIGIBLE FOR MEDICARE

Now that the federal government has made available Medicare Part C and Medicare Part D it became possible to develop a "group" plan that brings significant benefits to retirees. We now offer a group plan that has advantages for both the retiree and their sponsoring organization, such as:

Enrollment is not limited to any specific dates, it is “open enrollment”

Enrollment is not limited geographically

The plan is a “private fee-for-service” plan, not an HMO or “network” (ie: PPO, EPO)

The plan is good anywhere in the country

The drug plan has no deductible and pays for generics during the “donut hole”

The premium can be paid by either the retiree or their sponsoring organization

EMPLOYER CONSIDERATION: FASB 106 IMPLEMENTATION

In 1990 the Financial Accounting Standards Board (FASB) issued a statement entitled "Employers Accounting for Post-Retirement Benefits Other than Pensions (FASB 106)". Imposed by this ruling is the requirement that employers begin accruing the projected cost of post-retirement benefits during an employee's working career. The employer should value the cost of post-retirement benefits and place the results in their financial statements as a liability.

Some employers have looked for ways to systematically fund these liabilities while most are actively seeking ways to reduce the cost. One method of implementing FASB 106 requirements is the employer choosing to "policy insure" for its retirees. This has a dual benefit. First, the liability is a known (therefore "controlled") cost - the premium. Second, rather than reducing benefits, benefits may improve.

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