Other post-employment benefits (OPEB) refers to the benefits, other than pensions, that a state or local government employee receives as part of his or her package of retirement benefits. Typically retiree medical insurance is the most significant OPEB offering, though other benefits such as life insurance are also covered by this umbrella term.
In June 2015 GASB approved two new statements applicable to OPEB plans and participating governments. Statements No. 74 and 75 will replace No. 43 and 45 and make changes to the financial reporting framework for OPEB plans, including the reporting of a net OPEB liability (or a proportionate share of the net OPEB liability, if a sponsoring government). The new statements also require more extensive disclosures and required supplementary information including reporting the effects of changes in assumptions on the nete OPEB liability and a schedule of a government's OPEB contributions compared to the contributions required.
Statement No. 74 applies to OPEB plans that administer benefits on behalf of participating governments. It takes effect for financial statements with fiscal years beginning after June 15, 2016.
Statement No. 75 applies to governments who participate in OPEB plans. It takes effect for fiscal years beginning after June 15, 2017.
News Release: GASB Improves Reporting for Health Insurance and Other Retiree Benefits, June 2, 2015
GASB Statements No. 43 and 45 were issued in 2004 with the goal of providing standards for valuing the costs of OPEB liabilities. The statements required states to project OPEB costs into the future, and include actuarially determined projections on how many employees their expected to cover, and how long they were expected to work before drawing benefits. Some of the data points included in the required valuation are the actuarial accrued liability (AAL), actuarial value of assets (AVA), unfunded actuarial accrued liability (UAAL) and annual required contribution (ARC). Valuations are generally conducted at least every two years, though some states provide projections more frequently.
GASB in June 2014 issued exposure drafts proposing guidance for reporting Other Post-Employment Benefits. If and when approved, the new statements would supplant Statements No. 43 and 45. Per GASB:
The first Exposure Draft related to OPEB, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions (OPEB Employer Exposure Draft), proposes guidance for reporting by governments that provide OPEB to their employees and for governments that finance OPEB for employees of other employers.
The second Exposure Draft related to OPEB, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans (OPEB Plan Exposure Draft), addresses the reporting by the OPEB plans that administer those benefits.
Additional resources on GASB's OPEB proposals include:
Spotlight On Retiree Health Care Benefits for State & Local Employees in 2014, NASRA and Center for State and Local Government Excellence (December 2014)
Results of NASRA Survey on OPEB topics (members-only)
Diverging Trends Underlie Stable Overall US OPEB Liability, Standard & Poor's, (November 2014)
Understanding Finances and Changes in Retiree Health Care, Joshua Franzel and Alexander Brown, Government Finance Review (February 2012)
State and Local Retiree Health Benefits, Government Accountability Office (November 2009)
Retiree Health Plans: A National Assessment, Center for State and Local Government Excellence (September 2008)
Best Practice: Ensuring the sustainability of other post-employment benefits, Government Finance Officers Association