HUDSON–The Financial Oversight Committee of the county Board of Supervisors, which meets from time to time at the request of Chairman Patrick Grattan, heard a presentation last week by Vickie A. Mazzie, consulting actuary with Milliman, a benefits consulting and actuarial firm hired by the county. The topic was GASB 45 and the news wasn’t good.
GASB is an acronym for the Government Accounting Standards Board, and 45 is the standard for determining the long-term liability for healthcare payments for current employees who may be expected to retire and current retirees. It projects the costs for medical, dental, vision, hearing, life insurance and long-term care insurance. It does not cover pension benefits. The calculation is used by lenders when evaluating the credit-worthiness of the entity using the standard.
Under GASB 45, the county must show the potential liability for these benefits, which is calculated based on assumptions for turnover, retirement date and expected mortality. It answers questions pertaining to post-retirement benefits and the rate of increase over time. It also factors in the effect of co-payments for the benefits and includes those who are already retired and who currently are receiving benefits, and those who will retire and receive benefits for themselves and their dependents.
An actuarial firm is required to calculate the figures whenever a government entity has more than 100 employees. And in the county’s case, a calculation was done for both county departments and for Pine Haven, the skilled nursing facility and rehab center on Philmont, which is owned and operated by the county.
The calculations, which anticipate how much the county will have to spend on all these benefits, can affect financial status of the county and, in turn, the interest rate the county will pay when it borrows funds.
Currently, the county pays premiums of $1.3 million for retirees and their dependents, but the numbers point to much larger long-term liabilities based on the formulas. The total estimated unfunded accrued liability for county government comes to $57.1 million, plus an additional $8.6 million when Pine Haven is included.
“What effect will the Affordable Care Act have on the calculation?” Mr. Grattan (R-Kinderhook) asked.
Ms. Mazzie said that the current figures do not reflect any adjustments for the healthcare law, frequently referred to as Obamacare, since New York State has not yet set up the insurance exchange mandated under the act. The exchanges are designed to be resources where people can go to find a healthcare policy that fits their needs and ability to pay.
Supervisor Ellen Thurston (D-Hudson, 3rd Ward) asked another whether “an increased number of marriages have an impact?”
Ms. Mazzie responded that the county’s liability is offset by what the retirees contribute toward the premium.
“If we sell Pine Haven, how would the buyer treat the unfunded liability?” Ancram Supervisor Arthur Bassin (D) asked.
“If a private firm bought it, they do not have to deal with it,” said County Controller Ronald Caponera, who added that with a sale, “We would no longer have the future liability.”
When the county switched to a less-expensive healthcare plan for its employees, “our liability went down.”
“More decisions like that would be good,” said Mr. Bassin.