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Welfare Plan Design

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In designing a welfare plan I am trying to assess the level of benefits.

For example regarding pre-retirement death benefits, they can be funded by life insurance and of course require annual premiums.

However, any suggestions regarding a value for the level of benefits for post-retirement medical or long term care insurance.

For example say normal retirement is age 55 and I want to establish a reserve by the employee's normal retirement age. How can I determine a reasonable level of reserve to target for post-retirement medical costs (inclusive of an insurance policy), or long term care costs (inclusive of an insurance policy).

For example if post retirement medical costs consist of health insurance and other out of pocket costs, then there must be a target dollar reserve that would cover these expenses over the course of the retiree's life time. For example perhaps $300,000 might cover the life time expense. So an annual deduction to accumulate to $300,000 would be necessary. Likewise for long term care.

Any help or reference to statistical data resources would be appreciated.

Thank you.

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Are you trying to assess the level of benefits or are you trying to value the various levels of benefits?

If the latter, you should consider, as a first step, a review the Actuarial Standards of Practice No. 6, which discusses the measurement of retiree benefit obligations. Its link is


After that, get an actuary who is experienced in the field to help you.

As to the funding of the benefits, life insurance is not always the best answer. Sometimes it is better to fund from the general assets of the plan sponsor - if it is large enough - and to have NO post retirement health benefits if the sponsor does not have unlimited funds available.

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I am trying to first determine a reasonable level of benefits for eg. it could be monthly health insurance premiums plus out of pocket expenses. And then I would want to be able to determine what those costs might approximately be for eg. for say each age from say 55 through 90. Then it is easy for me to determine a present value of such benefits.

Perhaps the same for long term care.

I am also looking for a reasonable amount of pre-retirement life insurance, for eg. it might be 10 times compensation.

My thought is that mayber there are statistical resources available.


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Actuaries revel in the type of statistical data you desire. Since Section 419A of the IRC requires calculations being determined by an actuary in any event, I suggest that the best solution to your need is to hire an actuary with health and welfare plan background and experience.

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