Retiree Medical Benefits

[Guest jmg]

I have a question I hope someone can provide some information on. We offer employees that leave the company with a minimum years of service to continue their medical coverage until age 65 (until they are eligible for Medicare) and life insurance for 10 years after they retiree.

Are either of these items considered retiree benefits that are subject to FASB 106 ?

[Sandra Pearce]

Yes and yes

[Guest Illinois]

I believe I have heard of a federal court case in Erie County in which the court said that using the term "medicare eligible" was really just using age; thus limiting a benefit to those who are not yet medicare eligible is a violation of the ADEA.

...or am I dreaming.

[Sandra Pearce]

FAS 106 requires stock held companies to record on their books the value of retiree benefit obligations actuarially calculated based on work force demographics and retiree benefits provided. I am not an actuary but I do gather and present the data necessary to our actuary for calculation our company's reporting obligation.

[mroberts]

By the way, I highly do not recommend offering retiree coverage. It's a big liability. If you have union employees and it's mandated by the contract, then you really don't have a choice. But if this isn't the case, I would not want to add some extra liability to the books.