Accounting standards and actuarial guidelines are subject to constant review and revision over time, with a focus on improving the clarity and accuracy of reporting. At Burke Group our commitment is to remain at the forefront of these changes. Recently two new guidelines have been published which could significantly impact the liabilities, reporting, and potentially how employers choose to structure their benefits in the future.
The first development of note is that in May the Actuarial Standards Board published Actuarial Standard of Practice Number 6 (ASOP 6), which governs how medical plans are valued. The practical impact of this publication is that “community rating” has effectively been eliminated as a designation, meaning that all medical plans are required to be treated as experience rated or self-funded in the future.
This means that:
This also means that even employers who previously did not have an actuarial liability, and did not need to have valuations done, may now have a liability and need to have valuations done. As always you should discuss this with your auditor to see if this now applies to you. We would also be happy to discuss your plan with you to see if you now need to have valuations done.
This change goes into effect for all employers with a measurement date on or after March 31, 2015.
The second change is that the Government Accounting Standards Board (GASB) in June issued a preliminary draft of changes to GASB 45. While these changes are not final yet, the new standard is currently slated to go into effect for fiscal years beginning after December 15, 2016. Prudent employers may want to begin planning for these changes now.
In short, we are looking at a significant revision in how benefits are calculated and reflected by employers over the next 3 years. At Burke Group we will be working with everyone to ease you through this transition. If you have any questions about how this could potentially impact your plan, you are welcome to contact either myself or Vince Cassano at Burke Group by calling (585) 624-5500.
Brian Schiedel is responsible for monitoring daily valuation recordkeeping services, ensuring that transactions meet strict procedural guidelines, and providing compliance and other consulting services for Burke Group’s retirement plan clients. He serves as the direct Relationship Manager for more than 30 retirement plans.
Prior to joining Burke Group, he obtained his bachelor’s degree in management science from the State University of New York at Geneseo. He has also obtained the Qualified 401(k) Administrator (QKA) designation through the American Society of Pension Professionals and Actuaries (ASPPA).