Our plan provides OPEB coverage for retirees, but the retiree must pay 100% of their OPEB premium. Does GASB 45 apply?
Probably. This is one of the most often misunderstood provisions of GASB 45, due to a concept described by GASB as an Implicit Rate Subsidy (IRS). When actives and retirees are blended together in the same plan, the cost of the blended plan would likely be lower than the cost of a standalone retiree plan, especially with many retirees under age 65. For example, if the rate for the blended plan was $500 and the calculated rate for the standalone retiree plan was $1000, GASB would agrue that the retiree plan was being subsidized by the active plan and would require that the full amount of the subsidy would have to be actuarially determined, accounted for and disclosed on the entities income statement.
