#13 - Audit Presentation - Laserfiche WebLink

Home Browse Search

CITY OF LAKE ELMO, MINNESOTA NOTES TO THE BASIC FINANCIAL STATEMENTS DECEMBER 31, 2023 67 NOTE 5 POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS Plan Description The City administers a single-employer defined benefit plan (the Plan) that provides health insurance to eligible employees and their spouses through the City’s health insurance plan. As of the most recent actuarial valuation date, there are 23 active employees electing coverage and no retirees electing coverage. Benefit and eligibility provisions are established through negotiations between the City and the City’s employees. The Plan does not issue a publicly available financial report. Benefits Provided At retirement, employees of the City receiving a retirement or disability benefit, or eligible to receive a benefit, from a Minnesota public pension plan may continue to participate in the City’s group insurance plan. Vesting requirements of three years if hired before July 1, 2010 or five years if hired on or after July 1, 2010 generally apply. The City is legally required to include any retirees for who it provides health insurance coverage in the same insurance pool as its active employees until the retiree reaches Medicare eligibility, regardless of whether the premiums are paid by the City or the retiree. Consequently, participating retirees are considered to receive a secondary benefit known as an “implicit rate subsidy.” This benefit arises from the assumption that the retiree is receiving a more favorable premium rate than they would otherwise be able to obtain if purchasing insurance on their own, due to being included in the same pool with the City’s younger and statistically healthier active employees. Contributions The City has historically funded these liabilities on a pay-as-you-go basis, in the amounts contractually required to satisfy the benefit terms discussed above. For the year ended December 31, 2023, the City did not make any direct contributions to the plan. Net OPEB Liabilities, OPEB Expense, and Deferred Outflows/Inflows of Resources At December 31, 2023, the City reported a net OPEB liability of $89,125 for the City’s plan. The net OPEB liability was measured as of December 31, 2022, based on an actuarial valuation as of December 31, 2021. For the year ended December 31, 2023, the City recognized OPEB expense of negative $7,456. In accordance with the Alternative Measurement Method, gains and losses due to experience and assumption changes are recognized immediately. In addition, there were no contributions between the measurement date and reporting date because the City has no retirees and no active employees who were expected to retire during 2023. Therefore, there are no deferred outflows or inflows of resources related to OPEB as of December 31, 2023.