Post Retirement Actuarial Study 2012 •
CITY OF CARMEL
POSTRETIREMENT BENEFIT PLAN
ACTUARIAL VALUATION
GASB 45
DISCLOSURE FYE DECEMBER 31,2011
PRELIMINARY ARC FYE DECEMBER 31,2012'
Retirement plan administrative and
recordkeeping services provided by
ONEAMERICA° MCCREADY AND KEENE, INC.
a ONEAMERICAA company
CITY OF CARMEL
POSTRETIREMENT BENEFIT PLAN
ACTUARIAL VALUATION
GASB 45
VALUATION DATE December 31,2011
DISCLOSURE FOR FISCAL YEAR January 1,2011 -December 31,2011
DETERMINATION OF ANNUAL OPEB EXPENSE January 1, 2012-December 31,2012
TRANSITION DA l'E TO GASB 45 December 31,2007
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CITY OF CARMEL
POSTRETIREMENT BENEFIT PLAN
Summary of Actuarial Valuation GASB 45 as of December 31,2011
Introduction
This report has been prepared in accordance with GASB 45 and reflects the adoption of the standard by City of Carmel effective
December 31,2007.
The first section of this report contains the disclosure of the Annual Required Contribution and other information computed
according to the provisions of GASB 45 for the Fiscal Year ending December 31, 2011. Also included are various exhibits
developing the individual components of various disclosure information required by GASB 45. The second section contains the
determination of the Annual Required Contribution for the Fiscal Year ending Decemb'er`31, 2012. The measurement date used in
each case was December 31,2011.
This report establishes the following amounts for the Fiscal Years ending 2011 and'2012:
2011 2012
Annual.Required&Contribution $ 1,459,245 $ 2,358,309
Net OPEB.Obligation•h terest • ^218;942 217,741
ARC Adjustment s (254,624) (284,262)
Annual Required Contribution $ 1,423,563 $ 2,291,788
The Annual Required Contribution for the Fiscal Year ending December 31, 2012, must be considered preliminary at this time.
Should an event take'place prior to the next:measurement date which would'leave a significant impact on the Annual Required
Contribution, calculations in-addition to those already cornpldted and Contained wit hiri'this'ireport irnik e'performed: `Exampl'es of
such an event would-be'a plan a tendtnerit ii creasiiig:benefits or the'lay'aff 6.fas. ignifiel.rit number of employee's'. If sucli an event
takes place,we recommend contacting your accountant to determine if further calculations will be required.
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Method
The cost method used was the Projected Unit Credit Cost Method as permitted by GASB 45. In order to determine the employer's
liability, the per capita claims were offset by the cost sharing features of the plan and Medicare reimbursement. The attribution
period used was from date of hire to date of full eligibility for benefits (20 years of service or Age 55 with 10 years of service).
Assumptions
The assumptions are summarized near the end of this report in the exhibit labeled GASB 45 Method and Assumptions. Such
assumptions include the per capita claims cost,the health care cost trend rate,the Medicare reimbursement rate, and participation
rate. The most pertinent assumptions are as follows:
ARC for Disclosure for ARC for
FYE 12/31/2011 FYE 12/31/2011 FYE 12/31/2012
Medical Trend from 10.0% 10.0% 10.0%
to 5.0% 5.0% 5.0%
over 11 Years 11 Years 11 Years
Discount Rate 5.75% 4.50% 4.50%
Participant Data
The data used was based on a census listing provided by the Employer. Assumptions were made regarding dependent data and
elections for active employees only. Simliar information has been furnished to us in the past, and the accuracy of this report depends
on the accuracy of all data that has been furnished to us from time to time. It is noted that we make no representation concerning the
accuracy of any employee data that has been furnished to us.
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Discussion
This determination of Annual Required Contribution is based on the Projected Unit Credit;.Accrued Liability as of December 31,
2011. Note that GASB 415 requires other.nforination to be disclosed, along with theAnnnal,Required,Contribution_
The per capita claims`cost, the health care cost fiend rate, the Medicare reimbursement fate, and the participation assumptions were
suggested by Crown Point Management Corisultahts Inc.. The'Other'assumptions' 'ere`'Suggested by McCready and Keene, Inc.
Final acceptance of each actuarial assumption is subject to the'appioVal of City of Cannel in consultation with the auditors who are
responsible for the preparation of your certified financial statement. McCready and Keene, Inc. is solely responsible for the
application of these assumptions and the determination of the results. However, Crown Point Management Consultants, Inc. has
reviewed these results and believes they are reasonable in light of the assumptions and cost method utilized.
Actuarial computations under_Statement. of Government Accounting Standards No. 45 are for purposes of fulfilling employer
accounting requirements.. The calculations reported herein have,been.made on a basis consistent_with our.understanding_of GASB.
45. However,the assumptions on which these calculations are based are decided upon by the plan sponsor and we make no statement
in regard-to-the reasonableness,of the;final choice of assumptions within the scope of GASB 45. Determinations for purposes other
than meeting employer financial accounting requirements may be significantly different from the results reported herein. The
calculations reported.herein are not applicable for determininglthe,deductibility, of employer expenses for postretirement benefits or
for determining any funding requirements.
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ACTUARIAL CERTIFICATION
The infonnation and valuation results shown in this report are, to the best of my knowledge, complete and accurated and are based
upon:
I. Employee census data as of December 31, 2011 submitted by City of Carmel. Although we did not audit this data, it
appears to be sufficient and reliable for purposes of the report.
2. Actuarial assumptions which, in the aggregate, are reasonably related to the experience of the plan and to reasonable
expectations, and which represent our best estimate of anticipated experience of the plan.
3. Actuarial methods as stated in the report and our interpretation of plan provisions as summarized in the report.
Statement Regarding Tax Information
Any tax information included in this report should be reviewed with the plan's tax advisor, and such information is not intended to be
used for the purpose of avoiding tax penalties.
The undersigned are members of the American Academy of Actuaries and meet the Qualification Standards of the American
Academy of Actuaries to render the actuarial opinion contained herein. We will be pleased to furnish any additional information or
answer any questions which may arise after your review of this report.
Prepared by
Crown Point Management Consultants,Inc. and McCready and Keene, Inc.
A 411119r .,„:1;/."27,/
Richard K. chuk David W. Shaw
F.S.A., F.C.A., M.A.A.A. F.S.A., M.A.A.A.,E.A.
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DISCLOSURE OF ANNUAL OPEB COST AND NET OPEB OBLIGATION
FYE 12/31/2010 FYE 12/31/2011
1. Normal Cost $ 706,158 $ 706,158
2. Amortization of Unfunded Accrued Liability 673,743 673,743
3. Interest 79,344 79,344
4. Annual Required Contribution(ARC)= [(1)+ (2)+(3)] $ 1,459,245 $ 1,459,245
5. Interest on Net OPEB Obligation(NOO) 155,935 218,942
6. Adjustment to ARC 181,349 254,624
7. Annual OPEB Cost= [(4)+(5)-(6)] $ 1,433,831 $ 1,423,563
8. Actual Employer Contributions. 338,064' . 392,562
9. Increase/(Decrease)in NOO= [(7)-(8)] $ 1,095,767 $ 1,031,001
10. NOO as of the Beginning of the Year 2,711,915 3,807,682
11. NOO as of the End of the'Year= [(9)+(10)] $ 3,807,682 $ 4,838,683
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DEVELOPMENT OF NET OPEB OBLIGATION
(1) (2) (3) (4) (5) (6) (7) (8)
Fiscal Annual Annual Actual Percent Change NOO
Year Interest Required NOO OPEB Employer Contributed in NOO at EOY
End Rate Contribution at BOY Cost Contribution =(5)/(2) _(4) - (5) =(3)+(7)
12/31/2008 5.75% $ 1,704,676 $ 0 $ 1,704,676 $ 375,843 22.0% $ 1,328,833 $ 1,328,833
12/31/2009 5.75% $ 1,635,948 $ 1,328,833 $ 1,623,495 $ 240,413 14.7% $ 1,383,082 $ 2,711,915
12/31/2010 5.75% $ 1,459,245 $ 2,711,915 $ 1,433,831 $ 338,064 23.2% $ 1,095,767 $ 3,807,682
12/31/2011 4.50% $ 1,459,245 5 3,807,682 $ 1,423,563 $ 392,562 26.9% $ 1,031,001 $ 4,838,683
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SCHEDULE OF FUNDING PROGRESS
Unfunded
Fiscal Year Valuation Accrued Accrued Funded
End Assets Liability Liability Ratio
12/31/2007 $0 $12,403,032 $12,403,032 0.00%
12/31/2008 $0 $12,867,010 $12,867,010 0.00%
12/31/2009 $0 $12,449,884 $12,449,884 0.00%
12/31/2011 $0 $19,688,810 $19,688,810 0.00%
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DETERMINATION OF ANNUAL OPEB COST
FYE 12/31/2011 FYE 12/31/2012
1. Normal Cost $ 706,158 $ 1,100,079
2. Amortization of Unfunded Accrued Liability 673,743 1,156,676
3. Interest 79,344 101,554
4. Annual Required Contribution= [(1)+(2) +(3)] $ 1,459,245 $ 2,358,309
5. Interest on Net OPEB Obligation 218,942 217,741
6. Annual Required Contribution Adjustment 254,624 284,262
7. Annual OPEB Cost= [(4)+(5) - (6)] $ 1,423,563 $ 2,291,788
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SUMMARY OF EMPLOYEE DATA
FYE 12/31/2011
Active
Fully Eligible 112
Other
462
Retirees 18
Surviving Spouses 1
Total Participants 593
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SUMMARY OF MAIN PLAN PROVISIONS
Medical,Dental,and Vision
1. The plan is a PPO plan providing comprehensive major medical benefits.
2. Participants are eligible for full benefits upon retirement at any age with 20 years active full time service,or age 55 with 10 years
of service
3. Cost Sharing features are as follows:
Plan B Plan C
Non-prescription Coverage Network Non-Network Network Non-Network
Deductible(2x Family) $250 $500 $500 $1,000
Physician Office Copay $20 N/A $20 N/A
Coinsurance Percentage 0% 20% 20% 40%
Out-of-Pocket Maximum $0 $1,500 $1,500 $3,000
(excluding Deductible)
Lifetime Maximum 365 days inpatient hospital same same same
Prescription Coverage Plan B Plan C
Copayment
Retail Generic $10 $10
Formulary Brand $30 $30
Non-Formulary Brand $50 $50
Mail Order 2x Above 2x Above
Dental Coverage
Deductible(2x Family) $50 waived for preventive and orthodontia
Copayment Percentage
Preventative 80%
Basic 80%
Major/Orthodontia 50%
Annual Maximum $1,500 $1500 lifetime max for orthodontia
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SUMMARY OF MAIN PLAN PROVISIONS
-Continued-
Medical.Dental,and Vision
4. 2011 Monthly Premiums
Medical and Vision Plan B Plan C
Retiree $637.00 $591.00
Spouse $836.00 $778.00
Dental Dental Plan
Retiree $4100
Spouse $39.00
The city contributes 50% of the employee-spouse premium for a retiree who has 20 years of service with the city,plus 1%
for each additional six months of service,to a maximum of 75% of the cost of medical and dental coverage. A retiree with
employee-only(or spouse-only, if the retiree is over 65) is eligible to receive 50%to 75%of the employee-only(or spouse-
only)premium using the same formula. The city's contribution will not exceed $700 per month. Retiree contributions for a
married couple that works for the city are based on service of the individual employed for the longer period of time(not to
exceed 75% of the total premium). The city contributes 100% of the premium for medical and dental coverage for those
who are killed or disabled in the line of'duty •with nd'maximum^contribu`'tion. The city pays 50% for work-related
disabilities. All other retirees pay 100%of the premium rate.
5. Coverage ceases at age 65.
6. Spousal coverage continues after the death of the retiree or after the retiree becomes eligible for Medicare.
7. Deductibles, out-of-pocket limits, and employee contributions are assumed to increase annually at the medical care cost trend rate.
The Lifetime Maximum was not increased.
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ACTUARIAL ASSUMPTIONS
COST METHOD Projected Unit Credit
ATTRIBUTION PERIOD Date of Hire to Full Eligibility
ASSUMPTIONS
Discount Rate 4.5%per annum
Mortality RP 2000 projected to 2017 with Scale AA
Disability None Assumed
Salary Scale N/A
Turnover According to Sarason Table T-1
Coverage Rate 100%of eligible employees are assumed to be covered in the plan at retirement.
Spouse Retired Participants: Age and marital status based on actual census data.
Active Participants: 50% are assumed to cover a spouse with male spouses 2
years older than female spouses.
Medicare Reimbursement.Rate N/A
Administrative Expense $345 annually, trended 5%
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ACTUARIAL ASSUMPTIONS
-Continued-
Retirement Rates: Age Male Female Age Male Female
Civilian Employees 50-53 2% 2% 63 17% 19%
54 2% 3% 64 20% 20%
55 4% 5% 65 40% 35%
56 3% 4% 66 25% 24%
57 4% 4% 67 22% 21%
58 5% 5% 68 19% 17%
59 5% 7% 69 16% 19%
60 8% 12% 70-74 30% 30%
61 14% 14% 75+ 100% 100%
62 32% 26%
Police and Fire Employees Age Rate
45-49 5%
50-51 10%
52-64 20%
65-69 50%
70+ 100%
Per Capita Claims Cost: Varies by age and status;representative rates follow:
Medical•&Vision Dental
Age male Felndle Age Male Female
55-59 $ 9,674 $ 9,570 All Ages $ 462 $ 462
60-64 '12,408 11,212
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ACTUARIAL ASSUMPTIONS
-Continued-
Health Care Cost Trend Rate: Year Medical Dental
0 10.0% 5.0%
1-2 9.0% 5.0%
3-5 8.0% 5.0%
6-8 7.0% 5.0%
9-10 6.0% 5.0%
11+ 5.0% 5.0%
Plan Mix:
Plan B 98%
Plan C 2%
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