Comprehensive Annual Financial Report (CAFR) - Johnson City

CITY OF JOHNSON CITY, TENNESSEENOTES TO THE FINANCIAL STATEMENTSFor the Fiscal Year Ended June 30, 20115. OTHER INFORMATION (CONTINUED):F. Post-employment health care benefitsCity o[Johnson City:Plan Description:In 1984, the City Commission approved a resolution which offers post-employment health care benefitsto eligible employees who retire from the City with 20 years of service. The retiree can carry thiscoverage until they turn 65. There are currently 760 employees that qualify for this coverage.In 2008, the City Commission approved a resolution which amends the post-employment health carebenefits. Under the amendment, active employees with at least 35 years of continuous full time servicesolely to the City as of July 1, 2008, shall be eligible to receive post-age 65 coverage in the City's grouphealth plan when they retire with 40 years or more of service at no charge to the employee. Currently,two City retirees receive this benefit.Active employees with 30 to 34 years of full time continuous service solely to the City as of July 1, 2008,who retire with 40 years of service prior to reaching Medicare eligibility, may remain in the group healthplan at employee rates until reaching Medicare eligibility. There are currently 76 retirees covered for thishealth benefit. The quarterly charge for employees is $354 for individual and $909 for family. The coinsurancerate of reimbursement depends on the plan the employee is covered by. The Preferred Networkhas a $550 deductible with an 80% co-insurance rate. The Select Network has a $475 deductible and a90% co-insurance rate. During the fiscal year ending June 30, 2011, contributions received from activeemployees were $1,473,868 and contributions received from retirees were $221,140. Upon reaching·Medicare eligibility, these employees shall be eligible to be reimbursed up to $3,000 per year for the costsof a Medicare supplemental plan, if they choose to procure such a plan.Active full time employees with less than 30 years of full time continuous service solely to the City as ofJuly 1, 2008, shall not be eligible for any of the retiree health bent!fits as set forth in the above paragraphs.Funding Policy:The contribution requirements of plan members and the City of Johnson City are based on pay-as-you gofinancing requirements.Annual OPEB Cost and Net OPEB Obligation:The City's other post-employment benefit (OPEB) cost (expense) is calculated based on the annualrequired contribution of the employer (ARC), an amount actuarially determined in accordance with theparameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoingbasis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (offunding excess) over a period not to exceed thirty years. The following table shows the components ofthe City's annual OPEB cost for the fiscal year, the amount actually contributed to the plan, and changesin the City's OPEB obligation.107