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Assumptions used in the computation of annual OPEB costs and valuation of the year-end OPEB
obligations were as follows:
2014 2013 2012
Discount rate—used at year end to value
obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.10%-4.20% 4.90%-5.20% 4.00%-4.20%
Discount rate—used to compute annual
cost. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.90%-5.20% 4.00%-4.20% 4.50%-4.75%
Expected long-term rate of return on plan
assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.00%-4.00% 3.00%-4.00% 3.00%-4.00%
The OPEB plan’s expected benefit payments over the next 10 years are as follows:
($ in thousands)
Gross
Benefit
Medicare Part D
Subsidy Total
2015 $ 22,781 $ 11 $ 22,770
2016 26,472 18 26,454
2017 29,983 32 29,951
2018 33,148 46 33,102
2019 35,902 67 35,835
2020-2024 209,484 904 208,580
Total $357,770 $1,078 $356,692
For purposes of measuring year-end benefit obligations, we used, depending on medical plan
coverage for different retiree groups, a 7.00% annual rate of increase in the per-capita cost of covered
medical benefits, gradually decreasing to 5.00% in the year 2019 and remaining at that level thereafter.
The effect of a 1% increase in the assumed medical cost trend rates for each future year on the
aggregate of the service and interest cost components of the total postretirement benefit cost would be
$1 million and the effect on the accumulated postretirement benefit obligation for health benefits would
be $35 million. The effect of a 1% decrease in the assumed medical cost trend rates for each future
year on the aggregate of the service and interest cost components of the total postretirement benefit
cost would be $(1) million and the effect on the accumulated postretirement benefit obligation for health
benefits would be $(30) million.
The amounts in accumulated other comprehensive loss that have not yet been recognized as
components of net periodic benefit cost at December 31, 2014 and 2013 are as follows:
($ in thousands) 2014 2013 2014 2013
Pension Plan OPEB
Net actuarial loss. . . . . . . . . . . . . . . . . . . . . . . . . . . $531,958 $411,076 $143,070 $ 30,835
Prior service cost/(credit) . . . . . . . . . . . . . . . . . . . 310 356 (24,320) (25,605)
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $532,268 $411,432 $118,750 $ 5,230
F-39
FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements