FairPoint Communications 2013 Annual Report Download - page 89

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87
Post-retirement Healthcare Plan Sensitivity. A 1% change in the medical trend rate assumed for post-retirement healthcare
benefits at December 31, 2013 would have the following effects (in thousands):
Increase (Decrease)
1% increase in the medical trend rate:
Effect on total service cost and interest cost components $ 13,875
Effect on benefit obligation $ 139,346
1% decrease in the medical trend rate:
Effect on total service cost and interest cost components $ (10,368)
Effect on benefit obligation $ (106,622)
The impact of the Medicare Drug Act of 2003 subsidy on the post-retirement healthcare benefits at December 31, 2013 is
as follows (in thousands):
Increase (Decrease)
Change in projected benefit obligation $ (32,656)
Change in each component of net periodic cost:
Service cost $ (1,678)
Interest cost (1,542)
Amortization of loss (2,326)
Total change in net periodic cost $ (5,546)
Estimated Future Contributions and Benefit Payments
Legislation enacted in 2012 changed the method in determining the discount rate used for calculating a qualified pension
plan’s unfunded liability. This act contained a pension funding stabilization provision which allows pension plan sponsors to use
higher interest rate assumptions when determining funded status and funding obligations. As a result, the Company's 2013 minimum
required pension plan contribution is significantly lower than it would have been in the absence of this stabilization provision. On
September 25, 2012, the Company elected to defer use of the higher segment rates under the act until the plan year beginning on
January 1, 2013 solely for determination of the adjusted funding target attainment percentage ("AFTAP") used to determine benefit
restrictions under Internal Revenue Code (the "Code") Section 436.
Estimated future employer contributions, benefit payments and Medicare prescription drug subsidies expected to offset the
future post-retirement healthcare benefit payments as of December 31, 2013 are as follows (in thousands):
Qualified
Pension Plans
Post-retirement
Healthcare Plans
Expected employer contributions for fiscal year 2014 $ 30,000 $ 5,701
Expected benefit payments for fiscal years:
2014 $ 13,970 $ 5,701
2015 3,698 6,964
2016 4,901 8,447
2017 6,173 10,091
2018 7,590 11,916
2019-2023 62,355 95,639
Expected subsidy for fiscal years:
2014 $—
2015 72
2016 104
2017 154
2018 217
2019-2023 2,535