US Postal Service 2014 Annual Report Download - page 65

2014 Report on Form 10-K United States Postal Service 61
These annual prefunding payments are in addition to the regularly allocated cost of premiums for current retirees, which
continue to be payable through 2016. The law requires the OPM to perform an actuarial valuation no later than 2017, to
determine if additional payments into the PSRHBF are required. If required, they will create an amortization schedule to fully
fund any remaining liability by 2056. Under current law the Postal Service’s share of the health insurance premiums for current
and future Postal Service retirees will be paid from the PSRHBF, beginning in 2017. At that time, the Postal Service will also
be required to fund the actuarially determined normal cost. The Postal Service did not make any prefunding payments in 2014,
2013, or 2012. At September 30, 2014, the balance in the fund was $48.8 billion. This amount represents 50% of the total
accumulated health benefit retirement obligation of $97.7 billion as of September 30, 2014.
At September 30, 2014, scheduled prefunding payments to the PSRHBF are as follows:
P.L. 109-435
(in millions)
Requirement
2015*
$
28,100
2016
5,800
2017**
—
2018**
—
2019**
—
Total PSRHBF commitment
$
33,900
*The 2015 commitment includes the $22.4 billion of payments previously defaulted on and $5.7 billion which is due no later than September 30,
2015.
**Effective in 2017, the unfunded liability will be calculated by the OPM. The Postal Service is obligated to fund the actuarially determined
normal cost and the amortized portion of the unfunded liability. Currently, these amounts cannot be estimated.
Components of retiree health benefits expense during the years ended September 30, 2014, 2013 and 2012 were as follows:
(in millions)
2014
2013
2012
Retiree health benefits premiums
$
2,985
$
2,850
$
2,629
P.L. 109-435 payment to PSRHBF
5,700
5,600
11,100
Total retiree health benefits
$
8,685
$
8,450
$
13,729
These costs are reflected as “Retiree health benefits” in the Statements of Operations and include the Postal Service’s
contribution to the FEHBP and the accrual of prefunding payments to PSRHBF. Because the amounts to be paid into the
PSRHBF are set by legislation, retiree health benefits expense may represent more or less than the full cost of the benefits
earned by Postal Service employees.
Note 10- Workers’ Compensation
Postal Service employees injured on the job are covered by the FECA, administered by the DOL OWCP, which makes all
decisions regarding injured workers’ eligibility for benefits. The Postal Service reimburses the DOL for all workers’
compensation benefits paid to or on behalf of Postal Service employees including an administrative fee.
An estimation model that combines four generally accepted actuarial valuation techniques is used to forecast future claim
payments based upon past claim-payment experience and exposure to claims as measured by total hours worked by Postal
Service employees. A liability is recorded for the present value of estimated future payments to Postal Service employees, or
their qualified survivors, who have been injured through the end of the reporting period. The estimated total cost of claims is
based on the date of the injury, the pattern of historical payments, frequency or severity of the claim-related injuries and the
expected trend in future costs. The liability for claims arising more than ten years ago is determined by an independent actuary.
The liability for estimated future workers’ compensation payments is recorded at its present value. To record the liability and
annual expense, an estimate is made of the amount of funding that would need to be invested at current interest rates in order to