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ELK RIVER MUNICIPAL UTILITIES <br /> ELK RIVER, MINNESOTA <br /> NOTES TO FINANCIAL STATEMENTS <br /> DECEMBER 31,2012 AND 2011 <br /> Note 5: POSTEMPLOYMENT BENEFITS OTHER THAN PENSION <br /> Plan Description. Elk River Municipal Utilities(the Utilities)administers a multi-employer defined benefit healthcare <br /> plan("the Retiree Health Plan").The plan provides lifetime healthcare insurance for eligible retirees and their spouses <br /> through the Utilities group health insurance plan,which covers both active and retired members.Benefit provisions are <br /> reviewed intermittently through the relationship with the Utilities' insurance broker. The Retiree Health Plan does not <br /> issue a publicly available financial report. <br /> Funding Policy. Contribution requirements also are reviewed at the time changes are made to the plan. The Utility <br /> contributes none of the cost of current-year premiums for eligible retired plan members and their spouses. For fiscal year <br /> 2012,the Utility contributed$0 to the plan.Plan members receiving benefits contribute 100 percent of their premium <br /> costs. In fiscal year 2012,total member contributions were$0. <br /> Annual OPEB Cost and Net OPEB Obligation. The Utilities' annual other postemployment benefit(OPEB)cost <br /> (expense) is calculated based on the annual required contribution of the employer(ARC).The Utility has elected to <br /> calculate the ARC and related information using the alternative measurement method permitted by GASB Statement 45 <br /> for employers in plans with fewer than one hundred total plan members.The ARC represents a level of funding that, if <br /> paid on an ongoing basis, is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities <br /> (or finding excess) over a period not to exceed thirty years. The following table shows the components of the Utilities <br /> annual OPEB cost for the year,the amount actually contributed to the plan, and changes in the Utilities' net OPEB <br /> obligation to the Retiree Health Plan: <br /> Annual required contribution $ 6,527 <br /> Interest on net OPEB obligation 1,430 <br /> Adjustment to annual required contribution (2,068) <br /> Annual OPEB Cost(expense) 5,889 <br /> Contributions made <br /> Direct(explicit)subsidy - <br /> Implicit subsidy (1,288) <br /> Increase in net OPEB obligation 4,601 <br /> Net OPEB obligation-beginning of year 35,759 <br /> Net OPEB obligation-end of year $ 40,360 <br /> 50 <br />