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ELK RIVER MUNICIPAL UTILITIES <br /> ELK RIVER,MINNESOTA <br /> NOTES TO THE FINANCIAL STATEMENTS <br /> DECEMBER 31,2015 <br /> Note 5: POSTEMPLOYMENT BENEFITS OTHER THAN PENSIONS-CONTINUED <br /> The following simplifying assumptions were made: <br /> Retirement age for active employees-Based on the historical average retirement age for the covered group,active plan <br /> members were assumed to retire at age 60,or at the first subsequent year in which the member would qualify for benefits. <br /> Participation Rate-It is assumed that 10 percent of active participants continue coverage until age 65.Participants are <br /> assumed to continue in their current coverage type(single or family). It is assumed that 100 percent of retirees will continue <br /> their current coverage until age 65. <br /> Life Expectancy-Life expectancies were based on mortality tables from the National Center for Health Statistics.The 2000 <br /> United States Life Tables for Males and for Females were used. <br /> Turnover-Non-group-specific age-based turnover data from GASB Statement 45 were used as the basis for assigning active <br /> members a probability of remaining employed until the assumed retirement age and for developing an expected future <br /> working lifetime assumption for purposes of allocating to periods the present value of total benefits to be paid. <br /> Healthcare cost trend rate-The expected rate of increase in healthcare insurance premiums was based on projections of the <br /> Office of the Actuary at the Centers for Medicare&Medicaid Services.A rate of 7.5 percent initially,reduced to an ultimate <br /> rate of 5.0 percent after eight years,was used. <br /> Health insurance premiums-2014 health insurance premiums for retirees were used per the valuation report. <br /> Withdrawal-The probability that an employee will remain employed until the assumed retirement age was determined using <br /> non-group specific age-based turnover data provided in Table 1 in Paragraph 35b of GASB 45. <br /> Disability-None <br /> Actuarial Method-Projected Unit Credit with 30-year amortization of the unfunded liability. <br /> Valuation date-January 1,2014 <br /> Based on the historical and expected returns of the Utilities' short-term investment portfolio,a discount rate of 4.0 percent <br /> was used. In addition,a simplified version of the entry age actuarial cost method was used. The unfunded actuarial accrued <br /> liability is being amortized as a level dollar amount over an open basis.The remaining amortization period at December 31, <br /> 2014 was thirty years. <br /> 144 <br />