According to a news release, the Technical Bulletinfrom the Governmental Accounting Standards Board (GASB) clarifies:
- how an employer should account for and report Medicare Part D retiree drug subsidy payments from the federal government to the employer
- how such payments to an employer affect the accounting for the transaction and financial reporting by a defined benefit Other Post Employment Benefits ( OPEB) plan
- how an employer should account for and report such payments to the plan
- how a defined benefit OPEB plan should account for and report such payments to the plan.
Medicare Part D is a federal program that provides prescription drug benefits to eligible Medicare recipients. Among other options, the law that created the program provides for payments to certain employers and plans that provide prescription drug benefits to persons who otherwise would be eligible to participate in Medicare Part D; the payments can be as much as 28% of eligible costs (See Feds Release Part D 2007 Specifics ).
The GASB Technical Bulletin is effective immediately, except for portions of answers pertaining to measurement, recognition or required supplementary information requirements of Statement No. 43, Financial Reporting for Postemployement Benefit Plans Other Than Pension Plans; or Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions, GASB said. Those provisions should be applied simultaneously with the implementation of Statement 43 or Statement 45.
“A number of questions have arisen from constituents seeking guidance on how government employers and related plans should account for retiree drug subsidy payments associated with Medicare Part D,” said Karl Johnson, GASB Project Manager, in the news release. “The Technical Bulletin provides guidance on how existing standards should be applied to those transactions.”