A true case shows the sensitivity of an employer's expense and liabilities to different actuarial assumptions and various health care plan designs. This sensitivity analysis will give preparers and users of financial statements an idea of the different consequences of SFAS No. 106. Accounting for Nonpension Benefits Measurement Issues. As with the calculation of pension liabilities, in order to determine a company's EPBO, assumptions are needed regarding mortality, retirement date, employee turnover, discount rate, etc. In addition, the projection of retiree health care costs requires estimates of the medical cost trend rate, the portion of cost to be reimbursed by Medicare, and marital and dependency status during retirement.
Attribution is the process of assigning the cost of retiree benefits to periods of employee service.
Therefore, the primary question is what is the appropriate attribution period. Reduction of Their Commitment Employers' increasing financial obligation associated with their retiree benefits is understandable if statistical data is examined. Many U.S. companies are aggressively attempting to limit their own liability as they confront changes in accounting rules, growing medical costs, an aging workforce, and demanding shareholders. Several reactions have taken place. First, many companies work feverishly to hold down cash outlays in many ways.