Other Post-Employment Benefits (OPEB)
What Are Other Post-Employment Benefits (OPEB)?
Other post-employment benefits (OPEB) are the benefits, other than pension distributions, that employees might start to receive from their employer once they retire. Other post-employment benefits can incorporate life insurance, medical coverage, and deferred compensation. These benefits are likewise alluded to as "other post-retirement benefits."
Types of Other Post-Employment Benefits
The following are three types of OPEBs that retirees might receive from their employers.
Wellbeing coverage
Retiree medical coverage is generally given as part of a group plan, much as it likely was the point at which the employee was all the while working. The group plan might be a similar one offered to current employees, or it could be a separate plan just for retirees.
By and large, on the off chance that the retiree has enrolled in Medicare, the retiree coverage will be secondary. That is, Medicare will pay its portion of medical bills and the retiree coverage will get some part of the remainder. Yet, terms can differ widely from one plan to another, so retirees ought to check their employer's Summary Plan Description (SPD) for subtleties.
Life insurance
Like health care coverage, the life insurance that employers might give to retirees is ordinarily part of a group plan and generally comes as term life insurance.
Deferred compensation
Deferred-compensation arrangements, which are likewise viewed as a post-employment benefit, pay the employee a salary or lump sum at some predetermined time, normally after they retire. These plans come in two distinct types — qualified and non-qualified — yet fill a similar fundamental need, which is to concede taxes while the employee is as yet working and turn out revenue later on, in a perfect world when that person is in a lower marginal tax bracket.
Other "other" benefits
Notwithstanding those other post-employment benefits, a few employers might give their retirees dental and vision care, legal services, and tuition reimbursement, among different benefits.
Which Businesses Offer Other Post-Employment Benefits?
Businesses and different organizations that might give benefits to employees after they retire incorporate private sector companies; state, district, and municipal governments; and strict and instructive institutions. Albeit these benefits are generally employer-paid, retired employees might need to share a portion of the costs through copayments and deductibles, as well as making contributions to the plan back when they were all the while working. Labor unions may likewise give other post-employment benefits to their individuals.
How Are Other Post-Employment Benefits Taxed?
Whether retirees must pay income taxes on their OPEB relies upon the type of benefit. Health care coverage is generally not taxable. Employer-paid life insurance premiums might be partially taxable assuming the death benefit surpasses $50,000.
Deferred compensation arrangements come in a wide range of stages, in part contingent upon whether the employer is a for-benefit business or a government or not-for-benefit entity. One way or the other, the income from such an arrangement is generally taxed in the year that the retiree receives it.
Most employers expect that individuals who are 65 or more seasoned and eligible for retiree medical advantages sign up for both Medicare Part An and Part B, as indicated by the Centers for Medicare and Medicaid Services.
Are Other Post-Employment Benefits Guaranteed?
Retirees who receive other post-employment benefits ought to note that except if there is an unmistakable and specific agreement recorded as a hard copy, their employer can frequently change or wipe out those benefits at its tact, as per the U.S. Department of Labor (DOL). Consequently it's worth checking the Summary Plan Description the employer or plan administrator must give to see precisely the way that it alludes to other post-employment benefits, like wellbeing coverage.
"Assuming your employer has reserved the right in the SPD or controlling plan document to change the terms of the plan, you might lose coverage out of the blue during your retirement," the Department of Labor says. "On the off chance that your employer made a reasonable commitment that you will have specific medical care benefits for a positive period of time or forever, and didn't reserve the right to change the plan in any formal written plan document, you ought to be covered."
Suggestions for Employers
Other post-retirement benefits can be costly for employers to fund and regulate. Likewise with many forms of retirement compensation, they additionally include severe reporting requirements.
Among other helpful resources, the rules administering how companies ought to report pension costs and other post-employment obligations are covered by the Financial Accounting Standards Board in Compensation — Retirement Benefits — Defined Benefit Plans — General (Subtopic 715-20). The American Society of Pension Professionals and Actuaries (ASPPA) additionally offers guidance for actuaries and others on the best way to agree with the required disclosure process.
Features
- Other post-employment benefits (OPEBs) are benefits, other than pension distributions, that a few employers give to retirees.
- OPEBs can incorporate paid health care coverage, life insurance, and deferred compensation.
- OPEBS are not guaranteed except if plan documents specifically state that the employer can't change or cease them.
