JACKSON COUNTY, MISSOURI

POSTRETIREMENT HEALTH INSURANCE

FINANCIAL INFORMATION

UNDER GASB 75

FISCAL YEAR ENDING

DECEMBER 31, 2024

6550 Sprint Parkway, Suite 200 Overland Park, KS 66211

April 2025

6550 Sprint Parkway Suite 200

Overland Park, KS 66211

(913) 491-3388 LewisEllis.com

Kansas City Dallas London Baltimore Charlotte Denver Indianapolis Omaha

April 16, 2025

Jackson County, Missouri Cheryl Colter, Deputy Director of Accounting Jackson County Courthouse 415 East 12th Street Kansas City, MO 64106

Dear Cheryl:

This report presents actuarial information in accordance with Governmental Accounting Standards Board Statement No. 75 (“GASB 75” or “GASB”) regarding the health insurance benefits available to retirees of Jackson County, Missouri (“County”). The purpose of this report is to:

Present information that provides a basis for financial statement disclosure and liability recognition as of December 31, 2024; and Determine the OPEB Expense for fiscal year 2024.

The valuation has been conducted in accordance with pertinent actuarial standards, along with generally accepted actuarial principles and practices. Employee data, claim experience and plan information were furnished by the County and its vendors. The data provided has been reviewed for reasonableness, but no attempt has been made to audit such information. The valuation is based on the benefit terms as of the measurement date of December 31st. Each actuarial assumption used in this valuation represents reasonable expectations of future experience under the postretirement insurance program.

The undersigned is a member of the Society of Actuaries and the American Academy of Actuaries and meets the qualification standards to render the actuarial information contained herein.

Respectfully submitted, LEWIS & ELLIS, LLC

Patrick Glenn, ASA, ACAS, MAAA Vice President & Principal

Jackson County Fiscal Year Ending GASB 75 December 31, 2024

TABLE OF CONTENTS

PAGE

SUMMARY

VALUATION RESULTS

FINANCIAL & DISCLOSURE INFORMATION

RESULTS BY ACCOUNTING FUND

SUMMARY OF PARTICIPANT DATA

SUMMARY OF PLAN PROVISIONS

COST ANALYSIS BY AGE

ACTUARIAL ASSUMPTIONS

ACTUARIAL METHODS

GLOSSARY

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SUMMARY

The valuation procedures noted below and information presented in this report are based on provisions underlying GASB 75. GASB stipulates that retiree benefits should be measured using age-adjusted costs. The excess of expected costs by age less retiree contribution premiums equals the employer provided benefit that forms the basis for the valuation.

The County adopted GASB 75 in fiscal year (“FY”) 2018. The present value of benefits allocated to past service represents the actuarial accrued liability (“AAL”). The amount of AAL less any OPEB trust assets is recognized as the booked liability known as the Net OPEB Liability. The amount of OPEB Expense is measured as the change in the Net OPEB Liability with deferral and amortization of specified items. When an OPEB trust does not apply, GASB 75 requires the discount rate be determined based on a yield or index rate for 20-year, tax exempt general obligation municipal bonds with an average rating of AA/Aa or higher.

VALUATION PROCEDURES

The measurement date as selected by the County under GASB 75 Standards is December 31st.

The financial information for FY 2024 beginning and end of year measurement is based upon actuarial valuations performed as of January 1, 2024 and January 1, 2025, respectively. The results of the valuations were determined by applying reasonable assumptions, utilizing the most credible data sources. Benefit terms as of the applicable measurement date were valued.

SUBSTANTIVE PLAN

Through its Early Retiree Continuation of Coverage policy, the County allows eligible retiring employees (and their dependents) to continue medical and dental coverage through the County’s group insurance program until becoming eligible for Medicare. Retirees must contribute group premium rates to maintain coverage. Group rates may not be sufficient to cover age-based retiree costs, thus creating a GASB 75 benefit.

FUNDING OF BENEFITS

Benefits are paid from general operating funds of the County. The County funds benefits on a pay-as-you-go basis for GASB purposes. Assets are not recognized for GASB reporting purposes unless placed in a qualifying trust arrangement.

The discount rate for FY 2024 end of year measurement was determined based on the average of the published yields from the S&P Municipal Bond 20-year High Grade and the Fidelity Municipal AA Yield Curve indexes. The selected average rate is 4.22%. The selected average rate for FY 2024 beginning of year measurement was 3.88%.

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SUMMARY (CONTINUED)

RESULTS

The present value costs may differ from expected due to experience gains / losses and changes in plan provisions, assumptions and/or actuarial methods. Example sources of experience gains may include lower retirements than assumed and lower medical inflation than assumed.

Example sources of experience losses may include lower turnover than assumed and less increase in retiree contribution premiums than assumed.

Changes and items of impact relative to the prior valuation are noted below:

The discount rate changed from 3.88% to 4.22%.

The census was updated from January 1, 2024 to January 1, 2025.

The assumed proportion of future retiring employees with a covered spouse was decreased from 20% to 15%.

The projected retiree per capita costs, retiree contribution premiums and trend assumption were updated as part of the actuarial evaluation. The January 1, 2025 renewal was taken into account. The County switched from a cost-plus funding arrangement to self-funding effective January 1, 2025.

FUTURE REPORTING

The end of year measurement for FY 2025 will be based on a valuation performed as of January 1, 2026 utilizing the census as of January 1, 2026. The beginning of year measurement for FY 2025 is based on a valuation performed as of January 1, 2025 utilizing the census as of January 1, 2025.

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VALUATION RESULTS

December 31, 2023 Measurement Date

Actuarial Present Value of Benefits 7,486,116

Actuarial Accrued Liability 4,423,993

Service Cost 375,432

Discount Rate 3.88%

December 31, 2024 Measurement Date

Actuarial Present Value of Benefits 6,373,850

Actuarial Accrued Liability 3,785,947

Discount Rate 4.22%

Employer Contributions - Benefit Payments for FY 2024

January 1, 2024 to December 31, 2024 – Medical / Rx Coverage

A. Retiree Claims and Fixed Costs 240,866

B. Retiree Premium Contributions 92,822

C. Employer Contributions (A – B) 148,044

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FINANCIAL & DISCLOSURE INFORMATION

A. Valuation Parameters

Fiscal Year 2024

Beginning of Year End of Year

Valuation Date January 1, 2024 January 1, 2025

Measurement Date December 31, 2023 December 31, 2024

Reporting Date December 31, 2023 December 31, 2024

Discount Rate 3.88% 4.22%

B. Net OPEB Liability – FY 2024

I. Total OPEB Liability 3,785,947

II. Plan Fiduciary Net Position (Trust Assets) 0

III. Net OPEB Liability (I minus II) 3,785,947

C. OPEB Liability Changes during FY 2024

OPEB Liability – Beginning of Year 4,423,993

1. Service Cost 375,432

2. Interest Cost 183,346

3. Changes in Benefit Terms 0

4. Differences between expected and actual experience (432,572)

5. Changes in assumptions and inputs (616,208)

6. Benefit Payments (148,044)

Net Changes (1 + 2 + 3 + 4 + 5 + 6) (638,046)

OPEB Liability – End of Year 3,785,947

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FINANCIAL & DISCLOSURE INFORMATION (CONTINUED)

D. OPEB Expense – Fiscal Year 2024

1. Service Cost 375,432

2. Interest Cost 183,346

3. Changes in Benefit Terms 0

4. Differences between expected and actual experience (223,466)

5. Changes of assumptions and inputs (284,689)

6. Projected earnings on OPEB plan investments 0

7. Differences between projected & actual earnings on OPEB investments 0

OPEB Expense / (Income) (1 + 2 + 3 + 4 + 5 – 6 + 7) 50,623

E. Net OPEB Liability as a Percentage of Payroll

Net OPEB Liability 3,785,947

Payroll * 88,453,180

Percent of Payroll 4.28% *Annualized pay as of January 1, 2025 of active employees

F. Sensitivity of Net OPEB Liability to changes in the Discount Rate

1% Decrease

3.22%

Current Single Discount Rate Assumption

4.22%

1% Increase 5.22%

Net OPEB Liability 4,151,306 3,785,947 3,456,664

Increase / (Decrease) from Baseline

365,359 (329,283)

G. Sensitivity of Net OPEB Liability to changes in Healthcare Cost Trend Rate

1% Decrease Current Trend Assumption 1% Increase

Net OPEB Liability 3,367,458 3,785,947 4,278,460

Increase / (Decrease) from Baseline

(418,489) 492,513

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FINANCIAL & DISCLOSURE INFORMATION (CONTINUED)

H. Deferred Outflows and Inflows of Resources

The accumulated amount of Deferred Outflows and Inflows of Resources as of December 31, 2024 are shown below.

Category Deferred Outflows of Resources Deferred Inflows of Resources

Changes in Assumptions

General 285,862 (2,026,379)

Enterprise 4,882 (76,852)

Total 290,744 (2,103,231)

Differences between expected and actual experience

General 244,122 (1,948,010)

Enterprise 34,660 (26,503)

Total 278,782 (1,974,513)

Combined Total 569,526 (4,077,744)

Amounts reported as deferred outflows / inflows of resources related to OPEB will be recognized as an expense / (income) item in OPEB expense as follows:

Fiscal Year Ending Amount 2025 (508,155) 2026 (508,155) 2027 (508,156) 2028 (541,931) 2029 (429,967)

2030 & Thereafter (1,011,853)

I. Changes in Benefit Terms

None

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J. History of Schedule of Changes in Total OPEB Liability

Fiscal Year Ending 2018 2019 2020 2021 2022 2023 2024

Discount Rate 3.68% 3.00% 1.96% 2.04% 4.18% 3.88% 4.22% Valuation Date Jan 1, 2018 Jan 1, 2020 Jan 1, 2021 Jan 1, 2022 Jan 1, 2023 Jan 1, 2024 Jan 1, 2025 Measurement Date Dec 31, 2018 Dec 31, 2019 Dec 31, 2020 Dec 31, 2021 Dec 31, 2022 Dec 31, 2023 Dec 31, 2024 Reporting Date Dec 31, 2018 Dec 31, 2019 Dec 31, 2020 Dec 31, 2021 Dec 31, 2022 Dec 31, 2023 Dec 31, 2024

Total OPEB Liability Beginning of Year 6,145,365 6,398,731 5,769,572 5,636,802 5,721,309 4,547,369 4,423,993 Service Cost 339,734 330,433 333,911 356,354 421,221 362,235 375,432 Interest Cost 208,261 246,050 180,154 117,315 125,419 205,318 183,346 Change in Benefit Terms (517,804) 0 0 0 0 0 0 Expected versus actual 827,389 (724,343) (134,689) (858,308) (471,501) (440,641) (432,572) Changes in assumptions (489,650) (395,239) (315,457) 484,576 (1,259,998) (254,911) (616,208) Net Benefit Payments (114,564) (86,060) (196,689) (15,430) 10,919 4,623 (148,044)

Net Changes 253,366 (629,159) (132,770) 84,507 (1,173,940) (123,376) (638,046)

End of Year 6,398,731 5,769,572 5,636,802 5,721,309 4,547,369 4,423,993 3,785,947

Covered Employee Payroll 72,765,669 69,409,476 72,478,026 76,452,521 81,152,435 88,754,307 88,453,180

Net OPEB Liability as a % of Covered Employee Payroll

8.79% 8.31% 7.78% 7.48% 5.60% 4.98% 4.28%

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K. Amortization of Deferred (Inflows) / Outflows

Item Initial Year

Ending

Amortization Period

Initial Balance

Beginning of Year Unamortized

Balance

Amortization Amount

FY 2024

End of Year Unamortized

Balance

1-Assumption 2018 10 (489,650) (195,860) (48,965) (146,895) 2-Assumption 2019 10 (395,239) (197,619) (39,524) (158,095) 3-Assumption 2020 10 (315,457) (189,273) (31,546) (157,727) 4-Assumption 2021 10 484,576 339,202 48,458 290,744 5-Assumption 2022 10 (1,259,998) (1,007,998) (126,000) (881,998) 6-Assumption 2023 10 (254,911) (229,420) (25,491) (203,929) 7-Assumption 2024 10 (616,208) (616,208) (61,621) (554,587)

Total Assumptions (2,846,887) (2,097,176) (284,689) (1,812,487)

8-Exp to Actual 2018 10 827,389 330,955 82,739 248,216 9-Exp to Actual 2019 10 (724,343) (362,173) (72,434) (289,739) 10-Exp to Actual 2020 10 (134,689) (80,813) (13,469) (67,344) 11-Exp to Actual 2021 10 (858,308) (600,815) (85,831) (514,984) 12-Exp to Actual 2022 10 (471,501) (377,201) (47,150) (330,051) 13-Exp to Actual 2023 10 (440,641) (396,577) (44,064) (352,513) 14-Exp to Actual 2024 10 (432,572) (432,572) (43,257) (389,315)

Total Exp to Actual (2,234,665) (1,919,196) (223,466) (1,695,730)

Totals (5,081,552) (4,016,372) (508,155) (3,508,217)

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K. Amortization of Deferred (Inflows) / Outflows - Footnotes

1. Update discount rate, mortality improvement scale (MP-2017 to MP-2018) and the assumed Health Insurance Tax.

2. Update discount rate, mortality improvement scale (MP-2018 to MP-2019), trend rates, contribution premiums and per capita costs.

3. Update discount rate, per capita costs, retiree contribution premiums and trend. Revise mortality assumption.

4. Update discount rate, mortality, per capita costs, retiree contribution premiums and trend.

5. Update discount rate, per capita claims and trend assumptions. Revise disability, retirement, turnover and salary scale assumptions.

6. Update discount rate, per capita costs, trend assumptions and covered spouse rate.

7. Update discount rate, per capita costs, trend assumptions and covered spouse rate.

8. Reflects the valuation of actual 2019 retiree premium rates, fixed costs and pooling charges relative to expected.

9. Recognize expected to actual for valuation parameters relative to the prior valuation.

10. Value updated census at January 1, 2021 using actuarial assumption and method parameters consistent with the prior valuation.

11. Value updated census at January 1, 2022 using actuarial assumption and method parameters consistent with the prior valuation.

12. Value updated census at January 1, 2023 using actuarial assumption and method parameters consistent with the prior valuation.

13. Value updated census at January 1, 2024 using prior assumptions and actuarial methods.

14. Value updated census at January 1, 2025 using prior assumptions and actuarial methods.

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RESULTS BY ACCOUNTING FUND

Accounting Fund

Number of Employees

Number of Retirees / Spouses

Net OPEB

Liability/(Asset) at 12-31-2023

(A)

OPEB

Expense / (Income)

(B)

Benefit

Payments

(C)

Change in Unamortized

Deferred Inflows/Outflows

(D)

Net OPEB Liability/(Asset) at 12-31-2024 (E)=(A)+(B)-

(C)+(D)

General 1,416 11 4,350,976 48,719 148,044 (530,577) 3,721,074

Enterprise 27 0 73,017 1,904 0 (10,048) 64,873

Total 1,443 11 4,423,993 50,623 148,044 (540,625) 3,785,947

Deferred (Inflows) / Outflows Dec 31, 2023

Additions

Amortization Dec 31, 2024

General-Assumptions (1,410,100) (603,731) (274,038) (1,739,793)

General-Expected to Actual (1,502,881) (425,499) (224,615) (1,703,765)

General-Total (2,912,981) (1,029,230) (498,653) (3,443,558)

Enterprise-Assumptions (70,868) (12,477) (10,651) (72,694)

Enterprise-Expected to Actual 16,257 (7,073) 1,149 8,035

Enterprise-Total (54,611) (19,550) (9,502) (64,659)

Total-Assumptions (1,480,968) (616,208) (284,689) (1,812,487)

Total-Expected to Actual (1,486,624) (432,572) (223,466) (1,695,730)

Overall Total (2,967,592) (1,048,780) (508,155) (3,508,217)

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SUMMARY OF PARTICIPANT DATA

Data on participants electing coverage was provided by the County. A summary of participants is presented here.

Participant Summary January 1, 2024 January 1, 2025

Actives

General 1,427 1,416

Enterprise 27 27

Total 1,454 1,443

Inactives

Subscribers 10 12

Spouses of Retirees 0 0

Total 10 12

Average Age of Actives 46.6 years 46.1 years

Average Service of Actives 9.1 years 8.7 years

Average Age of Inactives 61.2 years 63.3 years

Coverage as of January 1, 2025 - Subscribers

Medical Plan Option Actives Retirees Total

Blue Care HMO 183 2 185

Preferred-Care Blue PPO 292 0 292

BlueSaver HDHP 218 4 222

BlueSelect Plus EPO 338 6 344

BlueSelect Plus BlueSaver HDHP 206 0 206

Waived 206 0 230

Total 1,443 12 1,479

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Under

25-29 Years

30-34 Years

35-39 Years

40-44 Years

45-49 Years

50-54 Years

55-59 Years

60-64 Years

65-69 Years

70+ Years

Age Distribution

Under 5 Years

5-9 Years

10-14 Years

15-19 Years

20-24 Years

25-29 Years

30-34 Years

35+ Years

Years of Service

SUMMARY OF PARTICIPANT DATA (CONTINUED)

Distribution of Active Participants

Age Years of Service as of January 1, 2025 Under 5 5-9 10-14 15-19 20-24 25-29 30-34 35+ Total

Under 25 57 57 25-29 109 17 126 30-34 107 37 8 152 35-39 92 50 27 5 174 40-44 85 38 25 9 5 162 45-49 59 42 22 16 18 8 165 50-54 49 27 20 11 15 19 3 144 55-59 56 34 22 17 19 22 8 5 183 60-64 38 40 25 18 13 13 6 19 172 65-69 17 11 10 9 5 9 4 10 75 70+ 7 9 6 1 3 2 5 33

Total 676 305 165 86 78 73 21 39 1,443

Count

Count

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SUMMARY OF PLAN PROVISIONS

The County offers medical and dental insurance coverage through its group plan program to former employees (and their dependents) during retirement. A summary of the provisions of the health insurance program utilized in completing this study is presented below.

OPEB ELIGIBILITY

Elects “retiree” health insurance within 60 days of termination.

An employee who waives participation in the County’s health insurance program at the time of retirement (or during any subsequent open enrollment) is not eligible to participate at a later date.

Eligibility under the Jackson County, Missouri Revised Pension is shown below.

Pension Eligibility

Type Unreduced Retirement

Reduced Early Retirement

Non-Disability Retirement

Age 55 with 80 points Age 55 with 5 years of service Age 65

Disability Retirement

Five years of service and total permanent disability of an employee (as defined under the

Social Security Act)

BENEFITS

The County’s group medical insurance program consists of five medical plan options (as of January 1, 2025) and is provided through a cost-plus arrangement. The specific stop-loss limit is $200,000.

Under the Early Retiree Continuation of Coverage policy qualifying employees may receive retiree coverage that ceases at Medicare eligibility. Spouses may continue coverage under COBRA law when the covered retiree dies or attains age 65.

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SUMMARY OF PLAN PROVISIONS (CONTINUED)

MEDICAL / RX PLAN DESIGN SUMMARY (2025 Plan Year, in Network)

BlueCare HMO

Preferred-Care Blue

PPO

BlueSaver

HDHP

Deductible Individual / Family

N/A

$1,000 / $2,000

$3,300 / $6,600

Coinsurance 100% 80% 100%

Out of Pocket

$3,500 / $8,750

$4,500 / $8,500

Office Visit Copays PCP / Specialist

$30 / $60

Deductible & Coinsurance

Emergency Room $300 $250 + Deductible &

Coinsurance Deductible & Coinsurance

Wellness Benefit 100% Covered

Prescription Drugs - Tier 1 Tier 2 Tier 3

Retail $12 Copay 20% Copay 50% Copay

Deductible & Coinsurance

Lifetime Maximum Unlimited

BlueSelect Plus

EPO

BlueSelect Plus

BlueSaver HDHP

Deductible

N/A

Coinsurance 100% 100%

Out of Pocket

$3,500 / $8,750

Office Visit Copays PCP / Specialist

Deductible & Coinsurance

Emergency Room $300 Deductible & Coinsurance

Wellness Benefit 100% Covered

Prescription Drugs - Tier 1 Tier 2 Tier 3

Retail $12 Copay 20% Copay 50% Copay

Deductible & Coinsurance

Lifetime Maximum Unlimited

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SUMMARY OF PLAN PROVISIONS (CONTINUED)

RETIREE CONTRIBUTION PREMIUMS

Participants must contribute one hundred percent (100%) of the group plan premium to maintain coverage.

Spousal contribution premiums equal 102% of the single premium when COBRA coverage applies.

2024 Group Rates

Plan Single Single + One Family

Blue Care HMO 1,019.07 2,301.49 2,828.30

Preferred-Care Blue PPO 998.99 2,262.66 2,768.68

BlueSaver HDHP 940.42 2,147.36 2,597.46

BlueSelect Plus EPO 909.08 2,053.58 2,520.78

BlueSelect Plus BlueSaver HDHP 811.48 1,853.00 2,238.69

2025 Group Rates

Plan Single Single + One Family

Blue Care HMO 1,163.78 2,549.34 3,202.57

Preferred-Care Blue PPO 1,139.92 2,503.18 3,131.71

BlueSaver HDHP 1,070.30 2,366.12 2,928.18

BlueSelect Plus EPO 1,033.03 2,254.65 2,837.04

BlueSelect Plus BlueSaver HDHP 917.03 2,016.22 2,501.72

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COST ANALYSIS BY AGE

The benefit that is valued under GASB 75 equals the age-adjusted cost (sample ages shown below) less the retiree contribution premium. GASB 75 requires age be taken into account when determining the expected cost applicable to coverage during the retirement. Age-adjusted costs are the estimated costs that would result if a credible-size group of like-age participants was measured.

If retirees were detached and rated separately based on a similar age distribution of a credible size group, the applicable cost may be higher than a cost determined based on the combined active/retiree group. Thus, even when retirees pay the full group plan premium rate, a retiree benefit may still exist.

We evaluated County group plan claim experience and studied the detail of cost-plus renewals and plan design. Credible cost relativities weighted by the age / gender distribution of the County were applied to per member per month expected costs to determine age-adjusted costs. We factored in administrative costs, Rx Rebates and stop-loss premiums.

Age-adjusted costs during 2025 are shown below on a per member per month basis at sample ages.

SUBSCRIBERS-SINGLE

BlueCare HMO Preferred-Care Blue PPO BlueSaver HDHP

Male Female Male Female Male Female

55 1,270 1,379 1,252 1,360 1,166 1,266

58 1,458 1,491 1,438 1,470 1,338 1,367

60 1,596 1,589 1,573 1,567 1,462 1,456

62 1,746 1,710 1,721 1,686 1,599 1,566

64 1,914 1,851 1,887 1,824 1,752 1,694

EPO

BlueSelect Plus

BlueSaver HDHP Male Female Male Female

55 1,150 1,248 1,046 1,135 58 1,319 1,348 1,198 1,224 60 1,442 1,436 1,308 1,303 62 1,576 1,544 1,429 1,400 64 1,727 1,670 1,565 1,513

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COST ANALYSIS BY AGE

SPOUSES

BlueCare HMO Preferred-Care Blue PPO BlueSaver HDHP

Male Female Male Female Male Female

55 1,247 1,356 1,229 1,337 1,143 1,243

58 1,435 1,468 1,415 1,447 1,315 1,344

60 1,573 1,566 1,550 1,544 1,439 1,433

62 1,723 1,687 1,698 1,663 1,576 1,543

64 1,891 1,828 1,864 1,801 1,729 1,671

EPO

BlueSelect Plus

BlueSaver HDHP Male Female Male Female

55 1,127 1,225 1,023 1,112 58 1,296 1,325 1,175 1,201 60 1,419 1,413 1,285 1,280 62 1,553 1,521 1,406 1,377 64 1,704 1,647 1,542 1,490

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ACTUARIAL ASSUMPTIONS

A. Discount Rate

B. Measurement Date

C. Valuation Date

D1. Medical/Rx Claim and Retiree Premium Contribution Trend

The above considers industry experience, anecdotal data, industry surveys and plan experience.

D2. Fixed Costs 2.50% per year

D3. Pooling Charges 4 percentage points above claim trend

E. Dental Benefits The level of age subsidy is assumed to be immaterial and was not valued.

F. Age-Adjusted Costs The estimated age-adjusted cost for retiree insurance coverage during the next 12 months from the valuation date is shown at sample ages in the “Cost Analysis by Age” section.

4.22% per annum End of Year 3.88% per annum Beginning of Year

December 31, 2024 End of Year December 31, 2023 Beginning of Year

January 1, 2025 End of Year January 1, 2024 Beginning of Year

Plan Year Applied Trend

2025 7.50% 2026 7.25% 2027 7.00% 2028 6.75% 2029 6.50% 2030 6.25% 2031 6.00% 2032 5.75% 2033 5.50% 2034 5.25% 2035 5.00% 2036 4.75%

2037 (to Ultimate) 4.50%

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ACTUARIAL ASSUMPTIONS (CONTINUED)

G. Duration of Coverage Medical coverage is assumed to end at Medicare eligibility. Spouses may elect COBRA coverage upon retiree death or attainment of age 65, not to exceed spouse age 65.

H. Medical Plan Participation Current plan elections are assumed to persist.

Actives currently waiving are assumed to elect based on a weighted average of the current plan distribution.

Plan Rate

Blue Care HMO 20%

Preferred-Care Blue PPO 20%

BlueSaver HDHP 20%

BlueSelect Plus EPO 20%

BlueSelect Plus BlueSaver HDHP 20%

I. Participation in Coverage with Forty-five percent (45%) of future eligible retirees are assumed to elect medical coverage upon retirement. This considers experience of plans in the region with similar cost-sharing. For actives currently waiving the future assumed enrollment rate is half of 45% (i.e., 22.5%).

J. Future Spousal Participation Twenty percent (20%) of future participating retirees are assumed to have a covered spouse during retirement. This considers coverage tier elections of the current census and multiple years of retiree experience. Actual spouse elections were valued for spouses of current retirees.

K. Age Difference for Males are assumed to be 2 years older than their female spouses. This is based on County average age differences. Actual spouse date of birth was valued for current retirees.

the County for Retirees

Covered Spouses

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ACTUARIAL ASSUMPTIONS (CONTINUED)

L. Medicare Eligibility Age Age 65

M. Timing of Benefit Payments Mid-Year

N. Non-Spouse Dependents Deemed immaterial to the liability results and not valued.

O. Mortality Society of Actuaries Pub-2010 Public Retirement

Plans Headcount-Weighted General Mortality Tables using Scale MP-2021 Full Generational Improvement

P. Disability Incidence Rates of Disability are based on those from the

Jackson County, Missouri Revised Pension Plan actuarial valuation (report dated October 2023). This is deemed to be the most credible source for projecting Disability. Rates are shown below at sample ages.

Age Rate

20 .00025 25 .00025 30 .00050 35 .00075 40 .00100 45 .00200 50 .00300 55 .00300 60 .00300 65 .00300

70+ .00000

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ACTUARIAL ASSUMPTIONS (CONTINUED)

Q. Turnover Incidence Assumed turnover rates are based on rates used for the

Jackson County, Missouri Revised Pension Plan actuarial valuation (report dated October 2024). This is deemed to be the most credible source for projecting Turnover. Turnover rates are not applied when retirement eligibility is achieved.

Illustrations of annual rates of turnover are shown below at sample levels of service:

Years of Service Rate

0 .225 1 .225 2 .200 3 .175 4 .135 5 .135

10 .075 12 .075 15 .050 17 .050

20+ .030

R. Retirement Age Assumed rates are based on those used for the Jackson

County, Missouri Revised Pension Plan actuarial valuation (report dated October 2024). This is deemed to be the most credible source for projecting Retirement. Retirement rates project the annual probability of retiring for eligible employees.

Age < Rule of 80 Rule of 80 > Rule of 80

55 .050 .175 .150 56-59 .050 .175 .100

60 .075 .175 .100 61 .100 .175 .100

62-64 .100 .175 .150 65-66 .300 .325 .325

67 .250 .250 .250 68-69 .150 .200 .200 70+ 1.00 1.00 1.00

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ACTUARIAL ASSUMPTIONS (CONTINUED)

S. Salary Scale Per Employee Total assumed salary increase, including step and promotional increases, are based on rates from the Jackson County, Missouri Revised Pension Plan actuarial valuation (report dated October 2024). This is deemed to be the most credible source for projecting future pay.

Years of Service Rate

0 .0600 1 .0585 2 .0570 3 .0555 4 .0540 5 .0525 6 .0510 7 .0495 8 .0480 9 .0465

10 .0450 11 .0435 12 .0425 13 .0415 14 .0405 15 .0395 16 .0385 17 .0375 18 .0365 19 .0355 20 .0345 21 .0340 22 .0335 23 .0330 24 .0325 25 .0320 26 .0315 27 .0310 28 .0305

29+ .0300

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ACTUARIAL METHODS

A. POPULATION VALUED

The valuation is based on a closed group. Current employees and covered retirees as of the valuation date of January 1, 2025 are considered; no provision is made for future new hires.

B. ACTUARIAL COST METHOD – ENTRY AGE NORMAL – LEVEL PERCENT-OF-PAY

The actuarial calculations were performed in accordance with the Entry Age Normal – Level Percent-of-Pay Actuarial Cost Method as required under GASB 75.

The Actuarial Present Value (“APV”) of each member’s projected benefits is allocated on a level basis over the member’s assumed compensation between the entry age of the member and the assumed decrement ages.

The portion of the APV allocated to the upcoming year from the valuation date is called the Normal Cost.

The APV of benefits allocated to past service is called the Actuarial Accrued Liability

(“AAL”).

The Unfunded AAL represents the difference between the AAL and the actuarial value of assets as of the measurement date.

The APV = AAL for current retirees as all benefits have effectively been “earned.”

C. VALUATION PROCEDURES AND DISCOUNT RATE

The County implemented GASB 75 in fiscal year 2018. The selected measurement date is December 31st. The beginning and end of year measurements for FY 2024 are based on valuations performed as of January 1, 2024 and January 1, 2025, respectively. The benefit terms as of the respective measurement date and appropriate assumptions were taken into account and valued.

GASB 75 standards require a single discount rate be determined. To the extent Plan (or Trust) assets are projected to be sufficient to make projected benefit payments, the discount rate will equal the expected return on such assets. To the extent Trust assets are not projected to be sufficient to make future benefit payments the yield or index for 20-year, tax-exempt general obligation municipal bonds with an average rating of AA/Aa or higher should be factored in.

Plan assets do not apply to the County’s program.

In order to determine the discount rate for FY 2024 end of year measurement we took the average of the published yields from the S&P Municipal Bond 20-year High Grade and the Fidelity Municipal AA Yield Curve indexes. The selected average rate is 4.22%. The selected average rate for FY 2024 beginning of year measurement was 3.88%. These were used as the discount rates to determine present value costs.

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ACTUARIAL METHODS (CONTINUED)

D. ACTUARIAL VALUE OF ASSETS

It is our understanding there are no assets set aside in a qualifying trust as recognized under

GASB rules. Rather, the cost of group plan benefits (including retiree benefits) are paid as they come due from general operating funds of the County. Plan assets do not apply.

E. CALCULATION OF PRESENT VALUES

Using the actuarial assumptions, the number of retired participants and costs at each age is projected into the future considering the current population census. The projected costs less retiree contribution premiums are multiplied by the expected number of retirees to produce expected employer costs (i.e., retiree benefits) by year. These employer costs are discounted using the “discount rate” to determine the present value of the projected liabilities.

The actuarial calculations reflect a long-term perspective that involves estimates of reported amounts and assumptions about the probability of events into the future. Actuarially determined amounts are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. The actuarial calculations are based on the substantive plan (or benefit terms) and pertinent law as they exist at the measurement date.

F. BENEFIT TERMS

Projections of benefit payments are required to be based on the benefit terms and legal agreements existing at the measurement date, including changes impacting future periods enacted and made public as of the measurement date. For purposes of evaluating the benefit terms, consideration is required to be given to the written plan document, as well as additional information, including other communications between the employer and plan members and an established pattern of practice with regard to the sharing of benefit-related costs with inactive plan members.

G. USE OF ACTUARIAL MODELS

We performed various calculations supporting the valuation utilizing third-party valuation software. We have tested the underlying calculations of the models and found them to produce reasonable results.

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GLOSSARY

Actuarial Accrued Liability (AAL). That portion, as determined by a particular Actuarial Cost Method, of the Actuarial Present Value of plan benefits which is allocated to past service.

Actuarial Cost Method. A procedure for allocating the Actuarial Present Value of plan benefits to time periods, usually in the form of a Service Cost and Actuarial Accrued Liability. GASB 75 requires the use of the Entry Age Normal actuarial cost method with each period’s Service Cost determined as a level percentage of pay.

Actuarial Present Value. The value of an amount or series of amounts payable or receivable at various times, determined as of a given date by the application of a particular set of actuarial assumptions, and plan provisions. Actuarial Present Value takes into account the probability of payment as well as the time value of money.

Actuarial Valuation Date. The date as of which an actuarial valuation is performed generally coinciding with the “as of” census date. Actuarial valuations are required to be performed at least every two years. For GASB 75 reporting, the actuarial valuation must have been performed as of a date no more than 30 months and 1 day prior to the fiscal year-end date.

Age-Adjusted Cost. The projected cost that would result if a credible number of like-age participants were measured or rated.

Age-Subsidy. The difference between the age-adjusted cost and the retiree premium. An age-subsidy may occur because the retiree premium, based on the combined pool of actives and retirees, is lower than the age-adjusted cost at retiree ages.

Consolidated Omnibus Budget Reconciliation Act (COBRA). Gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events. Qualified individuals may be required to pay the entire premium for coverage up to 102 percent of the cost to the plan.

Deferred Inflows of Resources. Resources received not currently recognized as revenue.

Deferred Outflows of Resources. Resources expended not currently recognized as expense.

Defined Benefit OPEB Plan. An OPEB plan having terms that specify the amount of benefits to be provided at or after separation from employment. The amount specified usually is a function of one or more factors such as age and years of service.

Discount Rate. Expected rate of return on assets in an irrevocable trust to the extent that benefits may be paid from such assets; otherwise, the yield as of the measurement date on 20-year, tax-exempt, municipal bonds of quality rating AA or higher.

Employer Contribution. An employer may make contributions through an irrevocable transfer of assets to a qualifying trust, direct payment of benefits or a combination of these. Without a trust and self-funded, the contribution equals retiree claims plus admin costs, less any retiree contribution premiums. Without a trust and not self-funded, the contribution equals age-adjusted premium costs, less any retiree contribution premiums.

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GLOSSARY

Healthcare Cost Trend Rate. The rate of change in per capita health claims cost over time as a result of factors such as medical inflation, utilization of healthcare services, plan design and technological developments.

Measurement Date. The date as of which the Net OPEB liability is calculated. For purposes of GASB 75, the measurement date may be selected from a range starting no earlier than one year prior to and ending no later than the employer’s fiscal year-end date. When the actuarial valuation date does not equal the measurement date, actuarial techniques may be utilized to project results to the measurement date.

Net OPEB Liability. Total OPEB liability on the measurement date minus plan assets.

OPEB Expense. The amount of expense an employer must recognize under GASB 75 provisions. The change in the Net OPEB Liability during the measurement period, with deferral of recognition for (1) changes of economic and demographic assumptions (2) differences between actual and expected experience and (3) differences between actual and projected earnings on plan assets.

Other Postemployment Benefits (OPEB). Benefits (such as death benefits, life insurance, disability and long-term care) that are paid in the period after employment and that are provided separately from a pension plan, as well as healthcare benefits paid in the period after employment, regardless of the manner in which they are provided. OPEB does not generally include termination benefits or termination payments for sick leave.

Postemployment Healthcare Benefits. Medical, dental, vision and other health-related benefits paid subsequent to the termination of employment.

Reporting Date. The date corresponding to the end of the fiscal year.

Service Cost. The portion of the Actuarial Present Value of OPEB benefits attributed to the current year by the Actuarial Cost Method.

Substantive Plan. The terms of the OPEB plan as understood by the employer and plan members.

Total OPEB Liability. The portion of the Actuarial Present Value of OPEB benefits attributed to past service by the Actuarial Cost Method. This is equal to the AAL.

Unfunded Actuarial Accrued Liability. The excess, if any, of the Actuarial Accrued Liability over the assets of the plan.