Implied Subsidy and PEMHCA (CalPERS Medical Benefits)

04-28-2016 |

Implied subsidy must be recognized for PEMHCA (CalPERS medical) benefits in GASB 45/75 accounting, under ASOP 6 as confirmed by the ABCD (Actuarial Board for Counseling and Discipline)

If your Agency participates in PEMCHA, CalPERS medical benefits, GASB 45 - and now GASB 74/75 - require recognition of the Implied Subsidy in your OPEB liabilities, ARC, and OPEB expense.

This article illustrates the the implied subsidy and answers common questions about why the change occurred and how this will actually work in operation for California public agencies providing medical benefits through PEMHCA.

Implied Subsidy for PEMHCA Agencies -- Questions and Answers

The Actuarial Board for Counseling and Discipline (ABCD)  is responsible for determining how Actuarial Standards of Practice apply in specific situations.  The ABCD was asked for guidance regarding when the Implied Subsidy must be included (referred to as “use of age-specific rates” in this letter) in an actuarial valuation.  Their response is published here:

Their response, particularly the example in the middle of page 4, confirms that the Implied Subsidy is required for valuation of OPEB benefits provided through CalPERS (PEMHCA).


For background on PEMHCA benefits, see PEMHCA Rules (2015)

For more on the Implied Subsidy see: Implied subsidy description


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