7998-R1_ML&P_Hollis_2020-2021_AnnualReport_Web

TOWN OF HOLLIS, MAINE NOTES TO FINANCIAL STATEMENTS JUNE 30, 2021

NOTE 12 - OTHER POST EMPLOYMENT BENEFIT (OPEB) PLAN (CONTINUED) Trend Assumptions : Medical Trend assumptions were developed using the Society of Actuaries (SOA) Long-Run Medical Cost Trend Model. The SOA model was released in December 2007 and version 2021_b was used for this valuation. The following assumptions were input into this model: Variable Rate Rate of Inflation 2.00% Rate of Growth in Real Income/GDP per capital 2029+ 1.25% Extra Trend due to Taste/Technology 2029+ 1.10% Expected Health Share of GDP 2029 20.00% Health Share of GDP Resistance Point 25.00% Year for Limiting Cost Growth to GDP Growth 2040 The SOA Long-Run Medical Cost Trend Model and its baseline projection are based on an econometric analysis of historical U.S. medical expenditures and the judgements of experts in the field. The long-run baseline projection and input variables have been developed under the guidance of the SOA Project Oversight Group. The rate for the extra trend for taste and technology was set above the baseline of 1.1% (to 1.2%) to move closer to the 30-year average to reflect the future projections from the Centers for Medicare and Medicaid Services Office of the Actuary (CMS OACT). The Medicare Trustee Report and CBO Long-Term Budget Outlook. The trends selected from 2021 to 2023 were based on plan design, population weighting, renewal projections, and market analysis. For years 2024 to 2028, these are interpolated from 2023 to 2029 (which is the product of the inflation, GDP and extra trend rate assumptions). Deductibles, Co-payments and Out of Pocket Maximums are assumed to increase at the above trend rates. The ultimate trend rate reflects an assumed nominal per capital GDP growth. Administrative and claims expense: 3% per annum Future plan changes: It is assumed that the current Plan and cost-sharing structure remains in place for all future years. Significant actuarial assumptions employed by the actuary for demographic purposes are the assumptions that were adopted by Maine State Retirement

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