GASB Technical Bulletin Clarifies Medicare Part D
June 30, 2006
The Governmental Accounting Standards Board has issued Technical Bulletin (TB) No. 2006-1 clarifying how payments received from the federal government under the retiree drug subsidy provisions of Medicare Part D should be reported.
The law that created the Medicare Part D program allows direct payments to certain employers and plans that provide prescription drug benefits to retirees who otherwise would be eligible to participate in Medicare Part D. The Technical Bulletin addresses:
- How an employer should account for and report Medicare Part D retiree drug subsidy payments from the federal government to the employer;
- How such payments to an employer affect the accounting for the transaction and financial reporting by a defined benefit OPEB plan;
- How an employer should account for and report such payments to the plan; and
- How a defined OPEB plan should account for and report such benefits to the plan.
Accordingly, public institutions should note that a direct retiree drug subsidy payment from the federal government to an employer is a voluntary nonexchange transaction pursuant to paragraph 7 of Statement 33. Consequently the payment is a separate transaction from the exchange of salaries and benefits--including postemployment prescription drug benefits--for services between employer and employees. The voluntary nonexchange transaction does not affect accounting for employer contributions or the financial reporting presentation by a defined benefit OPEB plan in which an employer participates.
Except for sections of guidance that relate to the implementation of OPEB related statements 43 and 45, the TB is effective immediately. Please see the GASB Web site for information on ordering the TB.
NACUBO Contact: Sue Menditto, director, accounting policy, 202.861.2542.
- Task Force Urges Regulatory Reform
- Legislators Take Action on Education, Charitable and Research Incentives
- Associations Comment on College Ratings System
- ON-DEMAND: How to Build, Develop, and Support a Compliance Program at Your Institution
- ON-DEMAND: Strategic Tuition Assessment and Tuition Restructuring
- ON-DEMAND: Are Shared Services Right for Your Organization – The KU Journey
- ON-DEMAND: VIRTUAL: 2014 Annual Meeting
- ON-DEMAND: VIRTUAL: Student Financial Services Conference
- ON-DEMAND: VIRTUAL: Higher Education Accounting Forum
- A Guide to College and University Budgeting: Foundations for Institutional Effectiveness, 4th ed. - by Larry Goldstein
- NACUBO's Guide to Unitizing Investment Pools - by Mary S. Wheeler
- Managing and Collecting Student Accounts and Loans - by David R. Glezerman and Dennis DeSantis