Under the program, the State offers retirees who are not yet eligible for Medicare the option to participate in the State’s Group Health Insurance program. Although the State does not directly pay any portion of the premium for retirees who choose to participate in the program, the State does pay higher premiums for its active employees than it otherwise would if retirees were excluded. Therefore, the State implicitly subsidizes the premiums paid by participating retirees by offering these individuals access to health insurance coverage at a lower rate than they might otherwise pay based upon their age. This, in turn, creates an OPEB liability the State must recognize for purposes of financial reporting.
The $717.2 million total OPEB liability will be reported in the State’s financial statements, which will be included in the State of Wisconsin’s Annual Comprehensive Financial Report (ACFR) for the year ended June 30, 2023. In addition, some state agencies, such as UW System, and various authorities, including the UW Hospitals and Clinics Authority, that are reported in the State’s ACFR also separately issue GAAP-based financial statements. To assist each of these agencies and authorities in determining its proportionate share of the total OPEB liability, DOA prepared employer schedules that include these amounts.
