FARMERS CAPITAL BANK CORP - 10-K filing on 2017-03-10

Note 13 - Postretirement Medical Benefits

12 Months Ended

Dec. 31, 2016

Pension and Other Postretirement Benefits Disclosure [Text Block]

. Postretirement Medical Benefits

The Company provides lifetime medical and dental benefits upon retirement for certain employees meeting the eligibility requirements as of

December

31,

1989

(“Plan

1”).

Additional participants are not eligible to be included in Plan

unless they met the requirements on this date. There were

of such participants in Plan

at year-end

2016.

During

2003,

the Company implemented an additional postretirement health insurance program (“Plan

2”).

Under Plan

, any employee meeting the service requirement of

years of full time service to the Company and is at least age

years of age upon retirement is eligible to continue their health insurance coverage. Under both plans, retirees not yet eligible for Medicare have coverage identical to the coverage offered to active employees. Under both plans, Medicare-eligible retirees are provided with a Medicare Advantage plan. The Company pays

100%

of the cost of Plan

The Company and the retirees each pay

50%

of the cost under Plan

Both plans are unfunded

. Employees hired on or after

January

2016

are not eligible for benefits under Plan

The following schedules set forth a reconciliation of the changes to the benefit obligation and funded status of the plans for the years ended

December

31,

2016

and

2015

(In thousands)	2016			2015
Change in Benefit Obligation
Obligation at beginning of year	$	16,204		$	14,792
Service cost		637			739
Interest cost		683			649
Actuarial (gain) loss		(660	)		313
Participant contributions		153			129
Benefit payments		(462	)		(418	)
Obligation at end of year	$	16,555		$	16,204

The Company’s contributions were

$309

thousand and

$289

thousand for

2016

and

2015,

respectively. The Company expects benefit payments of

$416

thousand for

2017

The following table provides disclosure of the net periodic benefit cost as of

December

for the years indicated

(In thousands)	2016			2015
Service cost	$	637		$	739
Interest cost		683			649
Recognized prior service cost		50			51
Amortization of net actuarial loss		-			42
Net periodic benefit cost	$	1,370		$	1,481
Major assumptions:
Discount rate used to determine net periodic benefit cost		4.34	%		3.92	%
Discount rate used to determine benefit obligation as of year end		4.12			4.34
Retiree participation rate (Plan 1)		100.00			100.00
Retiree participation rate (Plan 2)		72.00			72.00

Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. For measurement purposes, the rate of increase in pre-Medicare medical care claims costs was

6.5%,

6.0%,

and

5.5%

for

2017,

2018,

and

2019,

respectively, then grading down by

.25%

annually to

4.75%

for

2022

and thereafter. For dental claims cost, it was

for

2017

and thereafter. A

change in the assumed health care cost trend rates would have the following incremental effects:

(In thousands)	1% Increase		1% Decrease
Effect on total of service and interest cost components of net periodic postretirement health care benefit cost	$	335	$	(250	)
Effect on accumulated postretirement benefit obligation		3,366		(2,612	)

The following table presents estimated future benefit payments in the period indicated.

(In thousands)	Postretirement Medical Benefits
2017	$	416
2018		451
2019		481
2020		516
2021		573
2022-2026		3,507
Total	$	5,944

Amounts recognized in accumulated other comprehensive income as of

December

31,

2016

and

2015

are as follows:

(In thousands)	2016			2015
Unrecognized net actuarial (gain) loss	$	(93	)	$	566
Unrecognized prior service cost		75			125
Total	$	(18	)	$	691

The estimated costs that will be amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year are as follows:

(In thousands)	Postretirement Medical Benefits
Unrecognized prior service cost	$	49
Total	$	49