Postretirement Benefits

The Company sponsors a postretirement medical and life insurance plan covering substantially all administrative and restaurant management personnel who retire or terminate after qualifying for such benefits.

The following was the plan status and accumulated postretirement benefit obligation (APBO) at December 31, 2017 and January 1, 2017:



	December 31, 2017			January 1, 2017
Change in benefit obligation:
Benefit obligation at beginning of year	$	4,566		$	3,060
Service cost	192			150
Interest cost	191			165
Plan participants' contributions	88			98
Actuarial loss (gain)	(122		)	1,251
Benefits paid	(115		)	(164		)
Medicare part D prescription drug subsidy	38			6
Benefit obligation at end of year	$	4,838		$	4,566
Change in plan assets:
Fair value of plan assets at beginning of year	$	—		$	—
Employer contributions (refund)	(11		)	60
Plan participants' contributions	88			98
Benefits paid	(115		)	(164		)
Medicare part D prescription drug subsidy	38			6
Fair value of plan assets at end of year	—			—
Funded status	$	(4,838	)	$	(4,566	)
Weighted average assumptions:
Discount rate used to determine benefit obligations	3.60		%	4.11		%
Discount rate used to determine net periodic benefit cost	4.11		%	4.25		%

The discount rate is determined based on high-quality fixed income investments that match the duration of expected retiree medical and life insurance benefits. The Company has typically used the corporate AA/Aa bond rate for this assumption. The actuarial loss in 2016 was due primarily to the Company utilizing updated actuarial data affecting the Medicare Part D prescription drug subsidy.

Components of net periodic postretirement benefit income recognized in the consolidated statements of operations were:



	Year ended
	December 31, 2017			January 1, 2017			January 3, 2016
Service cost	$	192		$	150		$	127
Interest cost	191			165			114
Amortization of net gains and losses	222			197			163
Amortization of prior service credit	(355		)	(355		)	(355		)
Net periodic postretirement benefit expense	$	250		$	157		$	49

Amounts recognized in accumulated other comprehensive income that have not yet been recognized as components of net periodic benefit income, consisted of:



	Year ended
	December 31, 2017			January 1, 2017
Prior service credit	$	1,617		$	1,972
Net loss	(2,928		)	(3,272		)
Deferred income taxes	101			97
Accumulated other comprehensive loss	$	(1,210	)	$	(1,203	)

The estimated net loss that will be amortized from accumulated other comprehensive income into net periodic postretirement benefit income over the next fiscal year is $191. The amount of prior service credit for the postretirement benefit plan that will be amortized from accumulated other comprehensive income into net periodic postretirement benefit income over the next fiscal year is $352.

The following table reflects the changes in accumulated other comprehensive income for the years ended December 31, 2017 and January 1, 2017:



	Year ended
	December 31, 2017			January 1, 2017
Net actuarial loss (gain)	$	(122	)	$	1,251
Amortization of net loss	(222		)	(197		)
Amortization of prior service credit	355			355
Deferred income taxes	(4		)	(541		)
Total recognized in accumulated other comprehensive loss	$	7		$	868

Assumed health care cost trend rates at year end were as follows:



	December 31, 2017		January 1, 2017		January 3, 2016
Medical benefits cost trend rate assumed for the following year pre-65	7.25	%	7.50	%	7.75	%
Medical benefits cost trend rate assumed for the following year post-65	6.25	%	6.50	%	6.75	%
Prescription drug benefit cost trend rate assumed for the following year	10.50	%	10.50	%	11.00	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)	3.89	%	3.89	%	3.89	%
Year that the rate reaches the ultimate trend rate	2075		2075		2075

The assumed healthcare cost trend rate represents the Company's estimate of the annual rates of change in the costs of the healthcare benefits currently provided by the Company's postretirement plan. The healthcare cost trend rate implicitly considers estimates of healthcare inflation, changes in healthcare utilization and delivery patterns, technological advances and changes in the health status of the plan participants. Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one-percentage-point change in the health care cost trend rates would have the following effects:



	1% Point Increase		1% Point Decrease
Effect on total of service and interest cost components	$	112	$	80
Effect on postretirement benefit obligation	1,043		788

During 2018, the Company expects to contribute approximately $143 to its postretirement benefit plan. The benefits, net of Medicare Part D subsidy receipts, expected to be paid in each year from 2018 through 2022 are $143, $165, $163, $170 and $188 respectively, and for the years 2023-2027 the aggregate amount is $1,126.