Nonpension Postretirement Benefits

We provide certain retiree health care and life insurance benefits covering our U.S. and Canadian salaried employees hired before January 1, 2004 and a majority of our union hourly employees (excluding employees hired at Shreveport after December 15, 2008 and at Toledo after September 30, 2010). Employees are generally eligible for benefits upon retirement and completion of a specified number of years of creditable service. Benefits for most hourly retirees are determined by collective bargaining. The U.S. nonpension postretirement plans cover the hourly and salaried U.S.-based employees of Libbey (excluding those mentioned above). The non-U.S. nonpension postretirement plans cover the retirees and active employees of Libbey who are located in Canada. The postretirement benefit plans are not funded.

Effect on Operations

The provision for our nonpension postretirement benefit expense consists of the following:



Year ended December 31, (dollars in thousands)	U.S. Plans						Non-U.S. Plans								Total
Year ended December 31, (dollars in thousands)	2016		2015		2014		2016			2015			2014		2016		2015		2014
Service cost (benefits earned during the period)	$	797	$	855	$	1,007	$	1		$	1		$	1	$	798	$	856	$	1,008
Interest cost on projected benefit obligation	2,608		2,537		2,840		51			52			108		2,659		2,589		2,948
Amortization of unrecognized:
Prior service cost	140		140		140		—			—			—		140		140		140
Loss (gain)	81		592		267		(47		)	(56		)	—		34		536		267
Nonpension postretirement benefit expense	$	3,626	$	4,124	$	4,254	$	5		$	(3	)	$	109	$	3,631	$	4,121	$	4,363

Actuarial Assumptions

The discount rates used to determine the accumulated postretirement benefit obligation and net postretirement benefit cost were as follows:



	U.S. Plans						Non-U.S. Plans
	2016		2015		2014		2016		2015		2014
Accumulated postretirement benefit obligation	4.05	%	4.56	%	4.10	%	3.48	%	3.69	%	3.61	%
Net postretirement benefit cost	4.56	%	4.10	%	4.74	%	3.69	%	3.61	%	4.36	%

The weighted average assumed health care cost trend rates at December 31 were as follows:



	U.S. Plans				Non-U.S. Plans
	2016		2015		2016		2015
Health care cost trend rate assumed for next year	6.75	%	7.00	%	6.75	%	7.00	%
Ultimate health care trend rate	5.00	%	5.00	%	5.00	%	5.00	%
Year the ultimate trend rate is reached	2024		2024		2024		2024

We use various actuarial assumptions, including the discount rate and the expected trend in health care costs, to estimate the costs and benefit obligations for our retiree health plan. The discount rate is determined based on high-quality fixed income investments that match the duration of expected retiree medical benefits at our December 31 measurement date to establish the discount rate. The discount rate at December 31 is used to measure the year-end benefit obligations and the earnings effects for the subsequent year.

The health care cost trend rate represents our expected annual rates of change in the cost of health care benefits. The trend rate noted above represents a forward projection of health care costs as of the measurement date. A 1.0 percent change in the health care trend rate would not have a material impact upon the nonpension postretirement expense.

Accumulated Postretirement Benefit Obligation

The components of our nonpension postretirement benefit obligation are as follows:



Year ended December 31, (dollars in thousands)	U.S. Plans						Non-U.S. Plans						Total
Year ended December 31, (dollars in thousands)	2016			2015			2016			2015			2016			2015
Change in accumulated nonpension postretirement benefit obligation:
Benefit obligation, beginning of year	$	58,795		$	65,565		$	1,390		$	2,536		$	60,185		$	68,101
Service Cost	797			855			1			1			798			856
Interest cost	2,608			2,537			51			52			2,659			2,589
Plan participants' contributions	528			610			—			—			528			610
Actuarial (gain) loss	146			(7,287		)	(102		)	(740		)	44			(8,027		)
Exchange rate fluctuations	—			—			46			(346		)	46			(346		)
Benefits paid	(3,953		)	(3,485		)	(42		)	(113		)	(3,995		)	(3,598		)
Benefit obligation, end of year	$	58,921		$	58,795		$	1,344		$	1,390		$	60,265		$	60,185

Funded status and accrued benefit cost	$	(58,921	)	$	(58,795	)	$	(1,344	)	$	(1,390	)	$	(60,265	)	$	(60,185	)

The net accrued postretirement benefit liability at December 31 of the respective year-ends were included in the Consolidated Balance Sheets as follows:



December 31, (dollars in thousands)	2016		2015
Current liability	$	4,892	$	4,903
Long-term liability	55,373		55,282
Total accrued postretirement benefit liability	$	60,265	$	60,185

The pretax amounts recognized in accumulated other comprehensive loss as of December 31, 2016 and 2015, are as follows:



Year ended December 31, (dollars in thousands)	U.S. Plans						Non-U.S. Plans						Total
Year ended December 31, (dollars in thousands)	2016			2015			2016			2015			2016			2015
Net actuarial loss (gain)	$	5,146		$	5,080		$	(730	)	$	(654	)	$	4,416		$	4,426
Prior service cost (credit)	(1,463		)	(1,323		)	—			—			(1,463		)	(1,323		)
Total cost (credit)	$	3,683		$	3,757		$	(730	)	$	(654	)	$	2,953		$	3,103

The pretax amounts in accumulated other comprehensive loss at December 31, 2016, that are expected to be recognized as components of net periodic benefit cost during 2017 are as follows:



(dollars in thousands)	U.S. Plans			Non-U.S. Plans			Total
Net actuarial loss (gain)	$	101		$	(54	)	$	47
Prior service cost (credit)	(200		)	—			(200		)
Total cost (credit)	$	(99	)	$	(54	)	$	(153	)

Nonpension postretirement benefit payments net of estimated future Medicare Part D subsidy payments and future retiree contributions, are anticipated to be paid as follows:



Fiscal Year (dollars in thousands)	U.S. Plans		Non-U.S. Plans		Total
2017	$	4,833	$	154	$	4,987
2018	$	4,951	$	153	$	5,104
2019	$	4,990	$	147	$	5,137
2020	$	4,872	$	141	$	5,013
2021	$	4,614	$	133	$	4,747
2022-2026	$	19,834	$	434	$	20,268