OTHER POSTRETIREMENT BENEFITS

The Company has an unfunded postretirement healthcare plan which provides health insurance to certain employees and their spouses upon retirement. This plan has been frozen and no additional participants will be added to the plan in the future.

The following table presents the changes in the accumulated postretirement benefit obligation related to the Company’s unfunded postretirement healthcare benefits at December 31 (in thousands):



	2014			2013			2012
Projected benefit obligation at January 1	$	5,900		$	5,954		$	5,120
Service cost	16			16			15
Interest cost	255			203			224
Plan amendments	—			603			—
Actuarial (gain) loss	2,387			(553		)	899
Benefits paid, net of contributions	(356		)	(323		)	(304		)
Projected benefit obligation at December 31	8,202			5,900			5,954
Fair value of plan assets	—			—			—
Under funded status	(8,202		)	(5,900		)	(5,954		)
Unamortized prior service cost	559			603			—
Unrecognized actuarial loss	3,962			1,653			2,329
Net amount recognized	$	(3,681	)	$	(3,644	)	$	(3,625	)

In October 2014 the Society of Actuaries issued new mortality tables and a mortality improvement scale which were applied when measuring the postretirement benefit obligation as of December 31, 2014. Because the new tables and improvement scale reflect today’s longer life expectancies, it resulted in an actuarial loss and an increase in our projected benefit obligation. As a result, we expect future net periodic postretirement benefit cost charged to expense to increase as a result of increases in the amortization of the actuarial loss.

Amounts recognized in the consolidated financial statements consisted of (in thousands):



	2014			2013			2012
Accrued postretirement benefit liability
Current portion	$	(368	)	$	(356	)	$	(322	)
Long term portion	(7,834		)	(5,544		)	(5,632		)
Pre-tax accumulated other comprehensive loss – unamortized post-retirement healthcare costs	4,521			2,256			2,329
Net amount recognized	$	(3,681	)	$	(3,644	)	$	(3,625	)

Components of net periodic postretirement benefit cost charged to expense for the years ended December 31 were as follows (in thousands):



	2014			2013			2012
Service cost	$	16		$	16		$	15
Interest cost	255			203			224
Amortization of unrecognized prior service cost	44			—			(1		)
Loss amortization (2)	78			123			111
Net periodic benefit cost	$	393		$	342		$	349
Assumptions used to calculate the benefit obligation:
Discount rate	3.7		%	4.5		%	3.5		%
Annual rate of increase in the per capita cost of:
Medical costs before age 65 (1)	8.0		%	8.5		%	9.0		%
Medical costs after age 65 (1)	7.0		%	7.3		%	7.5		%
Prescription drug costs (1)	9.0		%	7.8		%	8.0		%

(1) It was assumed that these rates would gradually decline to 4% by 2022.

(2) Actuarial (gains)/losses are amortized utilizing the corridor approach. Differences between actual experience and the actuarial assumptions are reflected in (gain)/loss. If the total net (gain) or loss exceeds 10 percent of the greater of the accumulated postretirement benefit obligation or plan asset, this excess must be amortized over the average remaining service period of the active plan participants. If most of the plan participants are inactive, the amortization period is the expected future lifetime of inactive plan participants.

A 1% change in the annual medical inflation rate issued would have the following impact on the amounts reported at December 31 are as follows (in thousands):



	2014			2013
Effect on accumulated postretirement benefit obligation
1% increase	$	969		$	697
1% decrease	$	(830	)	$	(597	)
Effect on annual service and interest costs
1% increase	$	34		$	27
1% decrease	$	(28	)	$	(23	)

The measurement date used to determine postretirement benefit obligation measures was December 31.

Expected benefit payments from the plan for the years ended December 31 are as follows (in thousands):



2015	$	368
2016	$	369
2017	$	387
2018	$	397
2019	$	418
Years 2020 - 2024	$	2,254