Other Postretirement Benefits

12 Months Ended

Dec. 31, 2011

Other Postretirement Benefits [Abstract]

Other Postretirement Benefits

10. 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):

	2011			2010			2009
Projected benefit obligation at January 1	$	5,201		$	4,115		$	4,446
Service cost		13			13			65
Interest cost		278			226			269
Plan amendments and curtailments		–			(167	)		(857	)
Actuarial (gain) loss		(80	)		1,308			432
Benefits paid		(292	)		(294	)		(240	)
Projected benefit obligation at December 31		5,120			5,201			4,115
Fair value of plan assets		–			–			–
Under funded status		(5,120	)		(5,201	)		(4,115	)
Unamortized prior service cost		(1	)		(2	)		(17	)
Unrecognized actuarial loss		1,541			1,745			621
Net amount recognized	$	(3,580	)	$	(3,458	)	$	(3,511	)

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

	2011			2010			2009
Accrued postretirement benefit liability	$	(5,120	)	$	(5,201	)	$	(4,115	)
Pre-tax accumulated other comprehensive loss – unamortized post-retirement healthcare costs		1,540			1,743			604
Net amount recognized	$	(3,580	)	$	(3,458	)	$	(3,511	)

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

	2011			2010			2009
Service cost	$	13		$	13		$	65
Interest cost		278			226			269
Amortization of unrecognized prior service cost		(1	)		(5	)		(18	)
Loss amortization		125			17			84
Curtailment benefit		–			(9	)		(17	)
Net periodic benefit cost	$	415		$	242		$	383
Assumptions used to calculate the benefit obligation:
Discount rate		4.5	%		5.5	%		5.8	%
Annual rate of increase in the per capita cost of:
Medical costs before age 65 1		10.0	%		11.0	%		8.3	%
Medical costs after age 65 1		8.0	%		9.0	%		7.0	%
Prescription drug costs 1		9.0	%		10.0	%		9.5	%

¹ It was assumed that these rates would gradually decline to 5% by 2018.

The effect of a 1% increase or decrease in the annual medical inflation rate would increase or decrease the accumulated postretirement benefit obligation at December 31, 2011 by approximately $607,000 and $553,000, respectively, and increase or decrease the annual service and interest costs by approximately $37,000 and $33,000, respectively.

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):

2012	$	304
2013	$	321
2014	$	328
2015	$	325
2016	$	317
Years 2017 - 2021	$	1,644

The Patient Protection and Affordable Care Act (PPACA) was signed into law on March 23, 2010. On March 30, 2010, the Health Care and Education Reconciliation Act of 2010, which amends certain aspects of the PPACA was signed into law. The new laws have a financial impact on the Company's postretirement health care plan. The effects of health care reform have been properly reflected in the accumulated postretirement benefit obligation as of December 31, 2011 and 2010 and the related net periodic postretirement benefit cost charged to expense for the years then ended.