POSTRETIREMENT BENEFITS OTHER THAN PENSIONS

Certain of our subsidiaries provide health care benefits to certain retirees who are covered under specific group contracts. As defined by the specific group contract, qualified covered associates may be eligible to receive major medical insurance with deductible and co-insurance provisions subject to certain lifetime maximums.

Included in accumulated other comprehensive loss at December 31, 2017 and 2016 are the following amounts that have not yet been recognized in net periodic benefit cost: unrecognized prior service costs of $0.4 million ($0.3 million net of tax) and $0.5 million ($0.3 million net of tax), respectively, and unrecognized actuarial losses of $4.6 million ($3.4 million net of tax) and $6.7 million ($4.1 million net of tax), respectively. The prior service cost and actuarial loss included in accumulated other comprehensive income (loss) and expected to be recognized in net periodic benefit cost during the year ending December 31, 2018 is $0.1 million ($0.1 million net of tax) and $0.5 million ($0.3 million net of tax), respectively.

The following table sets forth the funded status of these plans:



	December 31
	2017			2016
	(In thousands)
Change in benefit obligation:
Benefit obligation at beginning of year	$	30,122		$	32,132
Service cost	586			640
Interest cost	960			1,085
Employee contributions	256			338
Actuarial (gain) loss	1,622			(1,916		)
Benefits paid	(1,680		)	(2,157		)
Benefit obligation at end of year	31,866			30,122
Fair value of plan assets at end of year	—			—
Funded status	$	(31,866	)	$	(30,122	)

The unfunded portion of the liability of $31.9 million at December 31, 2017 is recognized in our Consolidated Balance Sheet and includes $2.2 million classified as a current accrued postretirement liability.

A summary of our key actuarial assumptions used to determine the benefit obligation as of December 31, 2017 and 2016 follows:



	December 31
	2017		2016
Healthcare inflation:
Healthcare cost trend rate assumed for next year	6.72	%	7.00	%
Rate to which the cost trend rate is assumed to decline (ultimate trend rate)	4.50	%	4.50	%
Year of ultimate rate achievement	2038		2038
Weighted average discount rate	3.53	%	3.97	%

A summary of our key actuarial assumptions used to determine net periodic benefit cost follows:



	Year Ended December 31
	2017		2016		2015
Healthcare inflation:
Healthcare cost trend rate assumed for next year	7.00	%	7.27	%	7.70	%
Rate to which the cost trend rate is assumed to decline (ultimate trend rate)	4.50	%	4.50	%	4.50	%
Year of ultimate rate achievement	2038		2038		2029
Effective discount rate for benefit obligations	3.97	%	4.27	%	3.85	%
Effective rate for interest on benefit obligations	3.32	%	3.52	%	3.85	%
Effective discount rate for service cost	4.44	%	4.68	%	3.85	%
Effective rate for interest on service cost	4.08	%	4.37	%	3.85	%

At the end of 2015, we changed our approach used to measure service and interest costs for pension and other postretirement benefits. In 2015, we measured service and interest costs utilizing a single weighted-average discount rate derived from the yield curve used to measure the plan obligations. In 2016, we elected to measure service and interest costs by applying the specific spot rates along that yield curve to the plans’ liability cash flows. We believe the new approach provides a more precise measurement of service and interest costs by aligning the timing of the plans’ liability cash flows to the corresponding spot rates on the yield curve. This change does not affect the measurement of our plan obligations but generally results in lower pension expense in periods when the yield curve is upward sloping. We have accounted for this change as a change in accounting estimate and, accordingly, have accounted for it on a prospective basis starting in 2016.



	Year Ended December 31
	2017			2016			2015
	(In thousands)
Components of net periodic benefit cost:
Service and interest cost	$	1,545		$	1,725		$	2,276
Amortizations:
Prior service cost	92			92			92
Unrecognized net (gain) loss	(457		)	(245		)	63
Net periodic benefit cost	$	1,180		$	1,572		$	2,431

Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one percent change in assumed health care cost trend rates would have the following effects:



	1-Percentage- Point Increase		1-Percentage- Point Decrease
	(In thousands)
Effect on total of service and interest cost components	$	214	$	(177	)
Effect on postretirement obligation	1,982		(3,489		)

We expect to contribute $2.2 million to the postretirement health care plans in 2018. Estimated postretirement health care plan benefit payments for the next ten years are as follows:



2018	$	2.2	million
2019	2.3		million
2020	2.4		million
2021	2.3		million
2022	2.4		million
Next five years	11.3		million