Workers’ Compensation Expense

The Company is liable under the Federal Mine Safety and Health Act of 1969, as subsequently amended, to provide for pneumoconiosis (occupational disease) benefits to eligible employees, former employees and dependents. The Company currently provides for federal claims principally through a self-insurance program. The Company is also liable under various state workers’ compensation statutes for occupational disease benefits. The occupational disease benefit obligation represents the present value of the of the actuarially computed present and future liabilities for such benefits over the employees’ applicable years of service.

In addition, the Company is liable for workers’ compensation benefits for traumatic injuries which are calculated using actuarially-based loss rates, loss development factors and discounted based on a risk free rate of 1.74%. Traumatic workers’ compensation claims are insured with varying retentions/deductibles, or through state-sponsored workers’ compensation programs.

Workers’ compensation expense consists of the following components:



	Successor		Predecessor
	October 2 through December 31, 2016		January 1 through October 1, 2016		Year Ended December 31, 2015		Year Ended December 31, 2014
(In thousands)
Self-insured occupational disease benefits:
Service cost	$	1,583	$	3,465	$	4,282	$	1,734
Interest cost	1,126		3,184		3,944		2,914
Net amortization	—		4,325		6,973		(216		)
Total occupational disease	$	2,709	$	10,974	$	15,199	$	4,432
Traumatic injury claims and assessments	3,162		6,628		16,781		19,924
Total workers’ compensation expense	$	5,871	$	17,602	$	31,980	$	24,356

The table below reconciles changes in the occupational disease liability for the respective period.



	Successor			Predecessor
(In thousands)	October 2 through December 31, 2016			January 1 through October 1, 2016			Year Ended December 31, 2015
Beginning of period	$	119,710		$	90,836		$	72,749
Service cost	1,583			3,465			4,282
Interest cost	1,126			3,184			3,944
Curtailments	—			4,156
Actuarial (gain) loss	(9,675		)	—			14,284
Benefit and administrative payments	(1,585		)	(3,728		)	(4,423		)
Fresh start accounting adjustment	—			21,797			—
	$	111,159		$	119,710		$	90,836

The following table provides the assumptions used to determine the projected occupational disease obligation:



	Successor	Predecessor
	October 2 through December 31, 2016	January 1 through October 1, 2016	Year Ended December 31, 2015
(Percentages)
Occupational Disease Benefit
Discount rate	4.31	3.80	4.76
Cost escalation rate	N/A	N/A	N/A

Summarized below is information about the amounts recognized in the accompanying consolidated balance sheets for workers’ compensation benefits:



	Successor		Predecessor
	Year Ended December 31, 2016		Year Ended December 31, 2015
(In thousands)
Occupational disease costs	$	111,159	$	90,836
Traumatic and other workers’ compensation claims	88,593		38,309
Total obligations	199,752		129,145
Less amount included in accrued expenses	15,184		16,875
Noncurrent obligations	$	184,568	$	112,270

As of December 31, 2016, the Company had $146.2 million in surety bonds and letters of credit outstanding to secure workers’ compensation obligations.

The Company’s recorded liabilities include $19.4 million of obligations that are reimbursable under various insurance policies purchased by the company. These insurance receivables are recorded in the balance sheet line items “Other receivables” and “Other noncurrent assets” for $0.8 million and $18.6 million.