Postretirement Health Care and Life Insurance Benefits

12 Months Ended

Jan. 30, 2021

Pension And Other Postretirement Benefit Expense [Abstract]

Postretirement Health Care and Life Insurance Benefits

11. Postretirement Health Care and Life Insurance Benefits

In addition to pension and other supplemental benefits, certain retired employees currently are provided with specified health care and life insurance benefits. Eligibility requirements for such benefits vary by division and subsidiary, but generally state that benefits are available to eligible employees who were hired prior to a certain date and retire after a certain age with specified years of service. Certain employees are subject to having such benefits modified or terminated.

The following provides a reconciliation of benefit obligations, plan assets, and funded status of the postretirement obligations as of January 30, 2021 and February 1, 2020:

	2020			2019
	(millions)
Change in accumulated postretirement benefit obligation
Accumulated postretirement benefit obligation, beginning of year	$	133		$	137
Service cost		—			—
Interest cost		2			5
Actuarial loss (gain)		(6	)		5
Medicare Part D subsidy		—			—
Benefits paid		(10	)		(14	)
Accumulated postretirement benefit obligation, end of year		119			133
Change in plan assets
Fair value of plan assets, beginning of year		—			—
Company contributions		10			14
Benefits paid		(10	)		(14	)
Fair value of plan assets, end of year		—			—
Funded status at end of year	$	(119	)	$	(133	)
Amounts recognized in the Consolidated Balance Sheets at January 30, 2021 and    February 1, 2020
Accounts payable and accrued liabilities	$	(13	)	$	(14	)
Other liabilities		(106	)		(119	)
	$	(119	)	$	(133	)
Amounts recognized in accumulated other comprehensive loss at   January 30, 2021 and February 1, 2020
Net actuarial gain	$	(32	)	$	(30	)
Prior service credit		(7	)		(8	)
	$	(39	)	$	(38	)

Net postretirement benefit costs and other amounts recognized in other comprehensive loss included the following actuarially determined components:

	2020			2019			2018
	(millions)
Net Periodic Postretirement Benefit Cost
Service cost	$	—		$	—		$	—
Interest cost		2			5			5
Amortization of net actuarial gain		(4	)		(6	)		(5	)
Amortization of prior service credit		(1	)		(1	)		(1	)
		(3	)		(2	)		(1	)
Other Changes in Plan Assets and Projected Benefit Obligation    Recognized in Other Comprehensive Loss
Net actuarial loss (gain)		(6	)		5			(11	)
Amortization of net actuarial gain		4			6			5
Amortization of prior service credit		1			1			1
Prior service credit		—			—			—
		(1	)		12			(5	)
Total recognized	$	(4	)	$	10		$	(6	)

The following weighted average assumption was used to determine the accumulated postretirement benefit obligations at January 30, 2021 and February 1, 2020:

	2020			2019
Discount rate		2.32	%		2.81	%

The following weighted average assumption was used to determine the net postretirement benefit costs for the postretirement obligations:

	2020			2019			2018
Discount rate used to measure interest cost		2.30	%		3.57	%		3.28	%

The accumulated postretirement benefit obligation assumptions are evaluated annually, and at interim re- measurements if required, and updated as necessary.

The discount rate used to determine the present value of the Company’s accumulated postretirement benefit obligations is based on a yield curve constructed from a portfolio of high quality corporate debt securities with various maturities. Each year’s expected future benefit payments are discounted to their present value at the appropriate yield curve rate, thereby generating the overall discount rate for the accumulated postretirement benefit obligations.

The Company estimates the interest cost component of net periodic benefit costs using a full yield curve approach in the estimation of these components of net periodic benefit costs. Under this approach, the Company applies discounting using individual spot rates from the yield curve composed of the rates of return from a portfolio of high quality corporate debt securities available at the measurement date. These spot rates align to each of the projected benefit obligation and service cost cash flows.

The future medical benefits provided by the Company for certain employees are based on a fixed amount per year of service, and the accumulated postretirement benefit obligation is not affected by increases in health care costs. However, the future medical benefits provided by the Company for certain other employees are affected by increases in health care costs.

The following provides the assumed health care cost trend rates related to the Company’s accumulated postretirement benefit obligations at January 30, 2021 and February 1, 2020:

	2020	2019
Health care cost trend rates assumed for next year	4.9% - 8.0%	5.25% - 8.63%
Rates to which the cost trend rate is assumed to decline (the ultimate trend rate)	4.5%	4.5%
Year that the rate reaches the ultimate trend rate	2029	2027

The following table reflects the benefit payments estimated to be funded by the Company and paid from the accumulated postretirement benefit obligations and estimated federal subsidies expected to be received under the Medicare Prescription Drug Improvement and Modernization Act of 2003:

	Expected Benefit Payments
	(millions)
Fiscal Year
2021	$	13
2022		12
2023		11
2024		10
2025		9
2026-2030		36

The federal subsidies expected to be received for each of the years presented above are estimated to be less than $1 million each year and are estimated to be a total of approximately $1 million for the entire time period presented.