ASSOCIATE MEDICAL BENEFITS

The Company provides comprehensive major medical benefits to certain of its retired associates and their dependents. Substantially all of the Company’s domestic associates who were hired before January 1, 1998 become eligible for these benefits if they retire at age 55 or older with more than 10 years of service. The retiree medical plan requires certain minimum contributions from retired associates and includes provisions to limit the overall cost increases the Company is required to cover. The Company funds its portion of retiree medical benefits on a pay-as-you-go basis.

The following table sets forth information about the retiree medical plan for domestic associates. The retiree medical plan is valued using a September 30 measurement date.



	2017			2016
	(In millions, except percentage figures)
Change in Accumulated Plan Benefit Obligation (APBO):
Benefit obligation at beginning of year	$	26.2		$	26.0
Service cost	0.3			0.2
Interest cost	0.7			1.0
Plan participants’ contributions	0.3			0.5
Actuarial (gain) loss	(1.2		)	1.3
Benefits paid	(2.4		)	(2.8		)
Benefit obligation at end of year	$	23.9		$	26.2
Change in plan assets:
Fair value of plan assets at beginning of year	$	—		$	—
Employer contribution	2.1			2.3
Plan participants’ contributions	0.3			0.5
Gross benefits paid	(2.4		)	(2.8		)
Fair value of plan assets at end of year	$	—		$	—
Unfunded status at end of year	$	(23.9	)	$	(26.2	)
Amounts recognized in the Consolidated Balance Sheets consist of:
Current liabilities	$	(1.8	)	$	(1.8	)
Noncurrent liabilities	(22.1		)	(24.4		)
Total amount accrued	$	(23.9	)	$	(26.2	)
Amounts recognized in accumulated other comprehensive loss consist of:
Actuarial loss	$	3.2		$	4.7
Unamortized prior service credit	(5.8		)	(6.9		)
Total amount recognized	$	(2.6	)	$	(2.2	)
Total change in other comprehensive loss attributable to:
Benefit (gain) loss during the period	$	(1.1	)	$	1.5
Net amortization of prior service credit and actuarial loss during the year	0.7			1.0
Total change in other comprehensive loss (income)	$	(0.4	)	$	2.5

Discount rate used in development of APBO	3.56		%	3.26		%



	2017			2016			2015
Components of net periodic benefit cost
Service cost	$	0.3		$	0.2		$	0.4
Interest cost	0.7			1.0			1.3
Amortization of actuarial loss	0.4			0.1			—
Amortization of prior service credit	(1.1		)	(1.1		)	—
Total postretirement benefit cost	$	0.3		$	0.2		$	1.7

Discount rate used in development of net periodic benefit cost	n/a			4.03		%	4.08		%
Discount rate used in development of service cost	3.44		%	n/a			n/a
Discount rate used in development of interest cost	2.56		%	n/a			n/a

The estimated actuarial loss and prior service credit that will be amortized from accumulated loss into net periodic benefit cost over the next fiscal year is $0.2 million and $1.1 million, respectively.

For measurement as of September 30, 2017, management has assumed that health care costs will increase at an annual rate of 6.75% in fiscal 2017, and thereafter decreasing 0.25% per year to an ultimate trend rate of 5.00% in 2024. A 1% increase or decrease in health cost trend rate assumptions would not have a material effect on the APBO as of September 30, 2017. A 1% increase or decrease in the health cost trend rate assumptions would not have a material effect on service or interest costs.

The following benefit payments under the plan are expected to be paid by the Company and the retirees for the fiscal years indicated:



	Gross Benefit Payments		Retiree Contributions			Net Company Payments
	(In millions)
2018	$	2.3	$	(0.5	)	$	1.8
2019	2.6		(0.7		)	1.9
2020	2.7		(0.8		)	1.9
2021	2.7		(0.8		)	1.9
2022	2.8		(0.9		)	1.9
2023 – 2027	12.0		(3.9		)	8.1

The Company also provides comprehensive major medical benefits to its associates. The Company is self-insured for certain health benefits up to $0.6 million per occurrence per individual. The cost of such benefits is recognized as expense in the period the claim is incurred. This cost was $33.4 million, $31.8 million and $29.6 million in fiscal 2017, fiscal 2016 and fiscal 2015, respectively.