Other Postretirement Benefits

12 Months Ended

Dec. 31, 2012

Other Postretirement Benefits [Abstract]

Other Postretirement Benefits

9. 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):

		2012			2011			2010
Projected benefit obligation at January 1	$	5,120		$	5,201		$	4,115
Service cost		15			13			13
Interest cost		224			278			226
Plan amendments and curtailments		–			–			(167	)
Actuarial loss (gain)		899			(80	)		1,308
Benefits paid		(304	)		(292	)		(294	)
Projected benefit obligation at December 31		5,954			5,120			5,201
Fair value of plan assets		–			–			–
Under funded status		(5,954	)		(5,120	)		(5,201	)
Unamortized prior service cost		–			(1	)		(2	)
Unrecognized actuarial loss		2,329			1,541			1,745
Net amount recognized	$	(3,625	)	$	(3,580	)	$	(3,458	)

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

		2012			2011			2010
Accrued postretirement benefit liability
Current portion	$	(322	)	$	(303	)	$	(292	)
Long term portion		(5,632	)		(4,817	)		(4,909	)
Pre-tax accumulated other comprehensive loss –
unamortized post-retirement healthcare costs		2,329			1,540			1,743
Net amount recognized	$	(3,625	)	$	(3,580	)	$	(3,458	)

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

		2012			2011			2010
Service cost	$	15		$	13		$	13
Interest cost		224			278			226
Amortization of unrecognized prior service cost		(1	)		(1	)		(5	)
Loss amortization		111			125			17
Curtailment benefit		–			–			(9	)
Net periodic benefit cost	$	349		$	415		$	242
Assumptions used to calculate the benefit obligation:
Discount rate		3.5	%		4.5	%		5.5	%
Annual rate of increase in the per capita cost of:
Medical costs before age 65 1		9.0	%		10.0	%		11.0	%
Medical costs after age 65 1		7.5	%		8.0	%		9.0	%
Prescription drug costs 1		8.0	%		9.0	%		10.0	%

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, 2012 by approximately $706,000 and $643,000, respectively, and increase or decrease the annual service and interest costs by approximately $30,000 and $27,000, 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):

2013	$	322
2014	$	329
2015	$	327
2016	$	322
2017	$	346
Years 2018 - 2022	$	1,732