A pension band is a figure that is used when calculating the monthly benefit for a defined benefit pension program.  A pension band figure, which is typically changes each year, is generally a dollar amount that the person will receive monthly for each year of service with the employer when they retire..  The pension band generally varies by job title/grade level/occupation covered by a pension plan.. Once assigned, the job title, grade level and occupation will generally remain in that band unless the job title, grade level and occupation (by location) are later reclassified to a different pension band.

Example of Basic Monthly Benefit Calculation.

The following hypothetical example shows how a basic monthly benefit is calculated assuming: •

You are in pension band 115.

The monthly benefit for pension band 115 is $55.49

In this example, the monthly benefit for a person with 30 years of credited service would be

Monthly benefit for pension band 115 ($ 55.49 Multiplied by 30 years of net credited service x 30 Basic monthly benefit =  $1,664.70

Like many states, up until the passage of the Affordable Care Act, Texas maintained a separate insurance pool for high risk individuals who could not obtain insurance from another source.

In Texas, that pool was known as the Texas Health Insurance Pool.  The Texas Health Insurance Pool insured individuals, such as those with pre-existing conditions, who could not obtain insurance from other sources.   As would be expected, the premiums, which reflect the higher health risk of the insured, offered by the Texas Health Insurance Pool were significantly higher than the rates offered by non-high risk insurance companies.

The Affordable Care Act and the Health Exchanges have changed high risk health insurance in Texas.  The Texas Health Insurance Pool no longer offers insurance policies and refers those individuals to health.gov for enrollment in the Federal Insurance Market system.

So how do the rates compare?  The rates under the Affordable Care Act are generally lower than the rates offered by the old Texas Health Insurance Pool.  For instance, consider a 53 year old, male smoker who had pre-existing health issues.  If this person were to select a gold level plan under the Affordable Health Care Act, which does not take the pre-existing conditions into account, they could expect to pay about $850 a month.  The same person would have paid about $1,500 a month under the old Texas Health Insurance Pool.

The existence of insurance through healthcare.gov can impact the valuation of employer fringe benefits in a number of situations.

For instance, self-employed workers or business owners may be involved in lawsuits involving the loss of premium payments.  The healthcare.gov marketplace provides a means to compare the different insurance options available to the self employed or business owner involved in the lawsuit.  Prior to healthcare.gov, it was relatively cumbersome to gather the necessary information.  Now comparisons of premiums, coverages, and standard deductions can be made for multiple policies.

What is it?: Phantom stock is a form of compensation where a company promises to pay cash at some future date, in an amount equal to the market value of a number of shares of its stock.  The recipent does not receive actual stock.

How does it work?  The payout on Phantom Stock will increase if the stock price rises, and decrease if the stock falls, but without the recipient actually receiving any stock. Like other forms of stock-based compensation plans, phantom stock broadly serves to encourage employee retention, and to align the interests of recipients and shareholders.

Phantom stock is essentially a cash bonus plan, although some plans pay out the benefits in the form of shares. Phantom stock is favored by closely held or family-owned companies who want to provide incentives to management and other employees without granting them equity.

How is it taxed?  When the payout is made, it is taxed as ordinary income to the employee and is deductible to the employer. Generally, phantom plans require the employee to become vested, either through seniority or meeting a performance target.

In earnings losses analyses which is relevant: total earnings or total taxable earnings?

A: Total earnings. Taxes and tax laws are subject to change. Additionally, fringe benefit values, such as those obtained from US BLS are based on earnings not taxable income.

Bottom line: tax treatments generally need to be backed out of income numbers when analyzing earnings losses.