Audit of the Pension Plan at a Terminated Medicare Contractor, General American Life Insurance Company

The General American Life Insurance Company served as a Medicare Part B contractor until their contract was terminated in 1998. Federal regulations and Medicare contract provisions require pension gains, which occur when a Medicare segment of a pension plan closes, be credited to the Medicare program. We identified about $3.5 million in excess Medicare pension assets at General American at the time of contract termination. Our methodology and calculations were reviewed by the Health Care Financing Administration's pension actuarial staff. We are recommending that General American remit the $3.5 million to the Medicare program.