Audit of the Pension Plan at a Terminated Medicare Contractor, Transamerica Occidental Life Insurance Company

EXECUTIVE SUMMARY:

The Transamerica Occidental Life Insurance Company (TOLIC) was a Medicare contractor until its contract was terminated in November 2000. 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 approximately $20.2 million in excess Medicare pension assets at TOLIC at the time of contract termination. Our methodology and calculations were reviewed by the Centers for Medicare & Medicaid Services' pension actuarial staff. We recommended that TOLIC remit the $20.2 million in excess pension assets to the Medicare program.