Anthem Blue Cross 2002 Annual Report Download - page 81

NOTES
to Consolidated Financial Statements (Continued)
76 Anthem, Inc. 2002 Annual Report
Anthem Southeast, Inc. sponsors a plan that is a
cash balance arrangement where participants have an
account balance that will earn a pay credit equal to three
to ten percent of compensation. This plan covers all full-
and part-time employees who have completed three
months of service and there is no minimum age for par-
ticipation. The pay credit is based on the sum of the par-
ticipants’ age and years of service. In addition to the pay
credit, participant accounts earn interest at a rate based
on 30-year Treasury notes.
Effective January 1, 2001, employees of Rocky
Mountain Hospital and Medical Services, Inc. and
Anthem Health Plans of Maine, Inc. became participants
in the Anthem Insurance plan and the former plans were
merged into the Anthem Insurance plan on April 30,
2001 and December 31, 2000, respectively.
All of the plans’ assets consist primarily of common
and preferred stocks, bonds, notes, government securities,
investment funds and short-term investments. The fund-
ing policies for all plans are to contribute amounts at least
sufficient to meet the minimum funding requirements
set forth in the Employee Retirement Income Security
Act plus such additional amounts as are necessary to pro-
vide assets sufficient to meet the benefits to be paid to
plan participants.
The effect of acquisitions on the consolidated ben-
efit obligation and plan assets is reflected through the
business combination lines of the tables below.
In addition to the Company’s defined benefit and
defined contribution plans, the Company offers most
employees certain life, medical, vision and dental benefits
upon retirement. There are several plans, which differ in
amounts of coverage, deductibles, retiree contributions,
years of service and retirement age. The Company funds
certain benefit costs through contributions to a Voluntary
Employees’ Beneficiary Association (“VEBA”) trust and
others are accrued, with the retiree paying a portion of
the costs. Postretirement plan assets held in the VEBA
trust consist primarily of bonds and equity securities.
The reconciliation of the benefit obligation based on a measurement date of September 30 are as follows:
Pension Benefits Other Benefits
2002 2001 2002 2001
Benefit obligation at beginning of year $582.9 $ 567.6 $144.3 $111.6
Service cost 35.0 29.3 1.7 1.5
Interest cost 45.8 40.9 11.7 8.7
Plan amendments 1.1 (6.8) 1.4 1.5
Actuarial loss (gain) 13.7 (5.5) 1.5 31.7
Benefits paid (52.8) (42.6) (12.0) (10.7)
Business combinations 157.0 —61.6 —
Benefit obligation at end of year $782.7 $ 582.9 $210.2 $144.3
The changes in plan assets are as follows:
Pension Benefits Other Benefits
2002 2001 2002 2001
Fair value of plan assets at beginning of year $495.3 $ 650.6 $ 23.7 $28.4
Actual return on plan assets (71.1) (115.7) (2.4) (3.6)
Employer contributions 216.8 3.0 12.0 2.0
Benefits paid (52.8) (42.6) (13.0) (3.1)
Business combinations 128.3 —14.1 —
Fair value of plan assets at end of year $716.5 $ 495.3 $ 34.4 $23.7