Health Net 2009 Annual Report Download - page 133

HEALTH NET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Components of net periodic benefit cost recognized in our consolidated statements of operations as general
and administrative expense for years ended December 31:
Pension Benefits Other Benefits
2009 2008 2007 2009 2008 2007
(Dollars in millions)
Service Cost .......................................... $1.0 $1.2 $1.3 $0.2 $0.2 $0.3
Interest Cost .......................................... 1.7 1.6 1.4 0.7 0.6 0.5
Amortization of prior service cost ......................... 0.5 0.5 0.5 — — —
Amortization of net (gain) loss ............................ — — — 0.1 — 0.1
Net periodic benefit cost ................................. $3.2 $3.3 $3.2 $1.0 $0.8 $0.9
The estimated net (gain) loss and prior service cost for the defined benefit pension plans that will be
amortized from accumulated other comprehensive income into net periodic benefit cost over the next fiscal year
are $0 and $0.4 million, respectively.
All of our pension and other postretirement benefit plans are unfunded. Employer contributions equal
benefits paid during the year. Therefore, no return on assets is expected.
Additional Information
Pension Benefits Other Benefits
2009 2008 2009 2008
Assumptions
Weighted average assumptions used to determine benefit obligations at
December 31:
Discount rate ................................................. 5.9% 6.6% 6.0% 6.6%
Rate of compensation increase ................................... 6.0% 5.9% N/A N/A
Pension Benefits Other Benefits
2009 2008 2007 2009 2008 2007
Weighted average assumptions used to determine net cost for
years ended December 31:
Discount rate .......................................... 6.6% 6.5% 5.8% 6.6% 6.5% 5.8%
Rate of compensation increase ............................ 5.9% 5.9% 5.9% N/A N/A N/A
The discount rates we used to measure our obligations under our pension and other post-retirement plans at
December 31, 2009 and 2008 mirror the rate of return expected from high-quality fixed income investments.
2009 2008
Assumed Health Care Cost Trend Rates at December 31:
Health care cost trend rate assumed for next year .................................. 9.0% 10.0%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate) .......... 5.0% 5.0%
Year that the rate reaches the ultimate trend rate .................................. 2016 2016
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