Health Net 2011 Annual Report Download - page 142

HEALTH NET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Participation in the plans is available to substantially all employees who meet certain eligibility requirements and
elect to participate. Employees may contribute up to the maximum limits allowed by Sections 401(k) and 415 of
the Code, with Company contributions based on matching or other formulas. Our expense under these plans
totaled $16.8 million, $17.5 million and $18.1 million for the years ended December 31, 2011, 2010 and 2009,
respectively, and is included in general and administrative expense in our consolidated statements of operations.
Deferred Compensation Plans
We have a voluntary deferred compensation plan pursuant to which certain management and highly
compensated employees are eligible to defer a certain portion of their regular compensation and bonuses (the
Employee Plan). In addition, we have a voluntary deferred compensation plan pursuant to which the Health Net,
Inc. non-employee Board of Directors are eligible to defer a certain portion of their meeting fees and other cash
remuneration (the BOD Plan). The compensation deferred under these plans is credited with earnings or losses
measured by the mirrored rate of return on investments elected by plan participants. These plans are unfunded.
Each plan participant is fully vested in all deferred compensation and earnings credited to his or her account. The
BOD Plan was amended and restated effective December 31, 2009 and the Employee Plan was amended and
restated effective January 1, 2010.
As of December 31, 2011 and 2010, the liability under these plans amounted to $47.0 million and $47.6
million, respectively. These liabilities are included in other noncurrent liabilities on our consolidated balance
sheets. Deferred compensation expense is recognized for the amount of earnings or losses credited to participant
accounts. Our expense under these plans totaled $0.7 million, $4.5 million and $6.2 million for the years ended
December 31, 2011, 2010 and 2009, respectively, and is included in general and administrative expense in our
consolidated statements of operations.
Pension and Other Postretirement Benefit Plans
Pension Plans—We have an unfunded non-qualified defined benefit pension plan, the Supplemental
Executive Retirement Plan. The plan was amended and restated effective January 2008 to comply with
Section 409A of the Code. This plan is noncontributory and covers key executives as selected by the Board of
Directors. Benefits under the plan are based on years of service and level of compensation during the final five
years of service.
Postretirement Health and Life Plans—Certain of our subsidiaries sponsor postretirement defined benefit
health care and life insurance plans that provide postretirement medical and life insurance benefits to directors,
key executives, employees and dependents who meet certain eligibility requirements. The Health Net of
California Retiree Medical and Life Benefits Plan is non-contributory for employees retired prior to December 1,
1995 who have attained the age of 62; employees retiring after December 1, 1995 who have attained age 62
contribute from 25% to 100% of the cost of coverage depending upon years of service. The plan was amended in
2008 to vest benefits for eligible associates who were terminated in connection with the Company’s operations
strategy. We have two other benefit plans that we have acquired as part of the acquisitions made in 1997. One of
the plans is frozen and non-contributory, whereas the other plan is contributory by certain participants. Under
these plans, we pay a percentage of the costs of medical, dental and vision benefits during retirement. The plans
include certain cost-sharing features such as deductibles, co-insurance and maximum annual benefit amounts that
vary based principally on years of credited service.
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