Health Net 2014 Annual Report Download - page 157
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HEALTH NET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
F-47
Additional Information
Pension Benefits Other Benefits
2014 2013 2014 2013
Assumptions
Weighted average assumptions used to determine benefit
obligations at December 31:
Discount rate .............................................................................. 3.7% 4.5% 3.9% 4.8%
Rate of compensation increase................................................... 6.0% 6.0% 3.5% 3.5%
Pension Benefits Other Benefits
2014 2013 2012 2014 2013 2012
Weighted average assumptions used to determine net
cost for years ended December 31:
Discount rate ....................................................... 4.5% 3.7% 4.4% 4.8% 4.0% 4.5%
Rate of compensation increase............................ 6.0% 6.0% 5.9% 3.5% 3.5% 3.5%
The discount rates we used to measure our obligations under our pension and other postretirement plans at
December 31, 2014 and 2013 mirror the rate of return expected from high-quality fixed income investments.
2014 2013
Assumed Health Care Cost Trend Rates at December 31:
Health care cost trend rates assumed for next year ......................... 6.5% to 12.8% 7.3% to 16.3%
Rate to which the cost trend rate is assumed to decline (the
ultimate trend rate) .......................................................................... 5% 5%
Years that the rate reaches the ultimate trend rate........................... 2024 to 2024 2022 to 2023
Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A
one-percentage-point change in assumed health care cost trend rates would have the following effects for the year
ended December 31, 2014:
1-Percentage
Point
Increase
1-Percentage
Point
Decrease
(Dollars in millions)
Effect on total of service and interest cost ................................................... $ 0.2 $ (0.2)
Effect on postretirement benefit obligation.................................................. $ 4.7 $ (3.8)
Contributions
We expect to contribute $1.7 million to our pension plan and $0.9 million to our postretirement health and life
plans throughout 2015. The entire amount expected to be contributed, in the form of cash, to the defined benefit pension
and postretirement health and life plans during 2014 is expected to be paid out as benefits during the same year.