Health Net 2007 Annual Report Download - page 129

HEALTH NET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Pension Plans—We have an unfunded non-qualified defined benefit pension plan, the Supplemental
Executive Retirement Plan (adopted in 1996 and amended in August 2004). 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 health care
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. 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.
The following table sets forth the plans’ obligations and funded status at December 31:
Pension Benefits Other Benefits
2007 2006 2007 2006
(Dollars in millions)
Change in benefit obligation:
Benefit obligation, beginning of year .......................... $25.2 $ 22.9 $ 9.7 $10.3
Service cost .............................................. 1.3 1.1 0.3 0.4
Interest cost .............................................. 1.4 1.2 0.5 0.6
Benefits paid ............................................. (0.9) (0.9) (0.4) (0.4)
Actuarial (gain) loss ....................................... (0.8) 0.9 (0.6) (1.2)
Benefit obligation, end of year ............................... $26.2 $ 25.2 $ 9.5 $ 9.7
Change in fair value of plan assets:
Plan assets, beginning of year ................................ $ — $ — $— $—
Employer contribution ..................................... 0.9 0.9 0.4 0.4
Benefits paid ............................................. (0.9) (0.9) (0.4) (0.4)
Plan assets, end of year ..................................... $ — $ — $— $—
Underfunded status, end of year .............................. $(26.2) $(25.2) $(9.5) $ (9.7)
Amounts recognized in our consolidated balance sheet as of December 31 consist of:
Pension Benefits Other Benefits
2007 2006 2007 2006
(Dollars in millions)
Noncurrent assets .......................................... — — — —
Current liabilities .......................................... $ (1.0) $ (0.9) $(0.5) $(0.4)
Noncurrent liabilities ....................................... (25.2) (24.3) (9.0) (9.3)
Net amount recognized ..................................... $(26.2) $(25.2) $(9.5) $(9.7)
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