Health Net 2007 Annual Report Download - page 131

HEALTH NET, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
Pension Benefits Other Benefits
2007 2006 2005 2007 2006 2005
Weighted average assumptions used to determine net cost for
years ended December 31:
Discount rate ...................................... 5.8% 5.5% 5.8% 5.8% 5.5% 5.9%
Rate of compensation increase ........................ 5.9% 5.8% 5.8% 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, 2007 and 2006 mirror the rate of return expected from high-quality fixed income investments.
2007 2006
Assumed Health Care Cost Trend Rates at December 31:
Health care cost trend rate assumed for next year .................................. 10.2% 11.0%
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 .................................. 2013 2013
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, 2007:
1-Percentage
Point
Increase
1-Percentage
Point
Decrease
(Dollars in millions)
Effect on total of service and interest cost .......................... $0.1 $(0.1)
Effect on postretirement benefit obligation ......................... $1.0 $(0.9)
Contributions
We expect to contribute $1,010,000 to our pension plan and $524,000 to our postretirement health and life
plans throughout 2008. The entire amount expected to be contributed, in the form of cash, to the defined benefit
pension and postretirement health and life plans during 2008 is expected to be paid out as benefits during the
same year.
Estimated Future Benefit Payments
We estimate that benefit payments related to our pension and postretirement health and life plans over the
next ten years will be as follows:
Pension
Benefits
Other
Benefits
(Dollars in millions)
2008 ............................................................. $ 1.0 $0.5
2009 ............................................................. 1.0 0.6
2010 ............................................................. 1.0 0.7
2011 ............................................................. 1.1 0.8
2012 ............................................................. 1.3 0.8
Years 2013 – 2017 .................................................. 11.4 3.9
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