That question is being asked every day as the health care industry continues to adjust to a changing health care system.
The Affordable Care Act introduced significant financial challenges for virtually all health care organizations, especially hospitals. As multiple hospitals and related service providers band together, they are faced with the challenge of choosing the “right” retirement program for the new organization.
The purpose of this white paper series is to provide insight and strategy for health care organizations in the midst of such dramatic change.
The first paper in our series on retirement benefits in the health care industry focuses on the overall retirement income program, including pension and savings plans. This includes a breakdown of the status of defined benefit plans and types of plans (including cash balance).
The second paper in our series on retirement benefits in the health care industry focuses on the value provided by the overall retirement income program, including defined benefit and defined contribution plans. The value of the overall retirement program is influenced by many factors. Value is determined not only by the benefit available to employees, but also by the type of plan (e.g., matched savings versus non-matching), the details within the plan (vesting, forfeitures, early retirement incentives, etc.), and the employee behavior required to receive an employer benefit from the plan.
Part three of our series on retirement benefits in the health care industry focuses on the efficiency of the overall retirement programs offered by employers in the industry. Health care employers have an opportunity to improve outcomes for their employees without increasing employer cost.
This fourth paper in our series on retirement benefits in the health care industry focuses on benchmarking the key measures of financial risk that accompany legacy pension liabilities. While only about a quarter of health care organizations offer defined benefit pension plans to new hires, the majority of health care organizations still have some form of legacy defined benefit plan liability on the balance sheet. Whether a defined benefit plan is open to new hires, closed to all but a select group, or frozen altogether, the pension liability remains on the balance sheet until the plan is fully and formally terminated.
This paper, Part Five, which also is the final paper in this health care white paper series, provides insights on holistic pension risk management. As defined benefit plans move from an ongoing state to a closed or frozen state, the end game for many could be plan termination. There are many steps plan sponsors can, and should, take to be ready for a plan termination down the road.
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