Physician s Total Rewards Southern California Permanente Medical Group
Table of Contents About Total Rewards... 4 Permanente Total Compensation... 5 Health Benefits... 6 Life Insurance... 10 Time-Off Benefits... 13 Sick Leave and Disability Income Benefits... 16 Retirement and Savings Plans... 18 Other Benefits... 22 Compensation Components... 24 Partnership of SCPMG... 26 Resources... 27
About Total Rewards t he Permanente Human Resources department supports the physicians of the Southern California Permanente Medical Group (SCPMG) by providing excellent human resources services and programs designed to meet the needs of the medical group and allow each physician to devote his/her efforts toward the delivery of high quality health care. The departments within Permanente Human Resources assist physicians with questions about the Partnership Agreement, Rules and Regulations, compensation, human resource and benefits issues, and recruitment and credentialing assistance. The Physician s Total Rewards brochure highlights the benefits and compensation program provided to physicians of SCPMG. As a summary, it can give only an overview. There are other detailed documents for the compensation and benefits provided to salaried and hourly Associates of SCPMG. The benefits and compensation programs are subject to change, and those changes may not be reflected in the Physician s Total Rewards brochure. The benefits and compensation programs as described in this brochure are currently in effect; however, these programs may be limited, added to, changed and/or discontinued. For details regarding the benefits and compensation plans described in this brochure, refer to the SCPMG Partnership Agreement and Rules, Benefits Handbook, insurance policies (for those benefits provided through insurance), and other documents that completely describe these programs. In the event of any conflict between this brochure and the documents that completely describe the benefits, the latter shall prevail. More detailed information can also be obtained by contacting: The Permanente Total Compensation Department at 1-877-608-0044 (toll-free). 4
Permanente Total Compensation Permanente Total Compensation and its integrated branches consisting of Physician Benefits, Payroll and Compensation exist to promote fair, equitable, and competitive physician and non-physician executive benefit and compensation policies, programs, and practices that are supportive and responsive to the needs of our physicians as well as our non-physician executives. Main areas of responsibility: In addition to administering the physician benefits programs previously described, Permanente Total Compensation is also responsible for administering the physician compensation programs including: the SCPMG Board of Directors approved changes to the Physician Compensation & Benefits Program each year, Anniversary Increases, Partnership Increases, Merit Cash Awards and other Bonuses. Managing the bi-weekly and off-cycle payroll runs. Managing the Area Permanente Total Compensation Offices to ensure physician inquiries regarding benefits, compensation and payroll practices are appropriately addressed. Providing physician data to meet the regulatory compliance measures. Conducting market research and analysis to retain market sensitive and competitive cash compensation and pay practices. Providing consultative services to executives and physician leaders on special projects. Supporting SCPMG Board of Directors Standing Committees, including: Administrative Stipend, Medical Director Review, Physician Benefits, and Physician Compensation. Administering physician leader and specialty specific incentive-based programs. 5
Health Benefits The following Health Plan, Alternate Mental Health, Supplemental Medical, and Dental Care benefits are provided: Health Plan The Kaiser Foundation Health Plan coverage is provided to all full-time (working 8/10ths or more) Associate and Partner physicians. Health Plan coverage is comprehensive and includes basic and major medical care, such as hospitalization, surgery, maternity care, X-ray and laboratory expenses, durable medical equipment, and emergency care. Covered services must be received directly at a Kaiser Permanente medical facility. Doctor Office Visits There is no co-payment for doctor office visits. Prescription Drugs There is a co-payment of $5 for each prescription that has been prescribed by an SCPMG physician or by a dentist. In addition, over-the-counter drugs can be purchased at a discount from a Kaiser Permanente pharmacy. Vision Care There is a $175 allowance toward the purchase of eyeglass lenses, frames and contact lenses, and fitting and dispensing every 24 months when prescribed by a Plan Physician or Plan Optometrist and purchased at plan facilities. Mental Health Care Mental health benefits are provided at Kaiser Permanente facilities with no co-payment. Emergency Services Emergency care and urgent care are available from Kaiser Permanente Plan facilities. Health Plan also covers emergency care obtained from non Plan providers. Health Plan coverage becomes effective on your date of hire. The benefit is provided to you, your spouse/domestic partner, and unmarried dependent children up to 26 years of age (regardless of student status). Alternate Mental Health The Alternate Mental Health Coverage is provided to all full-time (working 8/10ths or more) Associate and Partner physicians. Alternate Mental Health Coverage provides mental health services outside of Kaiser Permanente. The Alternate Mental Health benefit pays: Hospitalization 80% of the reasonable and customary cost of treatment in the area that services are received for mental illness during hospitalization for up to 31 days. Outpatient Visits 80% of the reasonable and customary cost of treatment in the area that services are received. If a family 6
consultation is required, the visit(s) will be charged to the person receiving the therapy. Each individual is allowed up to two such family consultations per lifetime. An outpatient group therapy or conjoint therapy session will be counted as a half visit for determining covered visits. Maximum Benefits for Associate Physicians: The plan provides a maximum of 25 outpatient visits per calendar year. Any doctor s visits while hospitalized will not count against the 25 maximum outpatient visits per year. Maximum Benefits for Partners: The plan provides a maximum of 40 outpatient visits per calendar year. Any doctor s visits while hospitalized will not count against the 40 maximum outpatient visits per year. Alcohol or Drug Dependency (Partner physicians only) 80% of the reasonable and customary cost for outpatient individual or group therapy up to a $1,000 calendar year maximum (this benefit does not count against the annual number of outpatient visits per calendar year). Day or Night Care Treatment 80% of the reasonable and customary cost of treatment in the area that services are received for the first 90 days of treatment in a calendar year. The 90-day period will be reduced by two days, however, for each full day of inpatient psychiatric care under these provisions. Alternate Mental Health Coverage becomes effective on your date of hire. This benefit is provided to you, your spouse/domestic partner, and unmarried dependent children (up to age 21, or up to age 25 for full time students). Supplemental Medical The Supplemental Medical Coverage is provided to all full-time (working 8/10ths or more) Associate and Partner physicians. Supplemental Medical provides additional coverage to the medical benefits provided by Health Plan coverage. This benefit reimburses physicians for certain medical expenses that either are not covered by Health Plan coverage or that exceed Health Plan coverage limitations. Physicians share the cost of covered Supplemental Medical expenses through deductibles and co-payments. For Partner physicians there is a $50 deductible per covered individual, up to $100 per family maximum. There is no calendar year maximum for Partners; however, there is a $300,000 per diagnosis/lifetime maximum. For full-time Associate physicians, there is a $100 deductible each calendar year per covered individual, up to a $200 deductible per family. For services that 7
Health Benefits (continued) are partially covered by Health Plan, a Health Plan denial letter is required. For Associate physicians there is a $1,000,000 lifetime maximum. As a full-time Associate physician, the following benefits have a lifetime maximum: Chemical Dependency...$50,000 TMJ...$2,000 Infertility Treatment...$30,000 As a full-time Associate physician, the following benefits have a calendar year maximum: Chiropractic...$1,000 Durable Medical Equipment...$2,000 Outpatient Chemical Dependency...$1,500 Supplemental Medical becomes effective on your date of hire and covers you, your spouse/domestic partner, and unmarried dependent children (up to age 21, or up to age 25 for full time students). Dental Plans All full-time (working 8/10ths or more) Associate and Partner physicians have the option to enroll in one of three Dental plans. Unless a dental option is chosen, physicians and their dependents are automatically enrolled in Delta Dental. Delta Dental covers 100% of preventive services; 80% of usual, customary and reasonable charges for basic services such as oral surgery, periodontics, endodontics, restorative dentistry, and prosthetics. Major services, such as crowns, jackets and prosthodontic services and construction or repair of bridges, and dentures are also covered at 80%. The maximum benefit is $1,000 per person per calendar year. Delta Dental covers 50%, up to a maximum of $1,250 for orthodontia for dependent children up to the age of 21. To receive full benefits, you must visit a participating Delta dentist. The majority of California dentists participate in the Delta Dental Plan. United Concordia Dental Plan is a dental health maintenance organization (DHMO) plan. The maximum annual benefit is unlimited and most listed procedures are provided at no charge to the member. Included are diagnostic and preventive services, restorative dentistry, crowns and bridges, pontics, periodontics, endodontics, prosthodontics, oral surgery, and X-rays. Orthodontia services are covered after you pay start-up fees of $265 plus $1,500 for children to age 19; $2,000 for adults. Orthodontic benefits continue for up to 24 months. Delta Care (PMI) is a dental health maintenance organization. The maximum annual benefit is unlimited and most listed procedures are provided at no charge to the member. Included are diagnostic and preventive 8
services, restorative dentistry, crowns and bridges, pontics, periodontics, endodontics, prosthodontics, oral surgery, and X rays. Dental care must be provided through one of PMI s panel providers. Orthodontia services are covered after you pay start-up fees of approximately $350 plus $1,600 for children to age 19; $1,800 for adults. Orthodontic services must be completed within 24 months. Premiums for Special Dependent Coverage may be deducted from the physician s paycheck or may be directly billed to the Special Dependent. Coverage is for Health Plan coverage only and does not include Supplemental Medical, Dental, or Alternate Mental Health coverage. Dental benefits become effective on the first of the month following your date of hire. The benefit is provided to you, your spouse/domestic partner, and unmarried dependent children (up to age 21, or to age 25 if a fulltime student). United Concordia covers unmarried dependent children to age 19, or up to age 23 if a full-time student. Special Dependent Coverage Full-time (working 8/10ths or more) Associate and Partner physicians may enroll Special Dependents in Health Plan coverage. Special Dependents are defined as the physician s parents, parents-in-law, parents of domestic partners, and over-age or married children. Health Plan coverage is available to Special Dependents provided they permanently reside in the Northern or Southern California Service Area, are not hospital confined at the time of enrollment, and do not have End-Stage Renal Disease. 9
Life Insurance SCPMG s life and accident insurance program provides financial protection for physicians beneficiaries in the event of their death. The maximum combined coverage for Optional Life Insurance and Permanente Provided Life Insurance may not exceed $1,500,000 and cannot exceed 500% of Base Annual Compensation. All of the SCPMG life insurance coverages are term life insurance plans. The life and accident insurance program is made up of the following benefits. Age-Rated Optional Life Insurance All Associate and Partner physicians may purchase Age-Rated Optional Life Insurance at 100%, 200%, 300%, 400%, or 500% of Base Annual Compensation, prorated to the work schedule. Agerated Optional Life Insurance includes Accidental Death and Dismemberment coverage up to $200,000. The premiums are based on age, and proof of insurability is not required when enrolling for up to 200% within the first 60 days after hire date or partnership date. The current age bands are as follows: Under 20 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 70-74 75-79 80 and over When a physician reaches a new age group or receives a compensation change, or work schedule change, the monthly premiums are automatically adjusted. Premium rates are subject to change each year. The monthly premiums are calculated using the following equation: Base Annual Compensation (Premium Rate / $1,000) Life Insurance % Work Schedule / 12 This benefit will be paid to your beneficiary upon your death due to any cause; however, payment will not be made for death due to suicide during the first two years of coverage. This limitation also applies to any additional increases in benefits. Age-Rated Optional Life Insurance may be purchased any time other than hire or partnership with proof of insurability acceptable to the group term life insurance carrier. Permanente Provided Life Insurance Permanente Provided Life Insurance provides life insurance for death due to any cause. The amount of insurance coverage a physician is eligible for increases with years of service as described below: 3 years of Qualifying Service 5 years of Credited Service 15+ years of Credited Service 100% 200% 300% 10
Example: A physician who has 8 years of Credited Service and Base Annual Compensation of $180,000 will have $360,000 of Permanente Provided Life Insurance. However, if this physician works a reduced schedule, the coverage is reduced. An 8/10ths (0.80) schedule physician would have a coverage amount of $288,000 ($360,000 x 0.80). Qualifying Service is time counted to determine if a physician is eligible for benefits. It includes both full-time and part-time service. Credited Service is time counted to determine the amount of retirement income. It is generally computed the same as Qualifying Service but is prorated to the physician s work schedule. For example, if a physician works an 8/10ths work schedule for 10 years, s/he would have 10 years of Qualifying Service, but only 8 years of Credited Service. Premiums are paid by SCPMG and result in imputed income for Partner and those Associate physicians who have coverage in excess of $50,000. Voluntary Dependent Life Insurance Dependent Life Insurance provides protection for a physician s spouse or domestic partner. This is a voluntary term life insurance program paid for by the physician through payroll deduction. Premiums are age-rated and the physician can purchase $100,000 of guaranteed issue during the 60-day period following your date of hire, election to partnership or life status change. The physician has the option to purchase additional dependent life insurance coverage in $50,000 increments, up to $500,000, with proof of medical insurability acceptable to the group life insurance carrier. The current age bands are as follows: Under 25 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69 Portability All SCPMG life insurance coverages are portable, meaning the continuation of your term insurance policy (Portability) will be available without evidence of insurability at a premium applicable to the age group you are in at retirement or termination. This term insurance may be continued until age 70, at which time it would end. You would then have the opportunity to convert to a whole life policy with no evidence of insurability at that time. 11
Life Insurance (continued) Business Travel Accident Insurance All physicians, on their date of hire, are covered by Business Travel Accident insurance. This insurance provides accidental death and dismemberment benefits when traveling on SCPMG business for up to four times Base Annual Compensation to a maximum of $250,000. The minimum insurance benefit is $100,000. Business Travel Accident insurance does not cover any travel to the regular work facility or what is considered normal commuting. If a covered accident results in death or serious accidental injury, the physician or his/her beneficiary(ies) will receive all or part of the plan s benefit, depending on the extent of the injury(ies). The loss must be directly related to the accidental injury and must occur within 365 days after the accident. Retiree Life Insurance Retiree Life Insurance provides a $50,000 life insurance benefit to physicians who have met one of the following requirements: retirement at age 55 with at least 15 years of Qualifying Service; or retirement with your age plus years of Qualifying Service equaling at least 75; or retirement at age 65 with at least 10 years of Qualifying Service; or a Full Early Retiree. Retiree Life Insurance becomes effective when all other SCPMG life insurance coverages cease. Premiums for this coverage are paid by SCPMG and do not currently result in imputed income. Premiums for this coverage are paid by SCPMG. 12
Time-Off Benefits Vacation Vacation days accrue bi-weekly and are prorated to the work schedule. A physician working a full-time (10/10ths) work schedule will accrue vacation according to the table below: Partner and Special Category Anniversary Year 10/10 Work Schedule Years Total Vacation Days per year Bi-weekly Hours accrued 1 4 23 7.08 5 9 28 8.61 10+ 33 10.15 Associate Anniversary Year 10/10 Work Schedule Years Total Vacation Days per year Bi-weekly Hours accrued 1 4 18 5.54 5 9 23 7.07 10+ 28 8.61 Vacation time may accumulate to a maximum of 90 days, as of a physician s anniversary date. At the conclusion of each Anniversary Year, the value of any Vacation days over 90 will be paid to the physician as excess Vacation. Holidays Physicians receive paid time-off for approved Holidays. All Holiday pay is prorated to the physician s work schedule. The following holidays are observed: New Year s Day Memorial Day Independence Day Labor Day Thanksgiving Day Christmas Day Educational Leave Educational Leave is granted for the mutual benefit of the individual physician and SCPMG. It must be used for bona fide programs, such as attending educational meetings, taking courses, or participating in university medical teaching. Educational Leave may be taken to study for specialty or subspecialty Board exams. Educational Leave must be approved in advance by the Chief of Service and the Area Medical Director. Eligible physicians earn five days (prorated to the work schedule) of Educational Leave per Anniversary Year. Educational Leave is earned after one year with SCPMG. However, upon approval, up to a maximum of one year s Educational Leave may be borrowed. A request to borrow Educational Leave must be made in advance. Any Educational Leave borrowed must be repaid if you leave SCPMG. 13
Time-Off Benefits (continued) If a physician does not use earned Educational Leave, it may accumulate to a maximum of 20 days. At the conclusion of each subsequent Anniversary Year, any unused Educational Leave in excess of 20 days will be lost. Educational Leave cannot be used during the last 90 days prior to termination or 30 days prior to retirement from the Medical Group. Leave of Absence Leave of Absence (without pay) is available upon approval by the Chief of Service and the Area Medical Director. The Executive Medical Director must approve any Leaves of Absence of more than 10 days. Partner and Special Category physicians may request as much as a one-year Leave of Absence. Associate physicians are considered for short leaves and may only receive up to three months Leave of Absence. Use of this benefit may result in an anniversary date adjustment and may affect time-off and Common Plan benefit accruals. Family Care and Medical Leave The Family and Medical Leave Act (FMLA) of 1993 allows Associate physicians with 12 or more months of service, up to 12 weeks of unpaid leave for certain family and medical reasons. The combination of SCPMG s various time-off benefits meets the majority of the requirements of FMLA. These benefits include Parenting Leave, Emergency Personal Leave, Vacation, and Leave of Absence (without pay). After the completion of one year of continuous service, family or medical leave may be requested for the birth of a physician s child or for the adoption or foster-care placement of a child in the physician s care; to care for an eligible child, parent or spouse with a serious health condition; or for the physician s own serious health condition. The state of California also provides for certain unpaid leaves specific to pregnancy, baby bonding, and family care. Parenting Leave A physician who has become the parent of a live birth or adopts a child less than two years of age may take an unpaid Parenting Leave of up to 120 calendar days. During this leave, Vacation, Leave of Absence, or, if eligible, Sick Leave may be used. Compassionate Leave Up to a maximum of five working days (prorated to the work schedule) of Compassionate Leave may be extended to any physician with the approval of the Chief of Service and Area Medical Director for the death of each immediate family member. 14
Jury Duty Up to 10 days of jury duty (prorated to the work schedule) in a five-year rolling period may be compensated. Emergency Personal Leave Emergency Personal Leave is available for all physicians working at least an 8/10ths work schedule. A physician may take up to five days in any Anniversary Year as Emergency Personal Leave. This leave may be taken on short notice in circumstances of personal hardship. If a physician has accrued Vacation, the leave will be charged against the Vacation balance. If a physician does not have sufficient accrued Vacation, Emergency Personal Leave will be uncompensated and be counted toward his/her annual Leave of Absence (without pay) maximum. Additional Leave Benefits In addition to the Leave benefits noted on the previous pages, the following Leave benefits are provided to physicians upon election to partnership: Extended Educational, Extended Military Service and Extended Medical Service Leaves For every five years of service with SCPMG, a Partner will accumulate three months (66 working days) of leave to be used for either an Extended Educational Leave, Extended Military Service Leave or an Extended Medical Service Leave. An eligible physician will receive one half of his/her Base Monthly Compensation when using either of these leaves. Extended Educational Leave is used for full-time educational purposes through an established and formalized program with a recognized educational institution. It may also be used for research if the research requires at least three months of full-time work and is done in conjunction with an established research institution in which the full facilities of the institution are available. Partners who have been with the Medical Group at least 10 years are eligible to have the last month of a three or more month leave paid at 100% of Base Monthly Compensation. Otherwise, 50% of Base Monthly Compensation is paid for the entire leave. Extended Medical Service Leave is used for full-time formalized and established medical service programs under the auspices of a recognized national or international agency that has been involved in this type of program, or a program that SCPMG would sponsor independently. Extended Military Service Leave is to be used only for involuntary full time active duty as clinicians in the United States Military, during a time of armed conflict, for a period not less than one month and no more than 12 months. 15
Sick Leave and Disability Income Benefits t he SCPMG Sick Leave Programs and the Disability Programs are integrated to provide continuation of a portion of a physician s income in the event of a disabling illness or injury. The amount and duration of the benefits are based on the physician s work schedule, length of service, and category. Sick Leave benefits are prorated to the physician s work schedule. Acute Sick Leave Associate physicians in their first year of service accrue Sick Leave benefits at 0.85 days bi-weekly to a maximum of 22 days per year, prorated to the work schedule. On the first and each subsequent anniversary date, any unused sick leave is replaced with a new balance of 22 days of Acute Sick Leave to be used during the coming year. All physicians working less than a 10/10ths work schedule will have their benefit prorated. Acute Sick Leave is paid at 100% of a physician s Base Monthly Compensation and is taxable income. California law allows physicians to use up to one-half of their annual Acute Sick Leave accrual to care for an ill spouse, domestic partner, parent, or child. Additional Sick Leave Benefits for Partner Physicians In addition to Acute Sick Leave, the following two Sick Leave Programs are available to all physicians upon election to partnership: Accumulated Acute Sick Leave After the first year of partnership (on the physician s anniversary date), 20% of the unused Acute Sick Leave is transferred to the Accumulated Acute Sick Leave account to a maximum accrual of 44 days. This leave may be used when you have exhausted all of your Acute Sick Leave, or, in the case of disability, may be used to supplement your income when combined with the Compensation Continuance Program. Chronic Sick Leave Chronic Sick Leave is used in conjunction with the Compensation Continuance Program and the Long- Term Disability Program. Upon obtaining partnership status, a bank of 528 working days is available for use in the event of extended disability. Short-Term Disability Associate physicians will be covered under Short-Term Disability at SCPMG s expense. This coverage will provide a benefit equal to 35% of your Monthly Base Compensation (prorated to the work schedule) to a maximum of approximately $2,423 per week, which is equivalent to a monthly benefit of approximately $10,500. The benefit begins after 30 continuous days of injury, sickness, or pregnancy related disability and will be paid to a maximum of 22 weeks. 16
Associate physicians also have the opportunity to purchase an additional 15% of Short-Term Disability coverage at a cost of $1.52 per $1,000 of Monthly Base Compensation within the first 60 days after hire date. Together, the Short-Term Disability coverages will provide a benefit equal to 50% of Monthly Base Compensation to a maximum monthly benefit of approximately $15,000 (prorated to the work schedule). The maximum weekly benefit payable from both coverages is approximately $3462. Compensation Continuance Program (Partner Physicians Only) The Compensation Continuance Program pays the greater of 60% of a Partner s Monthly Base Compensation or 60% of Average Monthly Gross Compensation. Benefits are prorated to the work schedule in effect at the onset of disability and are paid after the Partner has been disabled for 30 days. Benefits are payable for up to five months. Payments from the Compensation Continuance Program are paid by SCPMG and are taxable when received. Long-Term Disability Long-Term Disability insurance provides 50% of a Partner s or Associate physician s Monthly Base Compensation (prorated to the work schedule) or 50% of his/her Average Monthly Gross Compensation following six months of continuous disability, to a maximum of $20,000 per month. If a physician remains disabled, benefits continue to the end of the month in which the physician attains age 65. This benefit, combined with any other income benefits like a Social Security Disability Award, may not exceed 60% of Monthly Base or Average Monthly Gross Compensation. The Long-Term Disability insurance includes a two-year limit for mental/ nervous disabilities. In addition, the Long-Term Disability coverage includes a return to work provision which may supplement up to 80% of pre-disability indexed earnings. Long-Term Disability insurance may be purchased by Associate physicians within 60 days of hire. The monthly premiums are calculated using the following formula: Average Monthly Gross Compensation Premium / $1,000 Long-Term Disability insurance is provided to all Partners and the monthly premium is paid by SCPMG. Payments from the Long-Term Disability Program are tax-free when received because Associate physicians pay premiums and Partner physicians are charged imputed income for the value of the benefit. 17
Retirement and Savings Plans t he SCPMG Retirement and Savings Plans are designed to assist eligible physicians in maintaining financial independence during retirement years. Physicians Tax Savings Retirement Plan (TSR) 401(k) After six months of employment, Associate physicians are eligible to participate in the TSR Plan, officially known as The Southern California Permanente Medical Group Physicians Tax Savings Retirement Plan. This plan allows Partner and Associate physicians to accumulate retirement funds on a tax-deferred basis through deferrals of compensation. The TSR Plan is a qualified defined contribution plan under IRS Code Sections 401(a) and 401(k). Physicians may contribute from 1% to 75% of their gross compensation per pay period. Once enrolled, a physician may stop, change, or re-start the rate of contribution at any time. The maximum amount a physician can contribute to the plan changes from year to year based on changes in the cost of living index. In the year 2009, the maximum amount a physician can contribute is $16,500. TSR participants age 50 and over are able to contribute an additional amount of $5,500, making their maximum amount $22,000. This additional catch-up contribution of $5,500 will be made automatically unless the physician manually changes his/her contribution rate. Contributions to the plan are the physician s own earnings and are not matched by SCPMG. Each physician must designate the funds into which his/her contributions are to be deposited. There are several investment funds available with varying degrees of investment risk and inflation risk. These funds are chosen by the SCPMG Board of Directors and may change from time to time. A physician may: invest in one fund; allocate new contributions to various funds; or transfer assets among funds. Physicians may elect to transfer their assets from another employer s qualified plan directly to this plan, subject to the conditions imposed on transfers by the IRS. Transfers from another qualified plan are usually in the form of a Lump Sum Direct Rollover. In addition, physicians may borrow from their TSR Plan. Keogh Plan Upon attaining partnership, physicians are eligible to participate in the Keogh Plan, officially known as the Southern California Permanente Medical Group Retirement Plan. The Keogh Plan is a defined contribution plan designed to qualify for certain tax advantages under IRS Code Section 401(a). This plan 18
allows Partners to make tax-deductible contributions to a retirement plan which accrue tax-deferred earnings until distributed from the plan at retirement from the partnership. Election to participate or not participate in the plan is irrevocable. A physician must elect to participate or not participate by the sixth month after his/her employment with SCPMG. Electing to participate in the Keogh Plan is an irrevocable commitment to make an annual contribution of the amount required for the selected level of participation. If a physician does not elect to participate by the sixth month after his/her employment with SCPMG, s/he will not be able to commence participation at a later date. Physicians can choose the 100% contribution level or the 70% contribution level. Changes in the level of participation are not permitted once an election has been made. For example, the 2009 100% contribution level is 13.6% of Partnership Income* up to $32,500 and the 70% level is 9.52% of Partnership Income up to $25,778. The percentage is determined each year by the Retirement Plan Comparability Formula and the SCPMG Board of Directors. Each year by mid-year, the current year s percentage is determined. * Partnership Income is a Partner s annual income from SCPMG including Imputed Income and Year-End Performance Draw, adjusted to take into account the deduction for unreimbursed business expenses and self-employment taxes. For plan year 2009, Federal law limits the amount of contributions to all defined contribution plans to the lesser of the combined individual plan limits for Keogh and TSR or $49,000. This $49,000 limit applies to the Partner s combined Keogh and TSR contributions. For up to date contribution limits, visit the SCPMG Physician portal. Contributions to the plan are the Partner s own earnings and are not matched by SCPMG. There are several investment funds available with varying degrees of risk and return potential. These funds are chosen by the SCPMG Retirement Committee with final approval by the SCPMG Board of Directors, and funds may change from time to time. A Partner may: invest in one fund; allocate new contributions to various funds; or transfer assets among funds. If the physician is age 50 or greater, it is possible to contribute the catch-up contribution which brings the total deferrals to $54,500. We have found that many physicians miss this opportunity, so the catch up contribution will automatically contribute the maximum allowable amount to the TSR program Keogh Plan benefits can be paid upon either retirement or death. Due to the nondiscrimination regulations established by the Internal Revenue Service effective January 1, 1994, 19
Retirement and Savings Plans (continued) a physician must meet retirement eligibility requirements to receive a distribution from his/her Keogh Plan when leaving SCPMG. A physician must: retire and not continue working or terminate AND be either age 55 with 15 years of Qualifying Service, OR his/her age and years of Qualifying Service must equal at least 75 at the time s/he leaves SCPMG, OR age 65 If a physician continues to work after retirement on a per diem ex partner status, they cannot be paid a benefit out of the Keogh Plan. For questions regarding the Keogh or TSR/401(k), contact Schwab Retirement Plan Services Company at 1-888-256-8830. Financial Engines Financial Engines is an on-line financial planning service available to all physicians. Financial Engines is available at no cost to the physician. Personalized advice and portfolio management is also available for an additional fee. This tailored approach helps provide a clearer picture of the estimated future value of the retirement portfolio and assists in reaching retirement goals. For more information about this on-line financial planning service, call 1-800-601-5957 (toll-free). Common Plan The Common Plan is officially known as The Retirement Plan for Physicians Serving Members of Kaiser Foundation Health Plan. It is a non-qualified defined benefit plan. The Common Plan is designed to provide eligible physicians with a monthly retirement income. To be eligible to receive benefits, a physician must have at least 10 years of Qualifying Service. The amount of the benefit is based on the formula described on this page. There are two types of service that affect the Common Plan: Qualifying Service is time counted to determine if a physician is eligible for benefits. It includes both full-time and part-time service. Credited Service is time counted to determine the amount of retirement income. It is generally computed the same as Qualifying Service but is prorated to the physician s work schedule. For example, if a physician works an 8/10ths work schedule for 10 years, s/he would have 10 years of Qualifying Service, but only 8 years of Credited Service. In addition to Credited Service, a physician s Highest Average Compensation (HAC) is also used in the calculation of the benefit. HAC is defined as the average monthly compensation for 36 consecutive calendar months (out of 120 months) 20