Cleveland Clinic Health System Obligated Group - FMSbonds.com

Cleveland Clinic Health SystemNotes to Consolidated Financial Statements (continued)12. Pensions and Other Postretirement BenefitsThe System has two defined benefit pension plans, which cover substantially all of the System’semployees. The benefits provided are based on age, years of service and compensation. TheSystem’s policy is to fund at least the minimum amounts required by the Employee RetirementIncome Security Act. The System also sponsors several contributory, 403(b) plans, coveringsubstantially all employees, and one noncontributory defined contribution plan for certain of itsemployees. The System’s contributions for the 403(b) plans are determined based on employeecontributions. The System’s contribution for the defined contribution plan is based upon amultiple of employee compensation, as defined, determined according to age.The System provides health care benefits upon retirement for substantially all of its employees.The System’s health care plans generally provide for cost sharing, in the form of employee andretiree contributions, deductibles and coinsurance. The System’s policy is to fund the annual costof health care benefits from the general assets of the System. The estimated cost of thesepostretirement benefits is actuarially determined and accrued over the employees’ serviceperiods.On December 31, 2007, the System adopted the recognition and disclosure provisions of SFASNo. 158. SFAS No. 158 required the System to recognize the funded status (i.e., the differencebetween the fair value of plan assets and the projected benefit obligations) of its postretirementbenefit plans in the December 31, 2007 balance sheet, with a corresponding adjustment tounrestricted net assets. The adjustment to unrestricted net assets at adoption represents the netunrecognized actuarial losses and unrecognized prior service costs remaining from the initialadoption of SFAS No. 87, all of which were previously netted against the plan’s funded status inthe System’s balance sheet pursuant to the provisions of SFAS No. 87. These amounts will besubsequently recognized as net periodic pension cost pursuant to the System’s historicalaccounting policy for amortizing such amounts. Further, actuarial gains and losses that arise insubsequent periods and are not recognized as net periodic pension cost in the same periods willbe recognized as a component of unrestricted net assets. Those amounts will be subsequentlyrecognized as a component of net periodic pension cost on the same basis as the amountsrecognized in unrestricted net assets at adoption of SFAS No. 158.29