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Where the Kaiser Foundation Health Plan/Program and Hospital Profits Go

(c) Investments
    Investments include investments in equity, U.S. Treasury, government agencies, and other
    marketable debt securities and are reported at fair value. Alternative investments are carried at the
    equity method which approximates fair value. Certain investments are illiquid and are valued based
    on the most current information available. Interest and dividend income, as well as recognized gains
    and losses, which are recorded on the specific identification basis, are included in investment income
    (loss) - net. Health Plans and Hospitals have designated certain investments for the physicians’
    retirement plan. These investments are unrestricted assets of Health Plans and Hospitals. 

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Source DMHC - Mirrored here for historical purposes


(12) Physicians’ Retirement Plan
     Kaiser Foundation Health Plan, Inc. provides defined retirement and disability benefits for physicians
     associated with certain Medical Groups. Benefits are determined based on the length of service and level of
     compensation of each participant. The plan is unfunded and is not subject to the Employee Retirement
     Income Security Act of 1974.
     Although this plan does not qualify as an employee benefit plan, the liability has been substantially
     calculated in accordance with the provisions of SFAS No. 158, and net worth has been debited
                         KAISER FOUNDATION HEALTH PLAN, INC.
                                 HOSPITALS AND SUBSIDIARIES
       Notes to Annual Financial Reporting Form
                                 For the year ended December 31, 2008
accordingly. For purpose of this calculation, assets designated by management for liabilities of the
physicians’ retirement plan are treated as if they were qualified plan assets.
Summary of changes in the physicians’ retirement plan liability (in millions):
Physicians’ retirement plan liability at January 1                                  $  2,429
Service cost                                                                             113
Interest cost                                                                            154
Net gain in net worth                                                                   (129)
Benefits paid                                                                             (97)
Physicians’ retirement plan liability at December 31                                $  2,470
Accumulated benefit obligation at end of year                                       $  1,816
Change in plan assets:
   Fair value of plan assets at the beginning of year                               $     —
   Actual return on plan assets                                                           —
   Company contributions                                                                   97
   Benefits paid                                                                          (97)
                                                                                   $     —
   Fair value of plan assets at end of year
Funded status                                                                       $ (2,470)
Amounts recognized in the balance sheet consist of:
   Other long-term assets                                                           $      —
   Current liabilities                                                                   (95)
   Noncurrent liability                                                               (2,375)
                                                                                    $ (2,470)
Amounts recognized in net worth:
   Net actuarial gain                                                               $    187
Health Plans classifies a portion of the physicians’ retirement plan obligation as current. As of
December 31, 2008, $95 million of the liability is included in current liabilities.
                         KAISER FOUNDATION HEALTH PLAN, INC.
                                HOSPITALS AND SUBSIDIARIES
                               Notes to Annual Financial Reporting Form
                                For the year ended December 31, 2008
Provision for physicians’ retirement plan for the year ended December 31 (in millions):
 Service cost                                                                    $             113
 Interest cost                                                                                 154
Amortization of net actuarial loss                                                              5
                Total benefit expense                                                          272
 Expected return on assets – investment income
    included in operating expenses                                                            (196)
                Net benefit expense                                                             76
 Other changes in projected benefit obligations recognized in
    other comprehensive income (in millions):
       Net gain                                                                               (129)
       Amortization of net actuarial loss                                                       (5)
                Total recognized in other comprehensive income                                (134)
                Total recognized in net periodic benefit cost
                                                                                 $             (58)
                and other comprehensive income
Actuarial assumptions used were as follows:
 Weighted average discount rate at January 1 for
   calculating benefit expense                                                               6.50%
 Weighted average discount rate for calculating
   December 31 benefit obligation                                                            6.85%
 Weighted average salary scale for calculating pension
   expense and December 31 benefit obligation                                                4.90%
 Expected rate of return on plan assets                                                     8.00%
The expected return on assets is the portion of investment income that represents the expected return on
investments designated for the physicians’ retirement plan. This amount is recorded as a reduction in the
expense for physicians’ retirement plan and is excluded from investment income (loss) - net.

Source- DMHC - Mirrored here for historical purposes -