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Agenda

UNDERSTANDING FUTURE OPTIONS UAB Hospital Management, LLC Michael Waldrum, MD . MS. MBA. CEO UAB Hospital. Agenda. Purpose Structure Eligibility and Impact. Purpose. Provides a management structure for UAB Hospital that increases: Market Competitiveness

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Agenda

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  1. UNDERSTANDING FUTURE OPTIONSUAB Hospital Management, LLCMichael Waldrum, MD. MS. MBA.CEO UAB Hospital

  2. Agenda Purpose Structure Eligibility and Impact

  3. Purpose Provides a management structure for UAB Hospital that increases: Market Competitiveness Employee Satisfaction, Recruitment and Retention Operational Efficiencies While: Maintaining current ownership, authority, and control.

  4. Structure UA Board formed a wholly owned LLC (UAB Hospital Management, LLC) for the sole purpose of managing hospital operations: Existing eligible employees have the option to join the LLC effective July 1, 2012. All new employees hired beginning July 1, 2012 will be employed by the LLC.

  5. Employees Eligible to Transition Effective 7/1/12: Employees who have completed at least six months (by May 15, 2012) and whose primary assignment is in a 7 hospital organization. Includes: 01 – Regular Full Time: Each employee is eligible to choose to move to the LLC or continue to participate in the Teacher’s Retirement System (TRS). 03 – Regular Part Time: Each employee is eligible to choose to move to the LLC or continue to participate in TRS. 04 – Irregular: Employees who are currently participating in TRS are eligible to choose to move to the LLC or continue to participate in TRS. Employees who are not currently participating in TRS will be automatically transferred to the LLC payroll effective July 1, 2012. 12 – Three 12-hour Shifts: Each employee is eligible to choose to move to LLC or continue to participate in TRS. 17 – Weekend Staff: Each employee is eligible to choose to move to the LLC or continue to participate in TRS. Full eligibility list can be found on ONE (includes employees who are not eligible or may be eligible at a later date).

  6. Employee Retirement Option • Benefit plan design in the LLC will remain the same except those associated with retirement. • LLC established a defined voluntary contribution plan that: • Includes matching for full and part-time employees (both monthly and biweekly). • Established a match up to 5% of income and three year cliff vesting. • Plan is competitive in the market place. • LLC allows employees to retire from UAB Hospital with TRS benefits and be hired back in same position.

  7. Timeline • Employees desire various retirement plan options, depending on their individual situations. The LLC provides an option for non-faculty, hospital-based employees to move from UAB Hospital, which participates in the Teachers’ Retirement System (TRS), into the LLC, which offers a market-based defined contribution (retirement) plan. • Eligible employees have an opportunity to transition July 1, 2012. Transition is strictly voluntary for existing eligible regular status employees. • All employees must electronically sign a Statement of Intent form, www.uab.edu/LLCSelection, no later than Midnight, May 15, 2012 stating your choice of remaining a UAB Hospital employee (TRS benefits) or becoming an LLC employee (defined contribution plan). Any person who does not complete a form by May 15, 2012 will remain a UAB Hospital employee and continue to participate in TRS. A link to the Statement of Intent can be found on ONE. • Effective July 1, 2012, all hires to UAB Hospital will be employed by the LLC.

  8. Questions

  9. UAB Hospital Management, LLCHuman Resources Benefits

  10. What Will We Cover? • Define the new LLC 403b voluntary retirement plan. • Explain Teachers’ Retirement System of Alabama (TRS) plan and other existing retirement benefits you have today. • Provide information and guidance to help you make this important decision.

  11. Providing the Information to Guide Your Decision Making • The decision to move to the LLC or remain in the TRS plan is an individual decision. • Each of you will need to review all of the information and carefully consider which plan is the best long-term option for you and your family. • There will be different variables to be considered for each of you. Some common variables are:

  12. What Should I Consider in Making My Decision? COMMON VARIABLES: • Your Savings Style • Will a defined benefit plan (TRS) or a defined contribution (403b) plan better fit your savings style? • Your Level of Risk Tolerance • How comfortable are you with making investment choices and taking the risk that comes with some of those choices? • Your Need for Retiree Health Insurance • What value does retiree health insurance have on your long-term savings and retirement needs?

  13. New LLC Voluntary 403(b) What is a 403(b) plan? It is a voluntary defined contribution plan. Under a defined contribution retirement plan your retirement income is based on investments you make and returns on investment (both positive and negative) are credited to your account.

  14. New LLC Voluntary 403(b) • Dollar for dollar match available for full-time and part-time employees, bi-weekly and monthly paid, up to 5% of gross monthly pay not to exceed $250,000 annual UAB salary. • 3 Year Cliff Vesting: • UAB Service Date will count toward vesting unless you retire. • Employees who do not meet the 3 year vesting requirement will forfeit any employer matching. • Offered through TIAA/CREF and VALIC. • Tax sheltered for Federal and State for regular contributions. • Roth option allows contributions on an after-tax basis.

  15. 403(b) Contribution Limits IRS Limits • Under age 50 - $17,000 limit. • Age 50 or above - $22,500 limit. • Limit includes both regular pre-tax and Roth after tax. If currently participating in the UAB Hospital 403b plan will it automatically transfer to the LLC 403b retirement plan account? • No – you must complete a new salary reduction agreement and application.

  16. What benefits do I gain, if I elect to move to the LLC? • If you are currently a bi-weekly paid employee or a part-time regular employee and move to the LLC, you will be eligible for employer matching contributions in the 403b voluntary retirement plan. The LLC will match your contribution dollar for dollar up to 5% of gross pay. You must be contributing to the plan to receive employer matching contributions. • There is a vesting period for the LLC 403b retirement plan. • Employees will be vested upon completion of three years of employment with UAB. • Participation in the program is not required to reach the vested eligibility. • We will be transferring your service date from UAB Hospital to the LLC and time worked at UAB Hospital will count toward the vesting period. • If you are retiring and are rehired with the LLC, you will receive a new service date and any previous service with UAB will not count toward the LLC 403b vesting. • Once an employee reaches 3 years of service, they will be vested in the program. If any employee terminates employment prior to reaching 3 years of service, all employer contributions will be forfeited.

  17. What benefits will I no longer be eligible to receive if I elect to move to the LLC? • Participation in Teacher’s Retirement System (TRS). Being vested in TRS does guarantee a lifetime retirement income beginning at age 60 with at least 10 years of creditable service or with 25 years of service at any age. Lifetime income options are also available for your survivor. • In addition, employees retired with TRS may be eligible for retiree health insurance through the Public Education Employee’s Health Insurance Program (PEEHIP). Additional years of service in the TRS program reduce PEEHIP premiums. • No service retiree health insurance or life insurance options are available through the LLC. • No longer eligible for the 457b voluntary retirement plan.

  18. Points to Consider • Matching contributions are available for part-time regular and bi-weekly paid employees. 3 Year cliff vesting requirement may already be met. • If you have ever contributed in another 403(b) or 401(k) plan with another employer, this plan is similar to those plans.

  19. Teachers’ Retirement System of Alabama (TRS) TRS is a mandatory “defined benefit” retirement plan. What is a defined benefit plan? Under a defined benefit retirement plan your retirement income is based on a formula rather than investments.

  20. TRS – What you probably already know… Who Participates? • All benefit eligible employees of UAB Hospital are required to participate. What Do I Contribute? • Employee contributes 7.25% of gross monthly pay up to $250,000 annual earnable compensation maximum. • Effective October 2012 employee contribution will increase to 7.50%.

  21. Vesting Period/Retirement Formula for TRS • Ten year vesting period. • Provides for retirement income at age 60 with 10 years or more of participating service, or at any age with 25 years participating service. • Sick leave counts toward additional creditable service. Retirement Formula: Average Final Salary X Years and Months of Service X Benefits Factor ÷ 12 = Maximum Monthly Benefit Average Final Salary: The average of the highest three years (July - June) out of the last 10 years of contributions. Current Benefits Factor is 2.0125% (set by the State Legislature)

  22. Sick Leave and Retirement Credit - FAQ’s Will my sick time still count toward creditable time to retire? • If your employment moves to the LLC, then you will no longer be a participant in the TRS. Only sick time accrued while participating in the TRS plan is eligible to convert to creditable service. • LLC earned sick time cannot count for creditable service with TRS. • Employees transferring to the LLC will have an option to “freeze” unused sick time for possible future use toward TRS retirement. You can freeze up to the maximum TRS will accept for retirement credit (12 times Years of Service with TRS). What happens if I freeze sick time? • Frozen sick time can only be used toward creditable service with TRS. • Frozen sick time will no longer be available for use while employed.

  23. TRS – What you may not know… • Death Benefits for Active Employees • Contributions to the program, plus interest. • Term life insurance of $15,000 if active (prorated if less than full-time). • Full year’s salary (if employed more than 1 year or death was job related). • Amount matching contributions and interest to a max of $5,000 (if employed less than 1 year and death not job related) . • Disability • Eligible to apply if active and at least 10 years of creditable service. • PEEHIP Health Insurance • Eligible upon service or disability retirement. • Includes pharmacy coverage.

  24. Public Education Employee’s Health Insurance Program (PEEHIP) • Health Insurance Offerings for TRS Retirees • BCBS • Viva Health • Cost • Sliding Scale Service Premium • Age Premium • Subsidy Premium • PEEHIP Premium Calculator • http://www.rsa-al.gov/PEEHIPCalc/PEEHIPCalc3.htm

  25. UAB Hospital Voluntary 403(b) and 457(b) • Full-time regular monthly paid employees are matched dollar for dollar up to 5% of gross monthly pay not to exceed $250,000 annual UAB salary under the 403(b) plan. No matching available under the 457(b) plan. • Bi-Weekly paid employees, may contribute on an unmatched basis to both plans. • Offered through TIAA/CREF and VALIC. • Tax sheltered for Federal and State for regular contributions 403(b) and 457(b) plans. • Roth Option allows contributions on an after-tax basis under both 403(b) and 457(b) plans.

  26. UAB Hospital Voluntary 403(b) and 457(b) Contribution Limits IRS Limits (applied separately to both plans): • Under age 50 - $17,000 limit. • Age 50 or above - $22,500 limit. • Limit includes both regular pre-tax and Roth after tax.

  27. Points to Consider • If you elect to transition to the LLC, you will no longer be eligible for TRS and contributions will stop. • If you are vested, you would still be eligible to retire with TRS. You may also retire with TRS and transition to the LLC. • If you move to the LLC, no other service credit will count towards TRS. You will have an opportunity to freeze your sick time with UAB Hospital to count toward additional creditable service. If you do not freeze any sick leave, it all transfers to the LLC. • Employees who transfer to the LLC would lose the death benefit and disability options under TRS. If you are vested with TRS, you would still be eligible for PEEHIP when you begin retirement with TRS. The LLC does not offer retiree health insurance or retiree life insurance options. The UAB disability program is available for both UAB Hospital and LLC employees.

  28. Where Do I Get More Information Before I Make a Decision? • ONE Website • UAB Total Compensation Statement • www.myuabstatement.com • Human Resources • AskHR@uabmc.edu • Benefits@uab.edu • Teacher’s Retirement System and PEEHIP • www.rsa-al.gov • 1-877-517-0020

  29. What Do I Need to Do To Make My Decision? • All employees must electronically sign a Statement of Intent form, www.uab.edu/LLCSelection, no later than Midnight, May 15, 2012 stating your choice of remaining a UAB Hospital employee (TRS benefits) or becoming an LLC employee (defined contribution plan). • Any employee who does not complete a form by May 15, 2012 will remain a UAB Hospital employee and continue to participate in TRS. • The link to the Statement of Intent can also be found on ONE.

  30. Contact Information Benefits Department: Address: Administration Building, 264 or Russell Ambulatory Ctr, 1st Floor (HHR) Phone: 205-934-3458 E-mail: Benefits@uab.edu On the web: www.uab.edu/benefits For other questions related to the LLC you may contact Hospital Human Resources at AskHR@uabmc.edu

  31. Questions

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