PLANSPONSOR - April/May 2018 - 42

Nonprofit DC Plan <$100mm
Illinois Health and Hospital
Association
A
fter the Illinois Hospital Association
and the Metropolitan Chicago
Healthcare Council (MCHC) merged to
become the Illinois Health and Hospital
Association (IHA), in January 2016,
the employer put considerable work
into harmonizing benefits-and, in the
process, modernized plan design and
significantly lowered fees.
To demonstrate IHA's commitment
to both sets of employees, " it was imperative
that our entire team have a universal
benefit program, " says Joanna Farrere,
senior vice president, human resources
(HR) and administrative services, at the
nonprofit association, headquartered in
Napersville, Illinois.
Prior to the merger, the Illinois
Hospital Association sponsored a 401(k)
and a 401(a) plan, while the MCHC also
sponsored a 401(k) but with a significantly
different plan design. The HR team
" made a commitment to IHA staff to use
2016 to redesign and unify our entire
benefit program, " Human Resources
Director Kristen Muehlfeld says.
Modernizing Plan Design
Before the merger, the two organizations
had different employer contribution
approaches, among other distinctions. The
Illinois Hospital Association made a total
10.45% nonelective contributions, between
its 401(k) and 401(a), and made no match
in the 401(k). MCHC matched 100% of the
first 3% that employees contributed to its
401(k), then 50% of the next 3%. MCHC
did automatic enrollment, and Illinois
Hospital did not. The latter's 401(k) plan
had immediate vesting, while the former's
plan had a five-year vesting schedule. Only
MCHC had a Roth feature.
Muehlfeld and her colleagues looked
at both national and local surveys to benchmark
401(k) plan design. They saw that,
nationally, comparable health care organizations
averaged 7.6% in employer contributions,
while in the Chicago area they
contributed an average 8.7%. For the new
plan, the organization decided to target
an 8.5% employer contribution: a 2.5%
nonelective contribution, plus a 6% match.
The newly redesigned 401(k) plan
launched on January 1, 2017, after IHA
had merged the two 401(k)s and the
401(a). Employees in IHA's affiliated organization
HealthCare Associates Credit
Union, joined a new spinoff 401(k) plan-
HealthCare Associates Credit Union 401(k)
and Retirement Savings Plan-which also
launched in January 2017.
The redesigned IHA plan brought
the employer more in line with best-practice
thinking on plan design. " We had an
outdated plan we wanted to modernize, to
incorporate automatic features and additional
distribution options to ensure retirement
readiness, " Farrere says, referring to
42 PLANSPONSOR.com April-May 2018 Art by Chris Buzelli
TOTAL PLAN ASSETS/PARTICIPANTS:
$66 million/343
PARTICIPATION RATE: 99.0%
AVERAGE DEFERRAL RATE: 10.1%
DEFAULT DEFERRAL RATE: 3%
DEFAULT INVESTMENT: BlackRock LifePath
Index Funds
AUTOMATIC ENROLLMENT: Yes
AUTOMATIC ESCALATION: Yes
EMPLOYER CONTRIBUTION: 100% on 6%;
2.5% nonelective contribution
automatic escalation, for example, and the
ability to do partial withdrawals. " One of
the plan-design changes is the ability for
participants to change their deferral election
at any time. Previously, they were able
to change elections only twice a year, on
January 1 and July 1. "
When the redesigned plan launched,
it also started an automatic enrollment
and automatic increase program. " We
did require all staff members to make a
new [participation] election or default into
auto-enrollment, " Muehlfeld says.
Before the launch date, advisory firm
Blue Prairie Group LLC came on-site and
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