Point32Health

When Harvard Pilgrim Health Care and Tufts Health Plan combined in January 2021 to form Point32Health Inc., leadership of the two regional health-care systems chose to take a fresh look at plan design in deciding on the new Point32Health 401(k) plan’s features. “We took it as an opportunity to revisit every aspect of it,” says Jennifer Mangiaratti, director of benefits at Canton, Massachusetts-based Point32Health.

Point32Health competes for employees with other prominent health-care providers in the Greater Boston metropolitan area, as well as other large employers such as universities. “As a nonprofit regional health plan, we need to be conscious of who we’re competing with,” says Gregory Funk, vice president of total rewards. “Our ability to attract and retain employees requires balancing competitive benefit levels with affordability and the overall value of our total rewards package.”

Leadership sought 401(k) plan provisions that equal the median of peer employers’ defined contribution plans, and in some cases they decided on provisions that exceed the median. “We are choosing to compete not just based on cash compensation,” Funk says. “We wanted to make sure that our employees have an equal opportunity to participate in the plan, which drove some of our decisions around features like altering the eligibility for matching contributions.”

The new plan launched January 1, 2022, with automatic enrollment at 5% and auto-escalation of 1% per year up to 10%. Both of the previous plans offered a maximum 4% match but utilized different formulas: The new plan keeps that overall match value, with a formula of 100% of 3% and 50% of the next 2%. The plan also includes an annual discretionary contribution to participants’ accounts based on various financial factors.

Point32Health also moved to immediate participation and match eligibility for all employees. The new 401(k) plan has a three-year graded vesting schedule, with one-third of the employer contribution becoming vested each year. The plan also has an annual match true-up feature, which the previous Tufts Health Plan offering had, but the Harvard Pilgrim plan did not.

Point32Health officials worked with the new plan’s investment adviser, CAPTRUST, to evaluate the investment menu. The plan moved to Fidelity Freedom Funds as the default investment, made some shifts in share classes from what the two predecessor plans had and changed how the new plan distributes revenue sharing payments.

Prior to the merger, one plan had 37% of participants saving less than 4%, while the other had 9% of participants at less than 4% deferred. The new plan has 15% of participants at 4% or less, so more employees now get the full employer match. Use of automatic escalation has increased, too. The plan that previously did not utilize auto-escalation had 14% of participants signed up for voluntary auto-increases, while the predecessor plan that did auto-escalation had 63% of participants utilizing it. The new plan has 57% of participants auto-escalating, so more participants now increase their contribution annually. “We are not unique in that our auto-enroll and auto-escalation features are very ‘sticky’ with our employees,” Funk says.