Employee Benefit Plans

12 Months Ended

Dec. 31, 2022

Retirement Benefits [Abstract]

Employee Benefit Plans

Employee Benefit Plans

Supplemental Executive Retirement Plan

We maintain the United Therapeutics Corporation Supplemental Executive Retirement Plan (SERP) to provide retirement benefits to certain senior members of our management team.

Participants who retire at age 60 or older are eligible to receive either monthly payments or a lump sum payment based on an average of their total gross base salary over the last 36 months of active employment, subject to certain adjustments. Related benefit payments commence on the first day of the sixth month after retirement. Participants who elect to receive monthly payments will continue to receive payments through the remainder of their life. Alternatively, participants who elect to receive a lump sum distribution will receive a payment equal to the present value of the estimated monthly payments that would have been received upon retirement. As of December 31, 2022 and 2021, all SERP participants had elected to receive a lump sum distribution. Participants who terminate employment for any reason other than death, disability, or change in control prior to age 60 will not be entitled to receive any benefits under the SERP.

Because we do not fund the SERP, we recognize a liability equal to the projected benefit obligation as measured at the end of each fiscal year.

A reconciliation of the beginning and ending balances of the projected benefit obligation is presented below (in millions):

	Year Ended December 31,
	2022		2021
Projected benefit obligation at the beginning of the year	$	67.1	$	68.6
Service cost	3.1		3.4
Interest cost	1.2		0.9
Benefits paid	(0.2)		—
Net actuarial gain	(19.7)		(5.8)
Projected benefit obligation at the end of the year	$	51.5	$	67.1
Amount included in Other current liabilities(1)	$	19.5	$	18.2
Amount included in Other non-current liabilities	$	32.0	$	48.9

(1)This amount represents the benefit obligation due to participants who are eligible to retire and whose benefit payments could commence within one year of the respective balance sheet date.

The following weighted average assumptions were used to measure the SERP obligation:

	Year Ended December 31,
	2022		2021
Discount rate	4.95	%	2.05	%
Salary increases	4.00	%	4.00	%
Lump-sum interest rate	5.00	%	2.75	%

The increases in the discount rate and lump-sum interest rate for the year ended December 31, 2022, as compared to the same period in 2021, resulted in a decrease in the projected benefit obligation of $4.4 million and $13.4 million, respectively, as of December 31, 2022.

The components of net periodic pension cost recognized in our consolidated statements of operations consisted of the following (in millions):

	Year Ended December 31,
	2022		2021		2020
Service cost	$	3.1	$	3.4	$	2.8
Interest cost	1.2		0.9		1.3
Amortization of prior service cost	0.7		0.7		1.3
Total	$	5.0	$	5.0	$	5.4

The service cost component is reported within operating expenses and the other components are reported in other (expense) income, net in our consolidated statements of operations.

Amounts related to the SERP that have been recognized in other comprehensive (loss) income are as follows (in millions):

	Year Ended December 31,
	2022		2021		2020
Net actuarial gain (loss)	$	19.7	$	5.8	$	(8.4)
Prior service cost	0.7		0.7		1.3
Total recognized in other comprehensive (loss) income	20.4		6.5		(7.1)
Tax (expense) benefit	(1.1)		(0.3)		0.4
Total, net of tax	$	19.3	$	6.2	$	(6.7)

The table below presents amounts related to the SERP included in accumulated other comprehensive loss that have not yet been recognized as a component of net periodic pension cost in our consolidated statements of operations (in millions):

	Year Ended December 31,
	2022		2021		2020
Net actuarial (gain) loss	$	(21.7)	$	(2.0)	$	3.8
Prior service cost	0.6		1.3		2.0
Total included in accumulated other comprehensive loss	(21.1)		(0.7)		5.8
Tax expense	2.3		1.2		0.9
Total, net of tax	$	(18.8)	$	0.5	$	6.7

The accumulated benefit obligation, a measure that does not consider future increases in participants’ salaries, was $47.0 million and $59.1 million as of December 31, 2022 and 2021, respectively.

Future estimated benefit payments, based on current assumptions, including election of lump-sum distributions and expected future service, are as follows (in millions):

Year Ended December 31,
2023	$	19.5
2024	12.8
2025	5.3
2026	—
2027	—
Thereafter	30.1
Total	$	67.7

Employee Retirement Plan

We maintain a Section 401(k) Salary Reduction Plan which is open to all eligible full-time employees. Under the 401(k) Plan, eligible employees can make pre-tax or after-tax contributions up to statutory limits. Currently, we make discretionary matching contributions to the 401(k) Plan equal to 40 percent of a participant’s elected salary deferral. Matching contributions vest immediately for participants who have been employed for three-years; otherwise, matching contributions vest annually, in one-third increments over a three-year period until the three-year employment requirement has been met.