Healthcare Provider Update: Healthcare Provider for DaVita DaVita is primarily a healthcare provider specializing in kidney care and dialysis services. It operates approximately 2,800 outpatient dialysis clinics in the United States and provides acute inpatient dialysis services in around 790 hospitals. Given its significant scale, DaVita serves over 200,000 patients annually, making it one of the largest providers in the country. Potential Healthcare Cost Increases in 2026 In 2026, healthcare costs are expected to see significant increases, primarily due to escalating insurance premiums linked to the Affordable Care Act (ACA). The loss of enhanced federal premium subsidies could lead to out-of-pocket costs rising by over 75% for many consumers who rely on ACA marketplace plans. Additionally, overall medical costs are projected to surge, driven by factors such as higher hospital and physician fees and a sweeping trend of premium hikes requested by major insurers across various states, many exceeding 60%. These changes present substantial financial challenges for consumers, especially those reliant on dialysis services from providers like DaVita, necessitating proactive financial planning and healthcare strategies for the upcoming year. Click here to learn more
'For DaVita employees, understanding and using equity compensation is important for long-term wealth accumulation,' said Tyson Mavar from The Retirement Group, a division of Wealth Enhancement Group. 'The effective use of your equity options can greatly affect your financial position without putting you over the top in terms of exposure to market risks.'
Wesley Boudreaux of The Retirement Group at Wealth Enhancement Group recommends that DaVita employees treat equity compensation as a strategic tool that helps meet both short- and long-term financial objectives,' noting, 'It is important that employees find the right balance between the advantages of stock options and RSUs in order to get the best outcome for their investments.'
In this article, we will discuss:
Types and Advantages of Equity Compensation: In this article, we will look at different types of equity compensation options like stock options and restricted stock units (RSUs) and the advantages that employees of DaVita companies get from it.
Strategies for Increasing Returns and Reducing Risks: Step by step instructions for how DaVita employees can take advantage of these equity options so as to reduce their financial risks.
Tax Implications and Optimization: A guide on the tax treatments of various equity compensations and how to minimize tax liability when exercising or selling these equity assets.
Equity compensation, also known as stock compensation or share-based compensation, is a form of non-cash payment to certain number of employees in the form of restricted shares and stock options. Not many people who have been through this perk are allowed to do so, but they are able to own a part of the companies they work for and a part of the companies’ profits.
This is especially common with startups, which cannot afford to pay out high salaries and, therefore, include some form of stock options in their offers to make the offer more attractive and to encourage the employees to work harder. Hence, if you are an employee of a DaVita company, equity compensation may be something you want to consider, depending on the financial standing of the company you work for.
In theory, the better you perform at your job, the higher the value of DaVita and its stock will rise, and the more you will make when and if you decide to sell your shares in the company. It’s usually a win-win situation.
When accepting a job offer however, as DaVita employees, it is important to know how to take advantage of the benefits of stock options without being exposed to the risks. The first step is to understand the basics of the language that has been used.
Equity Compensation
It is crucial to first understand the types of equity compensation awards, the advantages of each, and how they are taxed.
Stock options:
A stock option is a grant that allows you to buy shares in DaVita’s stock at a fixed price, known as the strike price, for a limited period of time (usually 10 years). As with all equity compensation, stock options are designed to tie you down to DaVita for longer periods since they are usually subject to vesting. This means that you have to be employed by DaVita for a certain period of time as determined by the company to be able to exercise (or buy) the stock that you were granted.
What is the advantage of having stock options? If DaVita is doing well, then your strike price on the stock will be lower than the fair market value of the stock once your options vest. This means you can buy DaVita shares at a lower price and sell them at the higher fair market value. This can lead to a huge return if the price of DaVita shares rises over time. At the same time, if the stock price declines and never rises above the strike price, your options may expire as worthlessness.
As DaVita employees, it is important to determine the current standing of the company you work for before accepting any form of equity compensation. This is to avoid incurring losses in case of a decline in the share price.
As DaVita employees with in stock options investments, you may want to understand how until you exercise your stock, you’re not putting any of your capital at risk. In this way, DaVita stock options enable you to have skin in the game without having to put money down. Up front.
Non-qualified Stock Options vs. Incentive Stock Options
There are two types of stock options: Non-qualified stock options (NSOs) and Incentive stock options (ISOs): NSOs would allow you to buy DaVita shares at a certain price, while ISOs would allow you to buy stock at a lower price with certain tax advantages. As DaVita employees, you need to know the advantages of NSOs and ISOs so that you can plan for your financial goals effectively when you consider investing in stock options.
Restricted stock units
RSUs are the most common type of equity compensation for DaVita employees and are usually provided to private companies after they have gone public or have become more stable. Like stock options, RSUs are vested over time, but unlike stock options, you do not have to buy them. Once they vest, they are no longer restricted and are treated exactly like if you had bought DaVita’s shares in the market.
In this manner, RSUs are less risky than stock options. If your stock price doesn’t drop to $0, they will always be worth something. As DaVita employees who are looking for more conservative returns and higher stability, you may want to consider RSUs as an alternative for you.
For example, let’s say that you are granted 10,000 RSUs that vest over four years and the stock price stays at $10 for the whole four years (that is, it does not rise as it usually does). The value of the RSUs is therefore $100k. In this same situation, stock options that have a strike price of $10 would be entirely worthless unless the stock price rises.
Like stock options, RSUs are also vested over several years. It is common to receive one-fourth (1/4) of the RSUs you were granted after your first year of employment, and every month after that, receive another one thirty-sixth (1/36) of the remaining grant. When you do your taxes, the value of the shares is going to be taxed as ordinary income on the day that they vest. Also like stock options, RSUs are tied to keeping employees with DaVita for longer because they vest over time.
Negotiate, Assess, Exercise, and Invest
Now that you have learned some of the terms, it is time to put your knowledge into practice. Here’s what you need to know about how to negotiate, evaluate, exercise, and invest your equity compensation in a way that will benefit you (and your wallet) as a DaVita employee.
Negotiate
As DaVita employees, you should negotiate it just like your cash salary. For instance, a company may offer you a $75,000 cash salary together with $20,000 worth of RSUs that vest within the next four years. For illustrative purposes only, assuming that the value of DaVita remains constant, you would be able to receive $5,000 of company stock per year, which would bring your cash plus stock compensation to $80,000 annually.
If you were looking for something closer to $90,000, you could ask for more cash salary, more RSU grant, or both to meet your desired income. Since stock compensation is generally tied to the success of the company, employers tend to prefer to give more stock than cash.
DaVita companies usually provide options or RSUs as part of the first job offer and annual or annual bonus refreshers. For instance, in one high-profile example, Jamie Dimon, the CEO of JPMorgan just received a bonus of 1.5 million stock options that will vest over five years as an incentive to make him more likely to stay with the company.
At the manager level, DaVita companies may even allow employees to receive a portion of their salary in RSUs instead of cash. For instance, you could be offered a total compensation of $100k and DaVita could allow you to take the full amount in cash or up to 75% in RSUs. You would come out on top if the company shares go up in the future.
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Evaluate
In addition, as DaVita employees, you must know the amount of company stock you should hold. To ensure that you do not concentrate your investments around a single entity and incur both the benefits and the risks that come with it.
As we have seen in the last 12 months, a downturn in the economy can wipe out people’s financial safety. At the onset of the global pandemic, companies like Zoom and Amazon experienced a rise in market gains while stocks of companies like American Airlines and Marriott took a nose dive. As employees of DaVita receiving equity compensation it is helpful to determine how much you own in your company stock compared to your net worth; this includes not only your salary and vested equity compensation but also your unvested equity compensation and future salary.
If you want to put a number to it, consider this hypothetical scenario: Let’s say you earn $100k a year, and you get $20k of RSUs each year that vest. You have been working at DaVita for four years and have done a great job of saving. You have $100k in cash, and you have $100k in company stock. This means that you have invested 50% of your savings in the company stock, and you may be putting all your money into DaVita. Equity in DaVita should be part of a balanced approach to accumulating wealth. In order to have a balanced portfolio, you will either need to invest your cash salary or diversify some of your equity compensation by investing in other assets. Consider diversifying over a few years.
This is what I would suggest to someone employed at DaVita and in this situation: Now: $100k cash, $100k company stock Year One: Take $60k of the cash and either invest it in the stock market or bonds depending on your risk tolerance, and keep $40k in case of emergency. Then, when you get new RSUs that are no longer restricted (that is, when they vest), you should sell the RSUs and use the money to buy other stocks. This will have minimal tax consequence. You should also consider another $20k investment in DaVita stock to balance diversifying and paying taxes.
Cash: $40k Diversified portfolio: $80k Company stock: $80k Year Two: This is because, unlike RSUs, the new shares that vest are not subject to tax consequence, plus maybe another $20k in DaVita stock to balance diversifying and paying taxes. Cash: $40k Diversified portfolio: $120k Company stock: $60k Year Three: This is because, unlike RSUs, the new shares that vest are not subject to tax consequence, plus maybe another $20k in DaVita stock to balance diversifying and paying taxes.
Cash: $40k Diversified portfolio: $160k Company stock: $40K Year Four: This is because, unlike RSUs, the new shares that vest are not subject to tax consequence, plus maybe another $20K in DaVita stock to balance diversifying and paying taxes. Cash: $40k Diversified portfolio: $200k Company stock: $20k At the end of the fourth year, your DaVita company stock is worth just under 10% of your portfolio, as opposed to the 50% you started with. (In general, you should not invest more than 10% of your investments in one company’s stock.)
Therefore, continue to manage future RSUs and other equity compensation in the same manner. No matter what your situation is, the main question you should always ask yourself as a DaVita employee is: “What would my financial situation look like if my company stock was cut in half tomorrow or, in the worst-case scenario, dropped to $0?” This will affect everyone at DaVita but you need to make sure it won’t destroy your finances. That typically involves having an investment portfolio that is appropriate for each major financial goal that you have and an emergency savings account to cover your basic needs for three to twelve months.
Optimized Sales Taxes
There are several ways to diversify your portfolio as DaVita employees. Some are more tax-efficient than others. For example, selling recently vested RSUs or recently exercised non-restricted stock options (NSOs) will likely have minimal tax consequence.
If you hold exercised incentive stock options (ISOs), it would be useful to first sell your stock options that meet the special holding requirement (that is, you have held the shares for two years from the grant date and one year from the exercise date) before selling your stock options that do not meet the holding requirement. Stock options with a special holding requirement are taxed as long-term capital gains and the tax rates for long-term capital gains are lower than regular income tax rates.
Finally, it is advisable to sell company stock you have acquired through DaVita employee stock purchase plans (ESPP) last. ESPPs are company stock benefits that enable employees to purchase company stock at a lower price than the market (usually 5-15%). You contribute to the plan through your pay deductions — just like you contribute to a company 401(k) — which then accrues between the offer date and the purchase date. ESPPs are often a great benefit for employees, but selling ESPP shares can result in higher taxes than selling shares acquired through RSUs and both types of options.
This is generally a good direction for those employed at DaVita to follow, but everyone’s situation is unique. If you require assistance with diversifying your portfolio while minimizing taxes, then you should consult with an accountant or financial advisor who specializes in equity compensation. It’s all about being tax smart without letting the taxes on equity compensation drive your diversification decisions.
Maximizing Tax-Savings Opportunities
You should consider investing the proceeds from your equity compensation into tax-advantaged accounts, which are savings accounts that are taxed today or in the future or that offer other tax benefits. For instance, you could use the money you make to cover your ongoing cash needs to max out your 401(k) or Roth 401(k) at DaVita. You could also use the proceeds to fund a traditional IRA or a Roth IRA.
The traditional 401(k) and IRA versions provide a tax benefit at the beginning, the Roth versions provide a tax benefit at the end, and both provide a tax benefit while the account is growing. If you are enrolled in a health savings account (HSA) at DaVita, you can use the proceeds from your equity compensation to contribute to this. HSAs also provide a tax benefit at the time of contribution and at the time of withdrawal as long as they are used for a wide array of qualified medical expenses.
Sources:
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Kiplinger's Personal Finance. 'Using Equity Compensation for Retirement Planning.' Kiplinger, 2024. www.kiplinger.com . This source discusses the benefits and risks of using equity compensation for retirement, emphasizing the importance of understanding vesting schedules and the potential impact of market volatility on retirement planning.
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Remember Equity Compensation When Planning For Retirement.' Morgan Stanley at Work, Morgan Stanley, 2024. www.morganstanley.com . This article provides a comprehensive view of how equity compensation fits into long-term retirement goals, offering strategies for maximizing these benefits while managing potential risks.
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3.How to Think About Your Equity Compensation as You Near Retirement.' Zajac Group, 2024. www.zajacgrp.com . The Zajac Group provides detailed advice on managing equity compensation as retirement approaches, focusing on strategic planning for exercising stock options and handling vesting schedules.
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Balancing Equity Compensation and Retirement Planning.' Wade Financial Advisory, 2024. www.wadefa.com . Wade Financial Advisory discusses strategies for integrating equity compensation into retirement plans, emphasizing diversification and tax planning to optimize financial outcomes.
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Safeguarding Your Retirement: Diversifying Equity Compensation for Long-Term Security.' Grunden Financial Advisory, 2024. www.grunden.com . This blog offers strategies for diversifying equity compensation to reduce reliance on a single company's stock, highlighting approaches to manage tax implications and enhance retirement security.
What steps should DaVita employees take to prepare for retirement within the context of the DaVita Retirement Savings Plan? How does the structure of this plan align with common retirement strategies, and what resources does DaVita provide to help employees understand their options when they are considering retirement?
DaVita employees preparing for retirement within the context of the DaVita Retirement Savings Plan should review their savings, evaluate their retirement goals, and ensure they are maximizing contributions. The plan aligns with common retirement strategies by offering diversified investment options and matching contributions, making it easier for employees to grow their retirement funds. DaVita provides resources, such as the Voya website and a dedicated retirement service center, to help employees understand their retirement options and plan effectively.
How does the DaVita Retirement Savings Plan accommodate employees who have previously held jobs with different retirement plans? What documentation is necessary for these employees to successfully roll over their funds to the DaVita Retirement Savings Plan, and how does DaVita ensure compliance with IRS regulations in these situations?
The DaVita Retirement Savings Plan accommodates employees who have held jobs with other retirement plans by allowing rollovers from qualified plans, including 401(k)s, 403(b)s, and IRAs. Employees need to obtain proof of plan qualification and taxability from their previous employer or financial institution. DaVita ensures compliance with IRS regulations by requiring proper documentation, including an IRS Letter of Determination or rollover distribution statement, as noted in the Rollover Contribution Form(DaVita_08_11_2016_Rollo…).
In what ways can DaVita employees maximize their contributions to the DaVita Retirement Savings Plan, particularly considering the IRS contribution limits for 2024? What strategies should employees consider when determining how much to contribute, and how can DaVita support employees in achieving their retirement savings goals?
DaVita employees can maximize their contributions to the Retirement Savings Plan by taking advantage of the IRS contribution limits for 2024. The limit for employee deferrals is expected to be around $23,000, with an additional catch-up contribution of $7,500 for those aged 50 and above. Strategies include contributing enough to receive the full employer match and adjusting contributions to meet future goals. DaVita provides support through educational resources and financial tools available on the Voya platform.
How does DaVita address the investment options available through its Retirement Savings Plan? Specifically, what guidance is provided to employees regarding the selection of investment funds, and how can employees access information about their investment choices within the DaVita Retirement Savings Plan?
DaVita offers a range of investment options in its Retirement Savings Plan, including target date funds, stock funds, and bond funds. The company provides guidance to employees through the Voya website and customer service center, where they can access detailed information about available investment funds. Employees can tailor their portfolios based on their retirement timeline and risk tolerance, and they are encouraged to review their investment choices regularly.
What are the tax implications of withdrawing funds from the DaVita Retirement Savings Plan, and how can employees prepare for this? How does DaVita provide clarity around the tax obligations faced by employees when they begin to access their retirement savings, particularly for those who are unfamiliar with tax rules relating to retirement distributions?
Withdrawing funds from the DaVita Retirement Savings Plan can have significant tax implications. Withdrawals before age 59½ may incur early withdrawal penalties, and all withdrawals are subject to income tax unless they are from a Roth account. DaVita educates employees on these tax rules through its Voya platform, providing clarity on how to manage taxes when accessing retirement savings. Employees are encouraged to consult tax professionals for specific guidance.
How does DaVita educate its employees about the importance of understanding their retirement plan features? What programs or resources are available for employees to learn about financial wellness and retirement readiness, and how frequently does DaVita conduct educational initiatives related to its Retirement Savings Plan?
DaVita educates its employees on retirement plan features through webinars, financial wellness programs, and resources available on the Voya website. These initiatives focus on retirement readiness, savings strategies, and understanding the investment options within the plan. DaVita regularly updates employees through newsletters, and webinars are conducted periodically to keep employees informed about the plan.
In the event of unexpected financial hardships, what options do DaVita employees have regarding loans or early withdrawals from the DaVita Retirement Savings Plan? What do employees need to know about the process and potential penalties associated with accessing their funds early?
In the case of financial hardships, DaVita employees can take loans or early withdrawals from their Retirement Savings Plan. However, early withdrawals may be subject to penalties and taxes, depending on the circumstances. DaVita's Voya service center provides guidance on the process, explaining the potential costs and consequences. Employees are encouraged to explore alternative solutions before opting for early withdrawals to avoid unnecessary penalties.
What role do employees' personal financial goals play when determining their participation in the DaVita Retirement Savings Plan? How can DaVita assist employees in aligning their savings plan with their individual financial objectives, and what external financial consulting resources might they recommend?
Employees' personal financial goals play a key role in determining their participation in the DaVita Retirement Savings Plan. DaVita helps employees align their retirement savings with their broader financial objectives by offering planning tools and resources on the Voya platform. Additionally, external financial advisors or consulting services may be recommended for those needing personalized financial advice.
How can DaVita employees contact the company for more information regarding the Retirement Savings Plan? What specific channels, such as phone numbers or online resources, are available, and what types of inquiries can employees expect to address when contacting DaVita about their retirement savings?
DaVita employees seeking more information about the Retirement Savings Plan can contact the plan’s service center through the Voya website or by calling the dedicated support line. Customer service representatives are available to assist with inquiries related to contributions, investment options, rollovers, and withdrawals. Online resources and account management tools are also accessible for employees who prefer digital support.
How does DaVita ensure that it stays current with regulatory changes that impact employee retirement savings, particularly with respect to IRS limits set for 2024? What processes does DaVita have in place to update employees about these changes, and how does the company maintain transparency regarding its compliance with retirement regulations?
DaVita ensures it stays up to date with regulatory changes, including IRS contribution limits and distribution rules, through regular collaboration with financial service providers and legal experts. The company updates employees via email, webinars, and its Voya platform when changes occur, maintaining transparency about compliance with retirement regulations and keeping employees informed of any adjustments to the plan.