What physicians and providers need to know about the Eastern Maine Medical Center Retirement Plan 403(b) and 457(b)/ Northern Light Health Retirement Plan - 403(b) and 457(b)

Introduction

Northern Light Health is transitioning away from its pension system in July 2025, aligning with a national trend. While the shift from defined benefit plans (pensions) to defined contribution plans like 401(k)s and 403(b)s can feel unsettling, there’s opportunity here — especially for healthcare professionals who plan smart.

In this article, we break down:

• What this change means for you

• Key benefits of the new plans

• Smart investing strategies tailored to physicians

• Why this shift isn’t necessarily a downgrade

• Why the Change?

Why is Northern Light making these changes on July 15, 2025

Pensions require consistent, long-term funding — something that’s becoming harder for rural hospitals to guarantee amid fluctuating revenues and Medicare and MainceCare reimbursement challenges. Defined contribution plans like 403(b)s offer more flexibility for both employers and employees in today’s healthcare landscape.

What Retirement Plans will be offered to Northern Light Healthcare Employees after July 15, 2025

403(b) plans: Employer-sponsored, qualified, tax-advantaged plans for non for profit employers

401(k) plans: Employer-sponsored, qualified, tax-advantaged plans for profit employers

457(b) plans: Non-qualified deferred compensation plans for highly paid employees

Just so you know the word "qualified" is a huge word in the retirement space. If a plan is qualified it can be rolled over into another employer's retirement plan or an Individual Retirement Account (IRA). A qualified plan is also protected from creditors which is something every physician should value if they work in an environment where the government is the biggest payor of healthcare services.

In Northern Light Healthcare, as of 2025, according to their CFO, about 60% of the healthcare provided is paid for by either Medicare or Medicaid (MaineCare) and the lower levels of reimbursements from government payors versus private payors can create some distress is a healthcare provider like Northern Light Healthcare.

Investment Options Available in the Northern Light Health Retirement Plan

To their credit, Northern Light Healthcare probably has a 403(b) retirement plan that is in the top 1% in the country in its structure in my assessment.

I know it can be a real challenge practicing medicine in more rural environments with a heavy patient load and difficulty recruiting staff but Northern Light Health has set up a better retirement plan than you'll find at most employers.

Even within the state of Maine, the Northern Light Healthcare 403(b) is superior in my view to the Maine Health's (Maine Medical Center) retirement system in many ways.

Below are some of the investment options in the Northern Light Healthcare 403(b) and 401(k) plans:

Fidelity Target Date Funds – Great for simplicity, but may not reflect market conditions and because they usually take a one size fits all approach they may not reflect your personal needs or goals either.

As a general rule, you don't see bad target date funds anywhere. The strength of any target date fund is its simplicity and the fact it does become more conservative over time which is consistent with many people's perceived goals of what they "should" do (but that doesn't always line up with their actual needs and a lot of people don't necessarily understand the trade offs implied in the asset allocation). Moreover, a secondary weakness of any target date fund is the tendency to prephaps oversimplify things and not customize to the individual - leading people to actually fall short of their goals or take on risks that aren't necessary for them to reach their goals. A one size fits all approach actually fits some people perfectly and for others it doesn't fit it all.

Think of it this way - in America the average male shoe size is a 10.5 and the average female shoe size is a 9. Even if all male shoes were size 10.5 and all female shoes were size 9 - that would actually be a perfect fit for the some of the population. But if Dwayne "The Rock" Johnson who is 6'5 tried to squeeze into size 10.5 shoes they would really hurt and if Kristen Bell who is 5'1 tried to wear size 9 shoes they wouldn't fit right. Dwayne Johnson would be better off in size 14 shoes (his actual size) and Kritsen Bell would be better off in size 7 shoes (her actual size) then trying to make the median size work for them even if their body doesn't match the median.

Target Date funds offer a largely pre-set portfolio, usually set up based off what has happened in the past, that is designed to get more conversative over time. Their strength is that you don't have to make any adjustment in a target date fund - it will adjust itself.

There are two primary weaknesses of target date funds in my view and at my firm we tend to use them in extreme moderation with our own clients for these reasons. The first reason is that don't adjust much to market conditions and to keep costs low you could make the argument that they may (and often do) cut corners. For example, normally interest rates are 5% on bonds, but a target date fund may buy as many bonds when interest rates are 5% or 15% or -5%. But as an investor a bond is like a CD, the yield is pretty close to what you are usually going to get over time, typically, as so a rational investor would probably more bonds when yields are higher and less when they are lower and maybe hardly any at all when you have to the borrower to borrow their money (a negative yield on the bond in the 2010s). But Target Date Funds largely ignore(d) these conditions and set the bond allocation off age not off the expected return. But this is a form of oversight rationing in my view, by requiring minimal or no monitoring of asset prices you can offer the same service for cheaper - but it is not really clear to me that investors benefit from buying bonds at negative yields - which target date funds totally bought throughout the 2010s.

The second issue with target date funds is that they may not match your personality or goals very well.

The way this works out in target date funds is that some people actually match the target risk profile in their goals and risk tolerance pretty well and a target date fund could be perect fit for them. But, in the real world, people exist on a distribution in terms of how ambitious they are with their investments and their comfort with losses. So some people are more comfortable with risk than others and they could be 100% in growth assets and be fine with it, long after the target date funds says they should be more conservative and would force them to buy conservative investments. Some people are very risk averse by their nature and they are comfortable having their investments go down somehwat but not as much as a fund that is in 90% growth assets and in this way the investments in a target date fund can end up being a misfit for the person, in my view.

And that is basically it. There is nothing wrong with using target date funds and even in my own practice we use them a little bit with our clients (usually primarily in bad retirement plans where they don't have a lot of good low fee alternatives available and//or no good self directed brokerage account). But those two shortcomings are the reason why we don't use target date funds very much with our customers even though when they come to us they often have a lot of target date funds or if they are young enough they are exclusively in target date funds.

I will say one final thing on target date funds - they make the most sense if you don't have a lot of assets because their diversification benefits and simplicity are the most popular when you have the least amount of money and the fewest good alternative options. For someone who has $0k-$30k to invest, I think almost nothing beats the target date funds in terms of doing a good job of diversifying of a portfolio at a low cost, if that is important to you, and their weaknesses are not so glaring at that level to overwhelm their simpicity and ease of use as their strength. Even though target date funds by definition take a one size fits all approach, the consequence of putting everyone into the same box, regardless of their goals, needs and personalities is not as high when you have $15k as when you have $500k in my view. But as you get bigger the benefits of their simplicity and ease of use, relative to the alternatives, goes down, in my view, and the costs of their weaknesses go up in my view, which is why I don't really like them nearly as much for people who have $500k in them as a I do for people who have their first $5k in them.

With that said some people like target date funds and their simplicity and ease of use is a feature that a lot of people like. But in order to deliver that ease of use, the fund has to treat everyone the same and to a large degree the funds ignore market conditions in order to potentially save on the cost of oversight. So basically it is a good cheap product, there is some corner cutting or rationing that has to be done to get the price down and that is part of the deal in my opinion.

Low-Cost Vanguard & Fidelity Index Funds – Vanguard and Fidelity have the best low cost index funds on the entire market if you are a mutual fund investor. All the mutual funds that you find in a 403(b) basically invest in the same stuff, more or less, so the distinction is in their fees. Because you are basicaly buying the exact same things - the less you pay the more you keep. Nobody beats Fidelity or Vanguard for low cost mutual funds and low cost index funds (in the mutual fund form) so Northern Light Healthcare is using the best vendors here in my view, for this role. Northern Light's competitor Maine Health does not use nearly as good of funds in their 403(b) as Northern Light Healthcare in my view.

Bond Funds – The fact is standard bond funds in 403(b)s are just not that great and there is no way around the obstacles without using the brokerage window in my view. ERISA, which is the law from the 1970s that governs retirement accounts, says that each investment in a 403(b) or 401(k) must be sufficiently internally diversified so that if an employee bought only that fund it would be adequately diversified. For stocks or real estate this isn't really an obstacle - but for bonds what you find is that you usually get a plain vanilla 7-10 year maturity bond fund with some government bonds, some mortgages and some company bonds. In a totally standard interest rate environment this can be okay, but if any of the three main components (Treasuries, mortgages, or company bonds) find their yields really suppressed, it can be hard to work around it. Some 403(b) plan include higher yield bond funds and these can be beneficial in lower interest rate environments and I'm starting to see more and more of those funds each year. In a normal environment a high yield or higher yield bond bond may pay 2-3% more interest than a typical bond fund so if in a typical bond pricing environmenrt bonds pays 5% interest per year, a higher yield bond fund might pay 7-8% interest in that same environment.

Fidelity BrokerageLink Account – The BrokerageLink is an essential component of a good 403(b) plan or 401(k) plan. Essentially, a BrokerageLink allows you to buy a broader set of mutual funds than you might be able to buy in the standard fund options. While by law these options are mutual fund only in 403(b) plans - Fidelity has probably the top low cost mutual funds on the market today in my view so Fidelity is a great place to have a BrokerageLink Account at in my view. So it is a great plan. Fidelity has wonderful low cost mutual funds that allow for personalization and matching of your investments to your goals and risk profile than the standard funds in a 403(b) and definitiely way better than a target date fund, in my opinion. So for investors who want to utilize the best tools available, in my view, the BrokerageLink is definitiely worth a look.

Overall the investments in the Northern Light Health 403(b) and 401(k) Plans are outstanding and probably in the top 1% in quality for hospital plans in the United States from what I've seen. If you work at Northern Light Healthcare - your investment options are trully excellent compared to what you might get at another employer in my view. I work with phyicians all over the United States and I see tons of retirement plans each year, and Northern Light's 403(b) plan is one of the best I've seen.

While this article some general information about the different fund options, you should know that I'm not your financial advisor unless you have a written contract with our firm and if you do I wouldn't be giving you personalized advice through this article. The purpose of this article is education, and before making investment decisions, I'd strongly encourage you to do your own research, come to your own conclusions, and talk to your own professional financial advisor. This is just general information - none of the information about this investments is a recommendation specially for you.

What Eastern Maine Medical Center and Northern Light Healthcare Physicians and other Providers should watch out for in the Eastern Maine Medical Center Retirement Plan

While the Eastern Maine Medical Center and Northern Light Healtchare 403(b) Retirement Plans are among the best in the healthcare industry, financial security and success still depends on:

• Make sure that you are saving enough to provide for the type of financial security you want for yourself and your family later in life

  
  

• Make sure that you are paying attention to taxes both during your working years and into retirement

  
  

• Make sure you have a viable retirement income plan - that can actually sustain in a variety of market of environments. A retirement income plan is basically a viable method of converting your assets into cash flows over sustained period of time, to maintain the lifestyle you want, without running out of money too soon.

  
  

• Make sure to invest in a way that matches your goals for growth as well as your risk tolerance, liquidity needs and time horizon

  
  

• Consider doing periodic reviews as you evolve through stages of life and as market conditions change (think of these like a health check or even a self exam if you are a do it yourselfer - often problems caught early can be put back on the right course with minimal effort. However, once a problem has festered for 10-15 years the interventions are a lot harder, a lot more costly in the short term, and much less effective than early intervention). Just think of your financial health like your physical health - if you take off a little bit of skin on a melanoma caught early that is no big deal, if you let the cancer spread and metastisize the interventions become much harsher and they are lot less likely to work with no complications).

  
  

• Set it and forget strategies can sometime be fine in a target date fund in my view, especially if you perceive that your needs pretty much fit the median - (a one size fits all shoe fits fine if you a man and actual shoe size is 10.5 or a women and your actual shoes size is 9). They also can cometimes be productive outside a target date fund too but it is important to understand the range of outomces that can happen (both good and bad) and be totally comfortable with any of those happening. If for you you have concerns about whether you fit he median in terms of your goals and your tolerance for risk, having a conversation with a financial advisor is a simple and easy thing to do and they usualy can give you perspective in the same way that physicians can give their patients a lot of perspective on the progression of a disease or that potential outcomes of a surgery. Getting free information on the internet can generally be a useful thing to do, but if you want real perspective that is customized to you, I'd encourage you to talk to a good fiduciary financial advisor to get their take on your situation and answer whatever questions might be on your mind.

Our Take

While it is always disappointing to lose access to a pension plan, which are more beneficial to employees than 403(b)s, Northern Light has implemented a retirement plan structure that competes with — and often exceeds — what’s offered at many top healthcare systems nationwide. It's worth taking time now to make a plan, review your options, and consider professional guidance if you have any questions about your plan or how to most efficiently utilize it for your goals.

If you'd like to learn more about me or D.R. Harris & Co. you can find that information here and here.

And if you'd like to have a chat about your situation, feel free to click here and fill out the contact form and we'll get in touch with you about setting up a phone call if working with a fiduciary financial advisor is something you're considering doing.