Commissions
BENEFITS CORPORATION
Starting in late summer of 2014 and concluding in the winter of 2015 the EC Benefits Corporation created a special Health Insurance Task Force to review the feasibility of maintaining a group health insurance plan, continuing with the HRA and continuing the health insurance mandate. After a thorough review and multiple lengthy discussions the task force concluded and confirmed by the EC Benefits Corporation Trustees to maintain the group health insurance plan, continue with the HRA and continue the health insurance mandate. All the task force members were in agreement at the end of their work on all the points mentioned earlier. Appreciation and gratitude is extended to all members of the task force especially to Becky Reigle and Ryan Taylor for their leadership, hard work and the care and concern they demonstrated for the health and well-being of the EC pastors and churches.
There were two main reasons for the continuation of the group health insurance plan for active pastors: the forthcoming changes required by the Affordable Care Act (ACA) and the financial cushion available in the HRA. The ACA is a wildcard. Employers and employees are finding themselves unintentionally in violation of the ACA. Until decisions from multiple court jurisdictions and jurisdictional levels interpret and issue decisions on the ACA, developing or creating an extensive case history, the true intent and reach of the ACA will not be known. Moving away from an established group health plan that exceeds the minimal essential coverage required by the ACA and a health plan that is operationally compliant with the ACA is too risky.
The HRA (Health Reimbursement Account) utilized by EC Benefits to manage the healthcare claims of covered active EC active pastors added to its financial cushion during 2014. The HRA gives the EC Benefits Corp flexibility in the rates charged to churches and in plan design. The current active pastor health insurance plan with Highmark Blue Shield was assessed a 7% rate increase when the plan was renewed on October 1, 2014. Due to the cushion in the HRA the EC Benefit Trustees voted to keep the health insurance rates to the churches effective on January 1, 2015 constant from the 2014 rates. If or when it becomes necessary for the EC Church to discontinue the active pastor’s group health insurance plan the HRA balance can be used to provide a soft landing for affected pastors and churches. There are many health plans available with different benefit levels that can be utilized to transition away from our current plan minimizing the financial impact for most pastors. The task force and EC Benefits Trustees were aware that any changes to the benefits provided by our current plan will adversely affect some participants.
The findings and decisions from the work of the task force do not guarantee that a health plan for active pastors will continue indefinitely. As more pieces of the ACA become clearer and the cost of health insurance continues to rise, the EC Benefits Corp. will struggle annually with the decision to continue health insurance.
Churches that are reimbursing a pastor or paying for health insurance premiums or healthcare costs outside of the EC Health Insurance are not in compliance with the ACA, and as such will be subject severe penalties in the latter half of 2015. Also, EC pastors are not eligible for a premium subsidy from the health insurance marketplace. Dave King or Kevin Henry at the EC Church Center can discuss your payment arrangements and provide resources to determine if the reimbursements are in compliance with the ACA. Also, any questions concerning health insurance Dave and Kevin can answer or provide a more qualified resource that can be contacted.
The health plan census (plan participants) decreased in 2014 by 4 to 76.
The other substantial item that the EC Benefits Corp. Trustees wrestled with, at the request of the Covenant Implementation Team, was the continuation of the Medicare Supplemental, Highmark Freedom Blue, premium payments for retirees of the EC Church. It was with sadness and regret that the Board of Trustees approved a five year plan to eliminate payments of retiree Medicare Supplemental by the National Conference. All costs of the denominational sponsored Freedom Blue plan will be fully borne by the retiree effective January 1, 2020, if the plan is approved by the members of the Benefits Corporation at the annual corporate meeting held during the May 2015 National Conference. The cost of a Medicare Supplemental plan is a function of the amount of reimbursement that Medicate will pay to an insurance company to administer a Medicare Supplemental plan and cover some of the claims of the participant. As with most government expenditures in recent years Medicare is reducing the payments to administrators of Medicare Supplemental plans thus increasing the cost of the plan. The cost of Freedom Blue premium has approximately doubled in the last eight years to $211 per person per month. At the current rate of premium increases the cost to the denomination of providing retiree health insurance may exceed $340,000 in five years and absorb more than 23% of all ministry funds paid, at the 2014 ministry fund level. While projecting the cost of anything more than a year into the future is highly unreliable however a trend of increasing healthcare costs is well established and not diminishing.
The EC Benefits Trustees have communicated the possible change to the Medicare Supplemental plan and the reimbursement phase-out schedule to the retirees affected by the change. On the positive side, there are multiple Medicare Supplemental plans available to retirees and depending on health conditions and geographical location, plans with $0 monthly premium are available. Not every retiree would benefit from one of these plans but lower cost plans are available albeit with lower benefits. The EC Benefit Corporation will provide resources to our retirees to assist them with choosing a new Medicare Supplemental plan if necessary. The Manna Fund is available to assist retirees with basic living expenses of which a Medicare Supplemental plan would qualify for reimbursement. The Manna Fund is a renewable source of funds that may require fund raising to meet the needs of retirees. The current Freedom Blue plan will continue as long as there is sufficient participation to keep the plan active.
The premium for the Highmark Medicare Advantage PPO increased about 10% with no changes to benefit levels. This plan provides additional coverage beyond the basic Medicare coverage for retired pastors, spouses, and widows. The number of participants in the Medicare Advantage and Medicare Supplemental plans decreased from 2013 by 5 to 115.
The 403(b) Defined Contribution pension plan had a positive investment return in 2014 of about $891,000 or about 5.9%. Contributions remained consistent from previous years at $484,000. The total number of active participants in the plan decreased to 168. Of the total participants in the plan two are taking advantage of the Roth 403(b) option. I would like to thank Jennifer Buehler, Wells Fargo Wealth Management, for her commitment and time spent working with our active and retired pastors and she is a tremendous asset for the EC Benefits Board.
The housing equity account also had a positive investment return of 4.3% in 2014 and with contributions the account balance increased to $65,000. The number of participants is lower than we would like but we are glad that a few pastors are taking advantage of the program. And I encourage pastors living in parsonages to consider opening a housing equity account of if you have an account consider making consistent small contributions.
The Manna Fund balance is $49,000 as of December 31, 2014 and there were no distributions in 2014. A bequest was received from the M. Catherine Heidke estate that substantially increased the Manna Fund balance. The income limits to qualify for a Manna Fund were recently changed to 150% of the federal poverty level as defined by the US Department of Health and Human Services, the current limits are $17,655 for a single and $22,895 for a couple. The Manna Fund was established to assist our retired clergy and surviving spouses and we know that we have retired clergy and surviving spouses that do have a financial need but they will not complete a Manna Fund application. If you are aware of any of our retired clergy or surviving spouses that could benefit from a Manna Fund distribution please encourage them to complete an application for assistance. Manna Fund applications are mailed to retired clergy and surviving spouses in April and an application can also be received from the Benefits Administrator at the EC Church Center.
The disability fund had a balance of $434,000 at the end of the year up by about $32,000 from 2013. There was one disability claim paid during 2014.
The Benefits Corporation also administers the Defined Benefits Plan for the National Conference. This is an unfunded liability of National Conference. At the end of 2014 there were 35 pastors and surviving spouses receiving monthly pensions of approximately $6,500. We lost one member from the Defined Benefit Plan in 2014.
A financial audit was completed by Hamilton and Musser, PC on the records of the Benefits Corporation. There were no significant discrepancies noted by the audit. Our appreciation and thanks to the church treasurers that responded to the audit confirmation requests.
An election will be held at National Conference. If there is anyone interested in serving as a trustee please contact Frank Schock, President, EC Benefits Corporation. The EC Benefits Corporation trustees are dedicated, active and knowledgeable and vital to the operation of the EC Benefits Corporation. Their service is appreciated and they cannot be thanked enough for their service.
Employee benefits are going to be a continual challenge. Circumstances in the marketplace and regulatory changes are going to adversely affect our group. Please be sensible with your health and saving for retirement. The accumulation of small purposeful positive and proactive steps will create large future gains. The current issues we are experiencing are not going to disappear nor become less important. By helping yourself you are helping your denomination.
Rev. Frank Schock
Bibliography
Kaiser Family Foundation, Health Research & Education Trust, NORC at the University of Chicago, Employer Health Benefits, Annual Survey. Survey & Analysis, Menlo Park: The Henry J Kaiser Family Foundation, 2013.
BY-LAWS
1) Remove sentence 3.b from the Article IX, Section D. MANNA FUND (change in bold).
3. Eligibility for Manna Fund Distribution
a. The participant must have at least 10 years participation in the Pension Plan.
b. The participant cannot be a resident of a retirement or nursing home.
c. Maximum annual income levels will be determined by the Executive Committee.
d. The participant must complete the Manna Fund Financial Disclosure Form application.
2) Clarify language of eligible participants in Article IX, Section A. PENSION PLAN (change in bold).
1. Participants
a. All Ministers licensed by the Evangelical Congregational Church who are employed Evangelical Congregational credentialed personnel employed by a Conference, Church, Commission, or Board of the denomination may immediately participate in the Plan, whether full-time or part-time, thus entitled to their employer contribution.
HEALTH INSURANCE TASK FORCE
The Benefits Corporation appointed a Task Force to review and discuss health insurance for the active pastors and what future options may be available to us. The Task Force reviewed several different plans, falling into two categories: a more traditional PPO-HRA Qualified health insurance plan, as we now have with Highmark Blue Shield, and a Qualified High Deductible plan coupled with a Health Savings Account.
The goal of this Task Force and the Board of Trustees has been and continues to be to provide the best coverage for our pastors while trying to control the cost to our churches. In addition, the Task Force was given the directive to evaluate if and for how long the EC Church/Benefits Corporation can continue to administer/offer health insurance coverage for our pastors and churches. No decision was made regarding the long term future of health insurance coverage. It will be continually reviewed and assessed with each annual renewal.
The Task Force recommended and the Benefits Board of Trustees accepted the following recommendation at their Feb. 24th meeting that we continue with a plan the same or very similar to our current traditional PPO-HRA Qualified health insurance plan, as we now have with Highmark Blue Shield, pending 2015-16 renewal rates and available group health plans.
Our 2014-15 renewal came in with a 7% premium increase. The Board of Trustees voted to absorb that increase by using excess funds held within our Health Reimbursement Account (HRA), keeping the premiums at the same rates as they were in 2013-14.
Our Health Reimbursement Account is averaging around 40% usage by the eligible participants of our health insurance plan. It is very hard to explain why this benefit is not being used. Participants pay their first $500 of their medical expenses (deductibles and co-insurance). Once these expenses exceed the $500 (co-pays are not included), they are eligible to submit their expenses to our third party payer, PrimeFlex, for reimbursements of their deductibles and co-insurance. Prescriptions can be submitted for reimbursement once they exceed $1800. The Benefits Corporation has tried to encourage our participants to complete the claim form and submit it along with the Explanation of Benefits from Highmark to PrimeFlex for reimbursement. Last year we emailed step-by-step instructions and related forms of the reimbursement process to all participants, but only 1 or 2 new ones submitted their expenses.
Since we have the excess in the HRA, it is the Corporations intend to again absorb as much of the 2015-16 renewal premium increase as we can, hoping to hold the premiums at their current rates. At this point, this is our intent. We have no idea what our increases will look like and won’t until late August-early September.
Let me conclude with some observations made by the members of the Task Force during our discussions:
We are not sure how long the Benefits Corp can sustain a health insurance plan for the denomination, much of this is out of our control because of the known changes, anticipated changes & the unknown changes coming with the Affordable Care Act (ACA). But beyond the ACA, we are not sure how many of our churches can financially continue to provide health insurance to their pastor and family. We are already seeing this with the many pastors who have gone part-time in recent years. By waiting at least through one more renewal year before making any major change, we hope to have a better picture of where things seem to be trending with health insurance.
The Task Force discussed at length the Health Insurance mandate approved by the National Conference in 2005. This was passed primarily to insure that those with pre-existing conditions had access to health insurance and to maintain our participant census at 100+. Neither of those are valid reasons anymore. Our census has long ago fallen to under 100 and is currently in the 70’s. We were moved to a community rated plan when it fell below 100. Pre-existing conditions are no longer an allowed exemption from coverage as a reason to reject someone for health insurance coverage as per the ACA. Because health insurance is in a constant state of change right now due to the ACA, the Task Force did not make any recommendation to repeal this mandate this year. But it will be under a yearly discussion and consideration from this point on.
It must be emphasized that as long as the Benefits Corporation administers a health insurance plan, no pastor (full-time or part-time) is eligible for a subsidy via the marketplace/exchanges of the ACA. Those not covered by the mandate (full-time pastors), can apply for coverage in the marketplace but because we provide access to group health insurance, with no restriction on full-time or part-time employment, they are not eligible for a subsidy. As with so much of the ACA, there are more questions than answers. There are many gray areas. We are taking this position because we do not want any church or the Corporation to be fined because an employee secured a subsidy when they are not eligible.
Recent guidance from the Internal Revenue Service stipulates that an employer (in our case the Church) cannot reimburse an employee (in our case the pastor) for health insurance costs outside of an employer sponsored group plan. Whether the reimbursements are taxable or nontaxable is not relevant. Payments to employees for health insurance outside of an employer sponsored plan group plan are in violation of the ACA. Some are getting around this by increasing the salary, but nowhere can it be specified that this additional salary is to pay for health insurance.