After a much costlier plan was withdrawn earlier this year following an outcry by Presbyterian Church (U.S.A.) employing organizations and Medical Plan members, the denomination’s Board of Pensions (BOP) has approved a medical dues overhaul that still might result in pastors and other church employees contributing to the cost of their families’ health care coverage.
But the price tag is much lower. “We listened, we learned, we prayed and came out at a better place,” said Patricia Haines, the BOP’s senior vice-president for benefits.
“We are truly concerned about the financial stress being experienced throughout the denomination,” added John Hamm, chair of the board’s Healthcare Committee.
Last October, the board approved a dues overhaul that included a dues increase for members only and optional coverage for dependents priced at a flat $5,700, with employing organizations given the option of passing on all or part of the added to cost to employees. That model was scheduled to take effect Jan. 1, 2014.
Opposition to the change was immediate and voluminous. Many argued that the flat-rate premium would discriminate against younger pastors with families and against smaller churches. Presbytery executives opined that such a dramatic change needed more time to implement.
Earlier this year, the BOP withdrew the original dues overhaul and went back to the drawing board. “We placed a great deal of emphasis on the feedback we received,” Haines told the board at its June 26-29 meeting. “This tells an important story that I hope our constituents realize.”
On June 29 the board approved a model that keeps the existing plan in place through 2014. Next year dues will increase from the current 21 percent to 23 percent of “effective salary.” In 2015, dues will remain at 23 percent for members only, but will rise to 24.5 percent for members with covered partners and/or dependent children.
The additional 1.5 percent for partner and/or dependent children coverage will be billed to employers, who may pass some, all or none of the additional cost onto employees. For a pastor with “effective salary” of $50,000, for instance, the additional potential cost could be as much as $750.
A major reason for the reduced cost of the dues overhaul, said Hamm, was a greatly improved financial outlook for the Medical Plan between the October meeting and the board’s deliberations earlier this year. The anticipated deficit in the Medical Plan dropped from more than $28 million in October to around $13 million at year’s end.
The new model, he said, “maintains the financial integrity of the Medical Plan and gives employing organizations limited flexibility to reduce employers’ cost of health care.”
The board took several other actions to shore up Medical Plan funding:
- Raising the minimum participation basis for the Health Plan from the current $40,000 to $42,000 in 2014 and to $44,000 in 2015.
- Increasing generic prescription drug co-pays from $8 to $10 for retail and from $20 to $25 for mail order, which is a 90-day supply.
- Increasing the annual deductibles in 2015 from 1.25% to 1.5% of the member’s effective salary.
Members will be able to mitigate ― and even reduce ― their deductibles by participating in a new BOP program named “Call to Health.” The program, which begins in January 2014, is designed to increase participation in preventive health and improve member health.
Members who complete certain health actions during the year ― such as an annual preventive examination and getting specific lab tests ― will have their 2015 deductible reduced from 1.5 percent to 1 percent. More information about “Call to Health” will go out from the BOP later this summer.
Two of the BOP’s programs will see no dues changes in 2014. Monthly dues for the Affiliated Benefits Program ― health care coverage only for lay employees ― will remain the same as in 2013: $624 for member only, $926 for member and children, $1,281 for member and covered partner, and $1,668 for member and family.
And the board’s Medicare Supplement monthly dues will remain unchanged in 2014 at $218, or $145 for limited-income members and $305 for Affiliated Benefits Program participants.
The BOP’s Pension Fund remains fully funded, with assets of 126 percent of current and future liabilities. As of May 31, the board’s balanced portfolio was valued at $7.9 billion.
Judith D. Freyer, senior vice-president, treasurer and chief investment officer, reported that the board earned a 7.7 percent return on the balanced portfolio through May 31. “We took a little bit of a hit in June,” she said, “but everybody did. There’s not much change from our beginning-of-the-year market predictions … steady as she goes.”
The board, because this meeting was designated as its “annual meeting,” renewed a variety of contracts:
- Deloitte and Touche for audit services;
- Towers Watson for pension actuarial counsel;
- Milliman Inc. for medical actuarial counsel;
- Ballard Spahr for legal counsel;
- Cigna Behavioral Health for mental health and employee assistance services;
- Anthem Blue Cross Blue Shield of Kentucky for medical coverage for employees in that state;
- Cigna Global Health Benefits for medical coverage for overseas employees;
- Triple S for medical coverage for plan members in Puerto Rico.