Board of Pensions and Health Report from Friday Morning, June 20, 2014

1. CRSP DEFINED BENEFIT ANNUAL COST
6,903 6,504
6,200
5,118
4,092
2011 2012 2013 2014 2015

2. In 5 yrs, reduction in cost of 40.7%!
For 2015, reduction of 20%!

3. In 5 yrs, reduction in cost of 40.7%!
For 2015, reduction of 20%!

4. GUIDING PRINCIPLES
• Cost effectiveness within premium rates for local churches
• Cost effectiveness within the pastor’s contribution
• Concern for adequacy of coverage
• Cost effectiveness of the plan itself (controlling what can be managed)
• Care for the pastors and their dependents
• Maintaining equality within the appointment-making system for all
pastors and churches

5. OPTIONS CONSIDERED
• Maintenance of conference health plan as self-insured plan as is
• Closing down the self-insured plan and contracting for a fully insured
plan
• Closing down the self-insured plan, asking church to provide taxable
salary increase
• Options within the current plan to benefit from cost savings
• Options to current plan’s funding structure, including additional sharing
of healthcare costs with participants

6. PROPOSED PLAN FOR 2015
( IF PETITION 2, PART 2 IS APPROVED)
• Added two choices for healthcare plan – basic and basic plus – with
additional cost to participants for basic plus
• No changes in covered services from current plan; cost sharing in the
costs of medical claims will change with the basic plan
• Cost participation differential within the two plans for copays, out of
pocket maximums, deductibles, and coinsurance
• Slight change in formulary due to change in pharmacy benefit managers
• Plan premium reductions overall

7. PREMIUM COMPARISON
FOR PROPOSED PLAN
2014
Premium Participant Rate
2015
Premium Participant Rate
(Based on basic plan)
Percentage decline in rate
From 2014 to 2015
$ 13,788 $ 10,200 - 26%

8. PREMIUM COMPARISON FOR PROPOSED
PLAN AND PENSION COST (DB PORTION)
2014 2015
Percentage
decline
Healthcare $ 13,788 $ 10,200 - 26%
Pension (DB) $ 5,118 $ 4,092 - 20%
Total $ 18,906 $ 14,292 - 24.4%

9. RESULTS FROM CLERGY SURVEY
REGARDING SPOUSAL COVERAGE ELIMINATION
• Of approximately 775 invited, 503 responses were received, or 65%.
• Of respondents, 85.6% responded affirmatively that their spouses were
covered by healthcare insurance, with 43.3% insured with their own
employer and 34.7% were covered under the WNCC plan.
• Of persons responding to the elimination statement, approximately 83%
either strongly disapproved or disapproved of the statement regarding
elimination of the spousal coverage offering within the WNCC
healthcare plan.

10. INFORMATION POINTS
RELATED TO JONES PETITION
• IRS regulations, effective January 1, 2014, have declared that the
employer reimbursement of premiums to employees (if a group plan is
not provided) must be treated as taxable income, for both income tax
and self-employment purposes.
• These regulations further create penalties for employers who engage in
such a practice, a penalty assessed at $100 per day for each participant
to whom a reimbursement is paid, for an annual cost of $36,500.
• Increases in taxable income would impact the cost of pension benefits
to the churches, as some of these are based on a percentage of salary.

11. INFORMATION POINTS
RELATED TO JONES PETITION
• Current healthcare insurance program phase-out costs, or run-off of
claims, was reported in our year-end audit as $784,182. Anticipated
receipts would not fully cover this amount nor be timely in collection
for the payment of these claims within six months of year end.
• As an employer with greater than 50 persons, this proposal would cause
the Conference to be non-compliant with the Affordable Care Act as no
group health plan would be secured for the Conference lay staff. The
same would impact churches with more than 50 full-time employees.

12. INFORMATION POINTS
RELATED TO JONES PETITION
• Flexible spending arrangements and the salary reduction for premiums
paid would no longer be allowed for our pastors under IRS regulations.
• The life insurance provided to each clergy at no cost is not anticipated
within this proposal and would be discontinued.