On January 1, 2014, the Clergy Retirement Security Program (CRSP) changes approved by the 2012 General Conference will take effect. The Minnesota Conference Board of Pension and Health Benefits has been studying the changes and has taken necessary actions. It approved a change in the billing calculation for CRSP and the Comprehensive Protection Plan (CPP). Churches will be billed the same amount the annual conference is billed for clergy appointed at 50 percent or more.
A new component of CRSP for 2014 will be a one-to-one matching contribution up to 1 percent of compensation if the clergyperson contributes to his or her United Methodist Personal Investment Plan (UMPIP). The 2014 annual conference budget recommendation provides that the CRSP defined contribution 1 percent match is paid by the annual conference from its benefits reserve fund in 2014. This is intended to encourage clergy to make the UMPIP contribution and receive the match. Using the benefit reserves to pay the match is only for 2014 and continuation depends on available funds and other factors. Local churches may be billed for the 1 percent match in years beyond 2014.
Minnesota Conference entered into an agreement with the North Carolina Conference to swap Minnesota surplus funding for North Carolina conference’s 2012 required contribution in the Pre-1982 pension plan. The Minnesota conference received $5 million in our benefits reserve account. This account is owned and invested by the Minnesota conference to backstop the Pre-1982 plan and other Minnesota conference benefit liabilities. The swap allowed Minnesota Conference to unrestrict $5 million from the Pre-1982 plan. Minnesota’s Pre-1982 plan remains funded well above 120 percent as calculated by the United Methodist General Board of Pension and Health Benefits.
Our other current use of Minnesota conference’s Pre-1982 fund is to make the annual CRSP defined benefit contributions when due. After the CRSP 2012 contribution and $5 million swap, we have between $5 million and $6 million available to redirect.
These changes are included in our 2014 Comprehensive Funding Plan (CFP). The CFP will be presented to the Minnesota Annual Conference for approval at 2013 annual conference session after it is reviewed by the GBPHB and an opinion is rendered.
Conference Health Plan and Health Care Reform
Before we can begin to understand the complexities of the health care reform act, we need to know the current state of health insurance for the Minnesota Annual Conference. We have a self-funded (sometimes called self-insured) plan. The annual conference board of pensions determines the benefits, deductibles, plan provisions, and premiums each year. The plan contracts with Blue Cross and Blue Shield for plan administration.
There are risks and benefits to having a self-funded health insurance plan. The annual conference bears the full responsibility for the plan. Premiums charged and earnings on reserve funds are the only sources of funds to pay claims. The MAC Plan participants are a small group (in the world of health insurance) with an average age well beyond the national average for employer group plans. This means our claims tend to be higher than the typical group. We maintain reserves to protect the plan and help moderate premium increases. We also purchase stop-loss insurance (or re-insurance) to cover high individual claims or high level of aggregate claims.
Currently the MAC Plan has adequate reserves and a little more. We use the “little more” to moderate premium increases. A few years ago, reserves were down and claims had increased a lot, so we had to increase premiums.
What does health-care reform mean for the MAC Plan? Well, we don’t know—yet. Each year we get more information: legal challenges are resolved, the Supreme Court offered its decision, regulations are being written, questions and analysis are prepared. The experts at the GBPHB are working to determine what it may mean for the United Methodist Church across the nation.
Our possible future actions could range from keeping the MAC Plan as it is to ending the MAC Plan and taking advantage of the new state exchange and/or private exchanges—or something in between, such as a combination of the MAC Plan and the exchange.
We will adopt a “wait and see” attitude until we learn more about the following:
We think it will take several years of experience with the state exchanges and analysis before we are ready to propose a model or method for the Minnesota Conference. There are many variables and possible scenarios that we will want to consider. As a self-funded health plan conference, we will be able to obtain assistance from the GBOPHB at a reasonable cost to help us analyze our options. (Part of the analysis may require gathering information from Minnesota clergy families about their household income because that is necessary to find out how many might qualify for the PTC. The information, if provided, will be used only in the aggregate and it will be kept in confidence with appropriate security.)
If you would like more information, here are some resources to consult:
Minnesota Annual Conference of the United Methodist Church