The Board of Pensions of the Presbyterian Church (U.S.A.) has already taken several steps in order to comply — early in some cases — with the healthcare reform legislation passed by the U.S. Congress earlier this year.
"We've all heard a lot about the legal requirements arising from the Patient Protection and Affordable Care Act (PPACA) legislation," said Pat Haines, senior vice president of benefits for the Board of Pensions. "We will meet or exceed these requirements while placing the best interests of members, churches, and employing organizations first at all times."
At its July 24 meeting here, the board approved three changes to its Medical Plan, effective Jan. 1, 2011:
- The definition of the term "dependent" is being expanded to cover members' adult children up to age 26, regardless of financial dependency, marital status, student status, or residency. In related action, the BOP Executive Committee had already approved an early accommodation for adult children who already were covered as of June 1, 2010 — most of them college students who had graduated in May. Without the early inclusion, those persons would have been without coverage between June 1 and the end of the year.
- Lifetime limits (dollar maximums) of $3.5 million per person are being eliminated.
- Pre-existing condition limitations are being eliminated for children under the age of 19.
Study of same-gender partner benefits to begin
After the recent 219th General Assembly urged the board to "adopt amendments to the Benefits Plan to extend eligibility for spousal and dependent benefits under the plan to Benefits Plan members, their same-gender domestic partners, and the children of their same-gender domestic partners, on the same basis as, and equivalent to, benefits made available to Benefits Plan members, their spouses, and the children of their spouses," the board encouraged management to begin studying how to do it.
"The Board of Pensions is committed to responding affirmatively to the action of the General Assembly, with a focus on doing what is in the best interests of our members and being attentive to the concerns of our participating employing organizations," said Thomas C. Paisley, Jr., Chair of the Board of Directors.
"There are many complexities associated with this matter, and they must be considered in depth before the Board takes any action," Mr. Paisley said.
Rob Maggs, BOP President and CEO, told the board that it will take "on the order of 18 months to do the work necessary to begin any implementation of the Assembly's action. "We will actively seek the full spectrum of views from our various constituents as we work to balance the interests of all concerned."
The General Assembly also approved a dues increase to be allocated among the plans of the Board of Pensions, including the pension plan, of up to 1 percent to fund domestic partner benefits and urged the BOP to design a mechanism to "provide relief of conscience, to be implemented simultaneously with these actions, for those congregations for whom these actions cause a moral dilemma." The BOP is not expected to implement any increase in pension dues in 2011.
John Cookson, the board's healthcare actuary, told the Healthcare Committee that the typical enrollment increase in healthcare plans when such benefits are extended is 1 percent or less. "Most carriers have not tracked experience, so we don't really have any cost data," he said. "If enrollment is low, the main risk is catastrophic claims, but that’s no different whenever you enroll new group of members."
Haines said that "anecdotal experience is that domestic partner enrollment is low because same-gender couples tend to be both employed and in better health, so on balance there’s less (financial) exposure to our Medical Plan, not more."
"The greater financial exposure is providing a survivor pension to the member's partner, because our pension plan, unlike most corporate plans, provides the survivor benefit at no cost to the member," added Maggs. "Whether the financial impact on the Pension Plan is significant or not will obviously depend upon the number of members who enroll with domestic partners."
Medical dues unchanged for 2011, but increase likely in 2012
For the fourth consecutive year, Medical Plan dues will remain unchanged in 2011. Medical dues are currently 19.5 percent of effective salary, with an additional 12 percent for pension, death and disability dues.
Medical Plan reserves are currently at 54.9 percent of projected liabilities, well above the board's target range of 20-33 percent. But under current assumptions, they are projected to drop below 20 percent by the end of 2012, making a dues increase likely for 2012.
"We are between a rock and a hard place, because we really don't know what’s going to happen as a result of healthcare reform," Cookson told the Healthcare Committee.
But with reserves at a healthy level right now, Haines said "it would be a hard sell to tell churches our reserves are very high but may not be sufficient in the future," particularly as the PPACA legislation becomes fully operational in 2014.
"There are just so many unknown variables right now," said Healthcare Committee Chair Susan Reimann.
In other business, the board:
- Learned that the BOP's balanced investment portfolio had a market value of $6.25 billion on June 30, 2010, a return of minus 1.7 percent for the year. But after a robust year in 2009, the overall return for the twelve months ended June 30 was positive 15.4 percent. Judith D. Freyer, senior vice president of investments, treasurer, and chief investment officer, reported that the PC(USA)'s Pension Plan remains fully funded at nearly 110 percent of potential liabilities.
- Increased monthly subscription dues for Affiliated Benefits Program (ABP) participants by an average of 5%, effective Jan. 1, 2011. The increase does not apply to Medicare Supplement subscribers. The ABP offers medical coverage and a retirement savings option — as well as death and disability coverage — to employees in non-installed positions working 20 hours a week or more.
- Announced that it will conduct an open enrollment for its Optional Dental Program from Oct. 1-Nov. 15, 2010.
- Extended its Sabbath Sabbatical Support Grant pilot, begun in 2007, to help fund small church pastors' sabbaticals. The program provides a limited number of grants of up to $3,000, which are apportioned by synods based on the number of small congregations within their bounds.
- Heard that effective July 1, 2010, Fidelity Investments began applying a quarterly administrative fee of $3.75 to each participant account in the Retirement Savings Plan to offset expenses incurred in providing record-keeping and invoicing services.
- Received a gift of $15,000 for its Assistance Program from its eight outgoing directors. This first "class gift" will help fund the BOP's CREDO program, which provides pastoral leadership and vocational development programs to groups of pastors.
- Welcomed the Rev. John McFayden as its new vice-president for church relations, succeeding the Rev. William R. Forbes, who died last year. McFayden came to the board after serving as pastor of First Presbyterian Church of Arlington Heights, Ill., near Chicago.