08530
July 24, 2008
Board of Pensions lowers death benefit dues rates 25%
No Medical Plan dues increase for 2009
PHILADELPHIA — Death is no longer “optional” in the Presbyterian Church (U.S.A.).
At its July 17-19 meeting here, the denomination’s Board of Pensions (BOP) changed the name of its death benefits program from Optional Death Benefits to Supplemental Death Benefits and approved a number of changes that promises to make the program more appealing to plan members and their spouses.
Because actuarial experience of the program “has been extremely favorable,” BOP Pension Committee chair Donald Fleischer said, the board approved a 25 percent reduction in dues for the program and increased the maximum coverage level from $200,000 to $300,000 for plan members and from $50,000 to $100,000 for spouses.
“These program enhancements should make the option of supplementing the death protection already provided by the Benefits Plan more attractive to members,” said Pat Haines, senior vice-president of benefits.
A special one-time open enrollment period will be held this fall to allow current participants to take advantage of the new coverage levels, which go into effect Jan. 1, 2009.
The board voted to discontinue its “preventive incentive” pilot program, which offered $100 to plan members over 50 for taking preventive healthcare screenings — most commonly known as “annual physicals.”
Instead, beginning Jan. 1, 2009, all plan members and their spouses will qualify for preventive healthcare visits with a $0 co-pay. BOP officials hope the new non-age restricted program will significantly increase preventive healthcare visits.
“Our members have not been particularly diligent about utilizing preventive care benefits,” said Stew Beltz, the board’s director of welfare benefits design and funding. The preventive incentive pilot was prompted in 2005-2006 because until then only 23 percent of members were getting routine screenings.
Preventive incentive “moved the meter to 53 percent,” Beltz said “but even after expanding the pilot project in 2007-2008, routine exams are holding at about 50 percent.”
So, Beltz said, “We’ve reached the point where we need to do something differently to preserve this emphasis on preventive healthcare.”
BOP officials told the board they do not anticipate a Medical Plan dues increase in 2009 and probably not in 2010. At the end of 2007, the Medical Plan fund balance was “a healthy $77 million or 50.2 percent of plan liabilities,” reported the BOP’s medical plan actuarial John Cookson.
The board’s target reserve guideline is 20-33 percent. Even with anticipated losses of a little more than $30 million over the next three years — assuming no changes in benefits levels or dues — the Medical Plan reserves will still fall well within the target range, Haines said,
Employing organizations currently pay 31.5 percent of effective salary in dues — 19.5 percent for the Medical Plan and 12 percent for pension, disability and death benefits.
The board raised dues by 7.8 percent for its Affiliated Benefits Program, which provides for employing organizations to offer medical coverage only or medical coverage with death and disability coverage to employees in non-installed positions who work 20 hours a week or more.
The rate increase, effective Jan. 1, 2009, also affects early retirees but not Medicare Supplement program participants.
In other actions, the board:
- Increased its Transition-to-College grants from a range of $250-500 to $500-1,000. Grants are available to plan members with an adjusted gross income of less than $101,600 who have dependent children entering their freshman year of college.
- Eliminated the requirement that employees work a minimum of 20 hours a week in order to be eligible to participate in the BOP’s Retirement Savings Plan.
- Signed onto GlobalFit, a service that offers discount memberships at nearly 10,000 fitness clubs nationwide and some at-home exercise options.
- Voted to reapply for the Medicare Part D (prescription drug) Subsidy program of the federal government, which nets the board about $6 million annually, thus keeping its Medicare Supplement Program dues down.
- Learned that the board’s balanced investment portfolio decline in value by 6.8 percent in the first half of 2008, to $7.2 billion. Total return for the three, five and ten years ended June 30, 2008 were 7.2 percent, 9.7 percent and 6.1 percent, respectively.
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