Board Invites Church To Review Considerations for Changes to Medical Dues and Provide Feedback
Three dues proposals are being considered to address the financial challenges before the Medical Plan of the Presbyterian Church (U.S.A.). Each alternative takes a different approach to paying for Traditional Program coverage. The Board of Pensions is communicating the options being considered in multiple ways: first, through The Board Bulletin; second, through the two Regional Benefits Consultations in April; and third, through healthcare.pensions.org, the Board's new website dedicated to healthcare.
The Board invites your feedback on the dues options being considered. As always, plan members can contact the Board by email at email@example.com or by phone at 800-773-7752 (800-PRESPLAN), and church leaders can contact their regional representatives. In addition, feedback can be given through the Board's new healthcare website, accessible from pensions.org. Although we cannot reply to all comments provided through the website, we will be reading them and providing the feedback to the Healthcare Committee of the Board of Directors, which will use it to help shape a final recommendation.
A significant portion of the Regional Benefits Consultations will be devoted to seeking and listening to feedback from the mid council personnel and others who attend. The Board will also use other, less formal ways of obtaining feedback from throughout the Church. This feedback will help determine which proposal provides the most balanced approach to meeting needs while maintaining the viability of the Medical Plan.
In developing a new proposal, the Board is committed to several key objectives:
- Maintain plan solvency.
- Uphold the foundational principle of community nature.
- Provide some flexibility (in the form of local decision making) to employing organizations that struggle to afford healthcare coverage for their employees.
The Board continues to work toward finding a medical dues solution that meets these objectives while heeding the heartfelt concerns of plan constituents.
In response to feedback that the Board should seek ways other than dues to raise revenue for the plan and reduce costs, the Board has proposed that the following plan changes, in addition to the dues options, be considered at the next Directors' meeting:
- Increase generic drug copays from $8 to $10 for up to a 30-day prescription.
- Increase the medical minimum participation basis from $40,000 in 2013 to $42,000 in 2014 and $44,000 in 2015.
- Add a health improvement feature designed to influence health- and healthcare cost-related behaviors, such as getting preventive care screenings. (In this proposal, completing certain health actions in 2014 would result in lower deductibles for members and their families in 2015. The 2014 deductible will be 1.25 percent, as it is in 2013; members who complete health actions in 2014 would have a 1 percent deductible in 2015 while those who do not would have a 1.5 percent deductible.)
All of these changes, to be voted on by the Board of Directors in June, would take effect January 1, 2014.
Current Dues Approach
- For 2013, Medical Plan dues paid by churches and other employing organizations are 21 percent of effective salary. (Total dues are 33 percent, including Pension Plan dues of 11 percent and Death and Disability Plan dues of 1 percent.)
- For 2014, the plan actuary projected in October 2012 that the Medical Plan would face a revenue shortfall of $28 million and that dues would need to increase to 25 percent of effective salary if no changes were made to the current dues approach. Based on markedly improved medical claims experience in late 2012, however, the plan actuary presented a revised estimate of the shortfall at the March Board meeting of $12 million for 2014 and $42 million for 2015. This forecast puts the medical dues need at 23 percent in 2014 and 24.3 percent in 2015.
- Traditional Program members share responsibility for the cost of coverage for medical services through copays, deductibles, and copayments but do not contribute toward medical dues.
OPTIONS TO CONSIDER
IMPORTANT: The following figures are estimates based on financial and other information available as of March 2013; the figures will be finalized before the June Board meeting. For a side-by-side comparison of the three dues options, see the Considered Dues Models chart.
Option A (maintains current dues approach but increases dues percentage; dues fully paid by church or employing organization)
- For 2014, dues increase to 23 percent of effective salary; for 2015, dues are anticipated to rise to 24.3 percent of effective salary.
- The 23 percent dues would cover members, covered partners, and dependents under the Traditional Program.
- These dues must be fully paid by churches and other employing organizations for each member enrolled in the Traditional Program.
Option B (modifies original proposal)
- For 2014, dues are 21 percent of effective salary for members; for 2015, they rise to 22 percent of effective salary. Incremental flat dollar amounts are charged for dependent coverage.
- The 21 (22) percent dues would cover members.
- For 2014, the annual flat dollar amounts for covering dependents are expected to be: covered partner, $664; children, $534; family, $1,165. For 2015, the estimated amounts are still being determined.
- Member-only dues must be paid by churches and other employing organizations for each member enrolled in the Traditional Program. The church/employer may share with the member none, some, or all of the flat dollar amounts (with any presbytery standards applied).
- If a member opted to have his or her covered partner, children, or family covered under another healthcare plan (such as through a covered partner's employer), the member's employer would be responsible for paying medical dues of 21 percent. (Currently, there is no dues relief for the employer when dependents opt out of the Medical Plan.)
Option C (new approach)
- For 2014 dues for full family coverage, including members, covered partners, and dependents, increase to 23 percent of effective salary; dues for member-only coverage are 21 percent. (For 2015, dues for full family coverage increase to 25 percent of effective salary; dues for member-only coverage are 22 percent.)
- At the 23 percent dues level (25 percent for 2015), dues cover members, covered partners, and dependents under the Traditional Program.
- At the 21 percent dues level (22 percent for 2015), dues cover members only under the Traditional Program. These dues must be paid by churches and other employing organizations for each member enrolled in the Traditional Program.
- The employer can choose to share with the member none, some, or all of the 2 (3) percent difference between member-only dues and dues for full family coverage. (that is, 2 (3) percent of the member's effective salary). As shown in the chart below, at the proposed 2014 salary minimum of $42,000, the most an employer would contribute is $840 annually. At the 2014 salary maximum of $124,000, the most an employer would contribute is $2,480 annually.
(UP TO) 2 PERCENT MEMBER CONTRIBUTION TOWARD FAMILY COVERAGE Min Median Max ANNUALLY $0-840 $1,080 $2,480 MONTHLY $70 $90 $207
- If a member opted to have his or her covered partner, children, or family covered under another healthcare plan (such as a plan through a covered partner's employer), the employer would pay 21 percent of effective salary for medical dues in 2014. (Currently, there is no dues relief for the employer when dependents opt out of the Medical Plan.)
The Board is currently seeking feedback on the three dues options from throughout the Church. The Board will share with the Healthcare Committee both formal and informal feedback on the dues and other revenue-generation options under consideration, including from the RBCs. The Healthcare Committee will bring a dues recommendation to the full Board for a vote at its June 2013 meeting. If approved, the approach to addressing the Medical Plan's financial challenges would take effect January 1, 2014.