Health benefits board returns funds
Kempton Group is the administrator for the Conference medical plan and the FSA and HRA plans. Online: www.kemptongroup.com. Forms, including direct deposit setup, are online at: www.okumc.org. Click on "Quick Links—Forms." The "OK to Wellness" newsletter, Winter 2007 edition, is mailed to people enrolled in the Oklahoma Conference Healthcare Benefits Plan.
$1,000 account created for each active participant
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By Holly McCray
Healthy financial status at year’s end translates into a windfall this new year for participants in the Conference medical insurance plan.
* That boost includes $1,000 for each active participant enrolled in the plan as of Dec. 1, 2006. On Jan. 1, that money was deposited in a new type of account—called a Health Reimbursement Arrangement (HRA)—to cover future medical expenses.
There’s more good news:
* If you are an active plan participant and have one dependent, $2,000 was banked in your HRA. Total deposit was $3,000 for a family (two dependents or more). These amounts also are based on Dec. 1 enrollment.
*Local churches are receiving refunds based on their 2006 health insurance apportionment contributions. For example, a local church that paid approximately $5,000 in 2006 is receiving a refund of $1,134.
* Prescription drugs cost less in 2007 for all participants, both active and retired. For example, a 30-day supply of a generic drug costs $5, compared to $10 in 2006.
* For retirees, monthly medical insurance premiums have been reduced 20 percent.
The Conference Board of Pension and Health Benefits recently approved these changes in the healthcare plan after reviewing the year-end reports for 2006. Chairman Bob Long announced the news to all clergy members at the January Orders Meeting.
"This truly is the gift of our self-funded plan," Rev. Long said. "We had a very positive year.
"One goal of a self-funded plan is that we collect or keep only the amount of money needed to fund everybody’s health care. We don’t make a profit. If we don’t spend it, then we are able to put it back into the pockets of the participants and the local churches."
Details appear in "OK to Wellness," a newsletter mailed by Jan Tofani to all participants in the Oklahoma Conference Healthcare Benefits Plan. Tofani is Conference Health Benefits director.
Reimbursements can now be requested from the new HRA accounts. Direct deposits can be set up to a personal bank account, Tofani noted.
In some ways, the new HRA account is similar to a Flexible Spending Account (FSA), she said. Like the FSA, an HRA is approved by the U.S. Internal Revenue Service and is a tax-favored benefit plan that reimburses employees for qualified medical care expenses that are not already reimbursed by an employer’s health plan.
However, HRAs are funded solely through employer contributions. FSAs are funded by the employee, through pre-tax payroll deductions.
Another difference: At year’s end, any unused FSA funds are not returned to the employee. "A unique feature of any HRA is the ability to roll over any unused amount at year’s end. The rollover dollars may be used for covered medical services in subsequent years," Tofani said.
Because the Conference contributes the HRA funds, any unused HRA balance is returned to the Conference—not the participant—if the person no longer is part of the Conference plan, she noted.
Tofani explained how the new accounts work for those participants who elected to make contributions to Flexible Spending Accounts. "Once your 2007 FSA funds have been depleted, then your HRA funds will be dispersed," she said.
Retirees ages 65 and older do not qualify for the HRAs because of their Medicare status, Tofani said. Instead, they are seeing savings in their monthly insurance premium costs. For example, the monthly premium for two-party coverage, where both are age 65 or older, dropped from $373 in 2006 to $298 this year.
Careful financial management across several years made possible all these cost savings, according to Long and Tofani.
"We now have three years of a track record with the self-funded program. It takes three years to have enough data to determine the trends," Long explained.
Tofani said, "In recent years, we’ve tweaked the medical benefits plan. We’ve changed the deduction, from $500 to $1,000; we made adjustments to the prescription drug plan. We shop around and compare prices. In so doing, we ended up with additional funds. We’ll still have sufficient reserve funds. We know how much our stop-loss provisions are."
Long said, "We have been able to rebuild our reserves. Now that we’ve replenished those, we are able to put the funds back in the pockets of the people. We know that $1,000 deductible has been a challenge, and we knew it would really ease the stress for people to be able to put enough money back to cover that for this year. That makes us very pleased.
"And with the new plan, if you don’t need it this year, it carries over to the next year."
Total monies voted by the benefits board: $136,956 for prescription drugs; $954,000 for establishing the HRA plan; and $954,000 for the refunds to churches.
Long noted, "Our board will continue to adjust to the changing realities of health care. The situation in America is constantly changing. We have to continually be changing with it, to make sure we keep a program that is solvent and keep quality health care for all of our participants."
The board also returned some funds in early 2006. That action refunded December 2005 premium costs to participants and local churches.
"We want people to have the money to spend on taking care of their health," Tofani said. "It’s good to work for an organization that really looks out for people. I don’t think these funding changes would likely happen in the secular world."
