Annual Conference delegates to vote May 29 -- Changes proposed in retiree health benefits
(Part 3 of a series)
By Holly McCray
Oklahoma’s retired clergy health benefits plan will undergo major change if Annual Conference delegates in May approve a proposal from the Board of Pension & Health Benefits (BOPHB).
If the new plan is adopted, retiree coverage will move from the Conference-sponsored Medicare supplement plan to a system where a retiree personally selects a plan that best fits that person’s health needs. The participant will pay premiums to that plan carrier, and the Conference will provide funding support directly to the retiree through a Health Reimbursement Account (HRA).
Effective date for the plan is Jan. 1, 2015.
Savings could top $1 million
This proposal is expected both to generate crucial savings of more than $1 million in Apportionment funding and to reduce insurance costs for the majority of retirees.
This is the second consecutive Annual Conference to consider key restructuring of health benefits for Oklahoma’s clergy, as U.S. medical costs continue increasing. At the 2013 meeting, the benefits billing for active clergy saw changes.
About 475 qualified retirees are enrolled at this time in the Conference Medicare Supplement Plan. This includes clergy, their spouses, and lay employees.
That number is predicted to increase by more than 200 people in 10 years.
Commitment to support retirees
Throughout months of meetings, Conference financial leaders have spoken of the faithful, covenant service of Oklahoma’s clergy and the desire to continue helping meet their health needs in retirement.
But leaders also have used the term "sticker shock" as they examined rising costs of healthcare as a stewardship issue.
For current retirees, Medicare is the primary plan, and the Conference provides supplemental insurance through Hartford. A prescription drug component is included.
• In 2013, the budget totaled $2,448,000 for the Retired Clergy Health Fund, part of the Apportionment. That amount this year is $2,497,000.
If the proposal for 2015 is approved, that apportioned amount will drop to $1.3 million.
• Since 2010, the Conference Health Benefits Plan — for both active and retired participants — has seen annual increases of 5.9 percent in medical claims and 17.6 percent in prescription claims, according to a BOPHB report in November 2013.
• Additionally, the board has learned from an actuarial study, a 2012 assessment, that the existing retiree medical plan has a liability of almost $127 million.
Chairperson Mark Commons, of Bartlesville, said the United Methodist Book of Discipline requires actuarial studies be done to determine future liability. He is a certified public accountant and member of East Cross UMC.
"We’re in a position where we now know the program as it exists today is not sustainable," he said. "What can we do to reduce the liability of the Conference, yet continue to provide our retirees a benefit that is sustainable?"
The board formed a task force, led by Pastor Kyle Kiner of Henryetta, with membership that included a balance of active and retired clergy as well as laypeople.
Commons said, "We had a lot of discussion, on who should be eligible, pro-rating years of service to the Conference," and more.
Knowledge was gained from connections with other annual conferences. Commons said Kansas provides no health benefits to its retirees. Illinois Great River Conference has ended coverage for retired clergy and is proposing to end it for active clergy. Illinois proposes to increase the minimum compensation rate and direct clergy to government healthcare exchanges.
Board selects One Exchange
However, the denomination’s General Board of Pension and Health Benefits has developed a relationship with One Exchange, a large Medicare exchange firm. More than 20 annual conferences utilize this exchange.
Commons said those One Exchange partnerships received affirmation from other conferences’ leaders, according to Brian Bakeman, Oklahoma Conference chief benefits officer and treasurer, and Stephen Mitchell, director of Benefits/Personnel.
Retirees choose among options
One Exchange offers plans from Blue Cross Blue Shield, Humana, Aetna, AARP, and more. One of its newest partners is IBM.
In March, the Oklahoma board agreed with the task force proposal to partner with One Exchange for retiree health needs. That is a key piece of BOPHB Report No. 3 that awaits Annual Conference action.
"We think we’ve come up with a good solution that continues to show care and compassion for our retirees, and also is good for the Conference as a whole, because it will reduce our expenses," said Commons. "Hopefully by doing that, it’s a much more viable benefit to maintain well into the future."
The Oklahoma Conference retirees form "a relatively small population when it comes to an insurance group," he explained, " and as a result it doesn’t take many large claims to impact the whole population. We’re migrating over to an exchange able to spread their costs over a much larger group. That generally translates into lower costs."
Here’s an abbreviated description of the proposed process for retirees.
1) You will receive a phone call from a licensed benefit adviser with One Exchange. That caller assists you in analyzing supplemental insurance plans, selecting one, and enrolling with the carrier. Spouses may choose to enroll in a different plan.
Costs and types of coverage range among plans. Some include options for prescription drug, dental, and vision coverages.
The enrollment period will be October-December 2014.
Prepare in advance for the phone call: Make a list of any medications you take, and learn which insurance company plans your doctor accepts.
2) After you enroll, One Exchange will open a Health Reimbursement Account in your name. The Conference will deposit a monthly stipend to that account, to help subsidize the supplemental insurance and other medical expenses.
Based on years of service in this Conference, each participant will receive up to $2,400 per year in the HRA.
For a retired clergy and spouse, the maximum per year will be $4,800. The amount can be shared between spouses. Unused funds roll over annually and remain in your HRA account.
3) Beginning in January, you will receive a monthly premium bill from the insurance company you chose. Premiums are not deducted by the Conference from your pension. You send premium payments directly to the insurance company.
4) You submit your expenses to One Exchange, which will reimburse you from the Conference funds in your HRA.
5) One Exchange advisers will provide year-round support to retirees. The Conference benefits staff will not be involved in the process.
Commons said the One Exchange call center staff is based in Utah and trained in United Methodist systems.
"They are on salary; they do not get commission," he said. "There is no benefit to them for steering you to one policy over another. Their whole goal is that you be satisfied with your decision."
More information: www.okumc.org/benefits.
Coming in the next issue: New People New Places
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