Facts and Possibilities
Pat Haines, Senior Vice President, Benefits
Todd Ingves, Director, Information Management
Objectives
• Serving MORE
• Serving BETTER
• Serving the CHURCH
2
The Plan NOW
• Benefits
• Funding
3
Income Security: Retirement
• Defined Benefit Pension Plan
•
•
•
•
Credit accrual
Experience apportionments
Asset based
11% dues
4
Income Protection for Members and
Survivors: Death and Disability
• Continued medical coverage and Pension
Plan credit accrual during disability – no cost
to employer
• Education benefits for dependent children
under age 25
• Asset based
• 1% dues
5
Asset-Based Funding
Employing Organization
12% Dues
Pension Plan
11%
Death & Disability
1%
2014
Short-Term
Investments
Pension, Death & Disability
Benefits Paid to Members
Board of Pensions
Balanced Investment
Portfolio
6
Dues Paid
$75 million
Investment
Earnings
$448 million
Benefits Paid
$344 million
In Sickness and In Health:
Medical Plan
• PPO + Pharmacy
• National networks: Blue Cross Blue Shield,
Catamaran and Cigna Behavioral Health
• Member cost sharing through income-based
copayments and deductibles
• Emphasis on wellness and prevention:
7
The Economics of Healthcare
•
•
•
•
•
•
Self-funded
Pay-as-you-go
Inherent volatility
1% of the population = 30% of the expense
Cost contributors: Lifestyle choices, age
23% / 24.5% dues, depending on family status
8
Pay-As-You-Go Funding
Employing Organization
23% / 24.5% Medical Plan
Dues
2014
Revenue
$179.6 million
Medical Benefits Paid
for
Members
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Benefits Paid
$180.8 million
Supplemental and Optional Benefits
•
•
•
•
Supplemental Death and Disability
Dental
Long-Term Care
Retirement Savings Plan
10
Actuarial Forecasting: Art and
Science
• Key factors
• Revenue: enrollment; salary increases;
investment return
• Expenses: enrollment; third-party costs;
compliance; plan design; TREND
11
2015 – 2017 Forecast (October 2014)
(in millions; rounded)
2015
2016
2017
Revenue
$187.5
$185.5
$183.4
Expenses
$189.8
$196.8
$203.8
Balance
($2.3)
($11.3)
($20.4)
Prior
Reserve
$52.5
$50.2
$38.9
$50.2
(26.7%)
$38.9
(19.9%)
$18.5
(9.1%)
Remaining
Reserve
2016 - 2017 Forecast (March, 2015)
(in millions; rounded)
2016
2017
Revenue
$181.4
$177.8
Expenses
$184.1
$188.6
Balance
($2.7)
($10.8)
Prior
Reserve
Remaining
Reserve
$61.1
$58.4
$58.4
(31.7%)
$47.5
(25.2%)
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Demographics
Who Can Participate?
• Called and installed teaching elders are
mandated
• All other church workers must work at least 20
hours a week in an eligible church service
• Includes non-mandated teaching elders and
lay workers
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Who Actually Participates?
50%
33%
16%
5,600
1,700
MANDATED
TEACHING ELDER
NON-MANDATED
TEACHING ELDER
3,700
LAY
Mandated Teaching Elders
• 5,600 members at 4,700
employing organizations
• All serving at local
churches
Average age 52
17.5 years of service
Non-mandated Teaching Elders
• 1,700 members serving
1,400 employing
organizations
• Approximately half are
serving local churches and
half serving agencies/mid
councils/other employers
Average age 55
18 years of service
Lay Employees
• 3,700 members (36% nonexempt, 64% exempt)
serving 1,100 employing
organizations
• 62% serving churches, 20%
serving agencies
Average age 51
10.5 years of service
Employing Organizations
90%
Employers
79%
Members
7%
Employers
LOCAL
CHURCH
2%
Employers
>1%
Employers
8%
5%
8%
Members
Members
Members
MID
COUNCIL
AGENCY
OTHER
EMPLOYER
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Congregations with Plan Members
3700
Churches
1.1
1100
Average
Members
Churches
1.7
Average
Members
CONGREGATION SIZE
250 or less
CONGREGATION SIZE
Between 251 and 500
700
Churches
4.1
Average
Members
CONGREGATION SIZE
501 or more
Churches and Employing Organizations
75%
For churches
and employing
organizations
covering
members in the
Traditional
Medical Plan
20%
3%
1%
1
MEMBER
22
2-5
MEMBERS
6 - 10
MEMBERS
More than 10
MEMBERS
Demographics
Church
Affiliated
Organizations
Mandated
Small
Churches
Teaching
Elders
NonMandated
Teaching
Elders
Lay
Members
Agencies
Large
Churches
Mid
Councils
Medical Plan Challenges
Medical Claims Cost Trend
10%
8.9%
9%
8%
7%
6.4%
7.1%
6.7%
6%
Linear Trend
5%
3.8%
4%
3.4%
3%
2%
1%
0%
2009
2010
2011
2012
Claims Cost Trend
2013
2014
Cost Drivers
•
•
•
•
Demographics
Chronic conditions
High-cost claimants
Prescription drugs
Chronic Conditions
6.8%
DIABETES
21%
HYPERTENSION
(High Blood Pressure)
21%
HYPERLIPIDEMIA
(High Cholesterol)
"The only way to keep your health is to eat what you don’t want, drink
what you don’t like, and do what you’d druther not.”- Mark Twain
High Cost Claimants
1% of Medical Plan population
responsible for 30% of Plan
costs
Conditions include cancer,
musculoskeletal and heart
disease
Often complex cases with
multiple co-morbidities
20% repeat rate over three-year
period
Prescription Drugs
• Specialty drugs are less than 1% of
prescriptions but account for 33% of drug
costs
• Includes treatments for cancer, Hepatitis C,
and rare conditions
• Specialty cost trends are significant and show
no signs of abating
• Generic inflation also a growing concern
Cost Controls
•
•
•
•
Vendor contracting
Call to Health initiative
High-cost claimant case review
Stop loss insurance
Challenges
• Managing rising
medical costs
• Keeping up with
changing healthcare
landscape
• Providing meaningful
benefits at
reasonable costs
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Stability and Transition
2016: Stability and Transition
• Board actions
• March
• Apportionment
• Disability reserves
• Disability cost of living increase
• June
• Medical dues
• Alternate dues method
33
2016 Dues Methods
Traditional Dues Method 2015/2016
Alternate Dues Method 2016
Medical
Medical
Member Only
Family
23%
24.5%
No Coverage
Member Only
Mbr. and Partner
Mbr. and Child
Member and
Family
2016 ABP Rates
Pension
11%
Pension
11%
D&D
1%
D&D
1%
Mandated, Non-mandated, Lay
Non-mandated, Lay
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Your Charge: Possibilities
• Reminders
•
•
•
•
Overall objective of Board of Pensions
Covenant with teaching elders
Context of facts and values
Wide range of benefits
“Start by doing what's necessary; then do what's possible; and
suddenly you are doing the impossible." - St. Francis of Assisi
"The possibilities are numerous once we decide to act and not
react." - George Bernard Shaw
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