Board of Pensions and Health Benefits 2016 Pre-Conference April 30, 2016

Topics 1.Health Benefits 2.Disability Benefits 3.Benefit Reserves 4.Arrearages

33 1. Health Benefits

4 HealthFlex Exchange In 2017, our HealthFlex Plan becomes HealthFlex Exchange. The Current B1000 PPO plan will be one of six health plans that will be available for purchase. 4

5 Health Plan Rating System Plans are now sometimes identified by color, with the colors Bronze, Silver, Gold and Platinum referring to plans covering, respectively, approximately 60%, 70%, 80% and 90% of health care expenditures. 5

6 HealthFlex Exchange The new HealthFlex Plans will range from “Bronze” to “Gold” and participants will be able to match their needs to the policy they select. 6 HealthFlex Exchange RatingsGOLDSILVERBRONZE Current PlanCurrent B1000 New Plans

Health Accounts in New Plans The new plans offer tax-advantaged accounts Health Reimbursement Accounts – owned by employer Health Savings Account – owned by employee 7

HealthFlex Exchange Costs 8 BWC HealthFlex Pool Direct Contributions $840 per Congregation Clergy Participant Premiums Premium to plan option selected by Clergy HRA or HSA Participant Premium determined by plan option selected and clergy family status

9 HealthFlex Exchange RatingsGOLDSILVERBRONZE Current PlanCurrent B1000 New Plans Given a DC to Shop for HealthFlex Plan Direct Contribution (DC) is based on family status (DC is NOT based on the Plan Selected) Price of Plan$$$$$$$$$$$$$$$ - Minus DC$$$ = Participant Premium $$$ (SIMILAR to existing ) $$ (LOWER than existing ) $ (LOWEST) Shopping on the Exchange

HealthFlex Exchange Choices 10

HealthFlex Exchange Quality 11

12 Exchange Timeline Benefits orientation at Annual Conference June 1 st at 8:00 PM Additional orientation this Fall Annual Election Period is in Early November 12

13 2. Disability Benefits

Mental Illness Discrimination Annual Conference 2015 adopted resolution for submission to General Conference to eliminate discrimination against mental illness diagnoses in the case of long-term disability compensation for lay employees of the Conference In the spirit of this resolution, the Conference is paying an extra premium to provide lay employees with non-discriminatory disability compensation effective immediately. 1 st year’s premium is coming from Conference Board of Pensions funds. Action by General Conference affecting the whole denomination is pending at this time. 14

15 3. Benefit Reserves

16 Surplus Redirection Definition: Move surplus funds collected for a general purpose from one account to another account serving the same general purpose 16

17 Retiree Medical Purpose: Retiree Medical and Pension Actuarial Assessment (Discount Rate = 4.0%; Ongoing = 6.5%) Obligation1,284 retirees and spouses Needed per year$ 1.75 million per year Needed total$ 36.4 million (Ongoing $27.7M) On Hand$ 23.4 million Shortfall$ 13.0 million (Ongoing $4.4M) Current Apportionment$1.5 million per year 17

18 Pre-82 Surplus Purpose: Retiree Medical and Pension Actuarial Assessment Obligation347 retirees Needed$ 52.0 million On Hand$ 80.3 million Surplus$ 28.3 million 18

Pre-82 Surplus Redirection 19 $28.3 Million Surplus PRE-82 CRSP-DBRetiree Med $13.0 Million Shortfall RESERVES ANNUAL CONTRIBUTIONS $2,270,000 Direct Billing $1,500,000 Apportionments Active Clergy CURRENT PROCESS $28.3 Million Surplus PRE-82 CRSP-DBRetiree Med $13.0 Million Shortfall RESERVES ANNUAL CONTRIBUTIONS $2,300,000 Direct Billing $1,500,000 Apportionments Active Clergy 2017 BUDGET PROCESS $2,300,000 Surplus Redirection

20 4. Arrearages

Benefit Arrearage Trends 21 Total arrearages have been steady for 3 years after dramatic increases from 2010 to ( 2015 YE = $780K) 14 churches entered forbearance agreements in of 14 are no longer incurring new arrearages 2 of these 9 have completely paid off their old arrearage

Benefit Arrearages (As of 12/31/2015) Forbearance Churches ($463,000 Arrearage) Arrearage Increase = $29,000 or 7% Arrearage Increase = $92,000 or 27% Non-Forbearance Churches ($317,000 Arrearage) -14 congregations over 90 days in arrears in congregations were in arrears in Arrearage Increase = $35,000 or 12% Total Benefits Arrearage = $780,000 -Total Arrearage increased by $64,000 or 9% in Arrearage = $716, Arrearage = $779,000 22

We Are Thankful Active medical benefit options are expanding while costs are controlled Retiree medical benefits have a plan for becoming fully funded Reliance on apportionment funding of benefits is being diminished Benefit arrearages are showing improvement and stability 23

24 Thank You