From the Worldwide Faith News archives

Denomination must confront retiree health costs, officials say

From NewsDesk <NewsDesk@UMCOM.UMC.ORG>
Date 31 Jan 2000 14:57:05

Jan. 31, 2000   News media contact: Tim Tanton·(615)742-5470·Nashville,
Tenn.  10-71B{038}

NOTE: This report is accompanied by two sidebars, UMNS stories #039 and 040.

SCOTTSDALE, Ariz. (UMNS) - Funding retiree health benefits is the No. 1
benefits issue facing the United Methodist Church, yet most of the
denomination's annual conferences appear to be doing nothing to address the
need, according to church officials.

The retiree medical liability facing the church's annual conferences could
be as high as $1.8 billion, said Bob Preusch, a staff executive with the
United Methodist Board of Pension and Health Benefits.

"The liability of the denomination is an enormous one, and it's growing very
rapidly," Preusch told governing members of the board during their Jan.
27-28 meeting. "Our participants are at risk of losing an important

Annual conferences are responsible for providing health care coverage for
their retired clergy members and other employees. Funding that coverage was
identified by the board's Benefits 2000 Task Force in 1998 as the top
benefits concern for the denomination. The report stated that without a
well-planned projection of the liabilities, a change in the makeup of the
benefits or some sort of cost-sharing with retirees, "the future holds the
potential for financial catastrophe at all levels of the denomination."

The board amended a piece of legislation that it is presenting to General
Conference in Cleveland to include a request that the denomination's top
lawmaking body direct the agency to develop a report on retiree medical
benefits. General Conference meets May 2-12. If the resolution is approved,
the board would give its report at the 2004 General Conference.

The board is hoping that the General Conference, which meets May 2-12 in
Cleveland, will direct the agency to develop a report on retiree medical
benefits and present its findings at the 2004 meeting of the church's
lawmaking body. However, the board cannot propose that in a resolution
because the deadline for submitting legislation to the 2000 General
Conference has already passed. Facing that technicality, board members
created wording that General Conference delegates could propose as an
amendment to existing legislation from the agency.

The amendment would enable the board to collect the information it needs
from the annual conferences regarding retiree medical obligations and report
back to General Conference.

Board members emphasized the importance of addressing the problem now,
instead of waiting another four years to bring up the issue - with the
possible result that the board wouldn't report back to General Conference
until 2008. Time is running out, noted Joel Huffman of Phoenix, a member of
the board's Health Benefits Committee.

The board has made all of the annual conferences aware that the issue
exists, Preusch said. About 30 percent of the conferences are doing research
or taking other steps in addressing it, he said. 

"However, that still leaves an uncomfortably large number of conferences
that have not really begun to take an active step in addressing the issue,"
he said.

Several of the conferences are looking to the board for leadership and
assistance in determining what they should do, he said.

During a Nov. 8 meeting in Chicago, a group of board members and staff
looked at the problem and developed a communications strategy for making
people aware of the issue at all levels of the denomination. That would
include directly communicating with bishops and their cabinets, conference
benefits officers and treasurers, chairpeople of conference pension boards
and councils on finance and administration, and participants at regional
benefits conferences.

The board wants to provide models that conferences can use in determining
their liability and dealing with the issue. The agency also needs to
quantify the denomination's liability, Preusch said.

"There is also a significant concern that ... at least some conferences
might be closer to financial difficulty in this regard than they even
realize, so we want to identify those conferences that might be facing
potential insolvency or financial hardship maybe as quickly as the next four
to six years," he said.

In an interview, top staff executive Barbara Boigegrain noted that the
Benefits 2000 Task Force report said there was no point in talking about
retiree benefits without discussing retiree health coverage. "You don't buy
a house without thinking about how you're going to pay for it," she said.

"Retiree health doesn't have to be a crisis," she said. A solution "is very
definitely doable if we all start planning for it now."

# # #

United Methodist News Service
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