wfn.org | Agency prepares to canvass church on health care issues

[NewsDesk <NewsDesk@UMCOM.ORG>]

July 23, 2002   News media contact: Tim Tanton7(615)742-54707Nashville,
Tenn.  10-71B{309}

NOTE: For additional coverage of the United Methodist Board of Pension and
Health Benefits' meeting, see UMNS story #310.

CHICAGO (UMNS) - If you're an employee of the United Methodist Church, you
might have good health care benefits. Or you might have none at all.

Providing health care coverage for active and retired employees is becoming
increasingly difficult for the church's regional units, or annual
conferences. Costs are rising to the point where many conferences are
reducing their coverage, passing more costs on to participants or dropping
people from their plans altogether. Health care coverage topped the list of
concerns at many of the yearly conferences meetings in May and June.

"It is not a secret to anyone that health care costs are out of control, and
that isn't just within a conferences or the church, but within the nation,"
noted Barbara Boigegrain, top staff executive of the United Methodist Board
of Pension and Health Benefits. Fast-rising health care costs are driving
down the resources available for mission and ministry, potentially
jeopardizing what the church is about, she said.

In response, the board will hold focus groups around the United States this
fall to discuss plans for addressing the problem. The agency's Benefits 2004
Task Force has developed recommendations for providing comprehensive and
consistent health care coverage across the church. Those recommendations,
still very preliminary, dominated much of the discussion when the board's
directors met July 19-20.

"The Benefits 2004 Task Force recommended that the denomination provide
coverage, which includes core pension benefits for all clergy, pension
benefits for all full-time lay workers, and health care for both active and
retiree clergy," said Gale Whitson-Schmidt, board treasurer.

In 1999, a predecessor task force identified paying for retiree medical
benefits as the No. 1 benefits challenge facing the church, and since then
the board has broadened its focus to include active employees as well.

Currently, each of the church's 65 annual conferences is responsible for
providing coverage to its own active and retired employees. About 32
conferences, agencies and other church-related employers offer coverage
through the board's HealthFlex program. 

At the focus group meetings in September and October, board staff will meet
with active and retired clergy and lay people in the conferences, including
pastors, benefits officers and treasurers, as well as bishops. "It's a
listening process," said agency spokesman Michael Lee. "It's not us
delivering a plan for them to say yea or nay."

The comments gathered at those meetings will be used as the Benefits 2004
Task Force develops its proposal. In November, the full board will adopt a
final proposal that will go to the denomination's top lawmaking body, the
General Conference, in 2004.

Boigegrain said she has detected "real angst" about health care among
pastors and others in the conferences. The church can't keep talking about
pension benefits as if they are the only monetary issue that retirees face,
she noted. "You really can't talk about an adequate income at retirement ...
if you don't address the cost of health care."

During their meeting, board members and staff described a hodgepodge picture
of health care coverage in the church, with eligibility requirements varying
widely among the conferences. Clergy members can lose their benefits by
transferring from one conference to another, depending on where they move.
And lay employees, in some cases, have lost their benefits just by staying
where they are. 

For example, a woman who had served as a church secretary for 30 years lost
her benefits after her conference dropped lay coverage two years before her
retirement. She ended up selling her home and moving in with her children
because she had no benefits except Social Security, said board member Dan
O'Neill of Denver. "We find this is not in keeping with the values we hold
as a church."

Staff executive Lisa Schilling noted that conferences are requiring more
years of service for full benefits, and they are expecting participants to
pay more of the costs. Several conferences have discontinued lay coverage,
and one conference is phasing out all benefits, she said.

Using data from 46 conference reports, O'Neill said health care costs around
the denomination are rising 15 to 25 percent, while budgets are increasing 3
to 5 percent. 

An attempt to start a denominationwide plan called UMCare was terminated in
1992, after the United Methodist Judicial Council ruled that it violated the
church's constitution by taking too much authority from the annual
conferences. As the board develops a new plan, Boigegrain said the issues
that arose with UMCare will be taken into account. She believes that both
the board and the denomination are in a different place today than they were
10 years ago, and the agency does not want to be perceived as trying to take
on more authority. "We're trying to meet a need," she said.

The HealthFlex plan has focused on keeping rates stabilized for its
participants, and Boigegrain noted that a number of non-HealthFlex
conferences are paying much higher rates. 

Feeling the same pressures as the rest of the industry, HealthFlex is
expected to incur an $11.2 million loss for 2002, according to a report by
board member Joel Huffman of Phoenix. Plan sponsors will be told to expect
2003 rates to be revised upward by 5 percent to 10 percent, he said. The
revised rates will result in an average HealthFlex increase of 23 percent to
28 percent, he said. 

In other business, the board:
7	Approved creation of a "safe harbor 401(k) plan" that could be
offered to for-profit organizations with United Methodist affiliations. Such
a plan would enable for-profit subsidiaries of universities, hospitals,
nursing homes and so on to participate in a defined contributions plan
through the board. "This is important (as part of) a continuing effort to
look for opportunities to bring dollars into the general board to offset our
payouts to retirees," Lee said.
7	Heard a report from staff that the annual conferences are ahead of
schedule in funding their pre-1982 liability for coverage for retiree health
care. The denomination's goal is to have that liability fully funded by Dec.
31, 2021.
7	Heard an update from Boigegrain about the work of the Global Pension
Task Force, which is developing a model that conferences outside the United
States will be able to use to provide pension benefits to their clergy.
 
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United Methodist News Service
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