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Facts and Possibilities
Pat Haines, Senior Vice President, Benefits
Todd Ingves, Director, Information Management
2
Objectives
• Serving MORE• Serving BETTER• Serving the CHURCH
3
The Plan NOW
• Benefits• Funding
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Income Security: Retirement
• Defined Benefit Pension Plan• Credit accrual• Experience apportionments• Asset based• 11% dues
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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
6
Asset-Based Funding
Employing Organization12% Dues
Pension Plan11%
Death & Disability1 %
Short-TermInvestments
Pension, Death & Disability Benefits Paid to Members
Board of Pensions Balanced Investment
Portfolio
2014
Dues Paid$75 million
Investment Earnings$448 million
Benefits Paid$344 million
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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:
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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
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Pay-As-You-Go Funding
Employing Organization23% / 24.5% Medical Plan
Dues
Medical Benefits Paidfor
Members
2014
Revenue$179.6 million
Benefits Paid$180.8 million
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Supplemental and Optional Benefits
• Supplemental Death and Disability• Dental• Long-Term Care• Retirement Savings Plan
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Actuarial Forecasting: Art and Science
• Key factors• Revenue: enrollment; salary increases;
investment return• Expenses: enrollment; third-party costs;
compliance; plan design; TREND
2015 – 2017 Forecast (October 2014)(in millions; rounded)
2015 2016 2017Revenue $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
Remaining Reserve
$50.2(26.7%)
$38.9(19.9%)
$18.5(9.1%)
2016 - 2017 Forecast (March, 2015) (in millions; rounded)
2016 2017Revenue $181.4 $177.8
Expenses $184.1 $188.6
Balance ($2.7) ($10.8)
Prior Reserve
$61.1 $58.4
Remaining Reserve
$58.4(31.7%)
$47.5 (25.2%)
Demographics
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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
Who Actually Participates?
MANDATED TEACHING ELDER
NON-MANDATED TEACHING ELDER
LAY
50%
16%
33%
5,6001,700
3,700
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 5518 years of service
Lay Employees
• 3,700 members (36% non-exempt, 64% exempt) serving 1,100 employing organizations
• 62% serving churches, 20% serving agencies
Average age 51 10.5 years of service
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Employing Organizations
LOCAL CHURCH
OTHER EMPLOYER
MID COUNCIL
AGENCY
90%Employers
79%Members
7% Employers
8% Members
2%Employers
5%Members
>1%Employers
8%Members
Congregations with Plan Members
CONGREGATION SIZE250 or less
3700Churches
1.1 Average Members
1100Churches
1.7 Average Members
CONGREGATION SIZEBetween 251 and 500
CONGREGATION SIZE501 or more
700Churches
4.1Average Members
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Churches and Employing Organizations
75%
20%
3%1%
1MEMBER
2 - 5MEMBERS
6 - 10MEMBERS
More than 10MEMBERS
For churches and employing organizations covering members in the Traditional Medical Plan
Demographics
Small Churches
Large Churches
Lay Members
Mandated Teaching
EldersNon-
Mandated Teaching
Elders
Agencies
Church Affiliated
Organizations
Mid Councils
Medical Plan Challenges
Medical Claims Cost Trend
2009 2010 2011 2012 2013 20140%
1%
2%
3%
4%
5%
6%
7%
8%
9%
10%
6.4%6.7%
8.9%
3.8%
7.1%
3.4%
Claims Cost Trend
Linear Trend
Cost Drivers
• Demographics• Chronic conditions• High-cost claimants• Prescription drugs
Chronic Conditions
DIABETES HYPERTENSION(High Blood Pressure)
HYPERLIPIDEMIA(High Cholesterol)
6.8% 21%21%
"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
31
Challenges
• Managing rising medical costs
• Keeping up with changing healthcare landscape
• Providing meaningful benefits at reasonable costs
Stability and Transition
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2016: Stability and Transition
• Board actions• March
• Apportionment• Disability reserves• Disability cost of living increase
• June• Medical dues• Alternate dues method
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2016 Dues Methods
Medical Member Only 23%Family 24.5%
Pension11%
D&D1%
Traditional Dues Method 2015/2016
Mandated, Non-mandated, Lay
MedicalNo Coverage Member Only
2016 ABP RatesMbr. and PartnerMbr. and ChildMember and Family
Pension11%
D&D1%
Alternate Dues Method 2016
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