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Pension board summarizes conference retirement plans

A UMNS photo courtesy of the Board of Pensions and Health Benefits All conferences have health care benefits for retirees, but plans vary widely among conferences.

June 22, 2006

A UMNS Report
By Neill Caldwell*

The United Methodist Church’s 2000 legislative assembly directed its Board of Pension and Health Benefits to gather information from the 63 annual conferences about retiree health care issues and their pension plans.

During the agency’s examination, it found that plans vary widely from conference to conference, but that all conferences have access to health care benefits for retirees. Some conferences fund plans for staff and local church employees as well as clergy. Most have some level of cost sharing by participants in the plan, and some conferences offer a prescription drug program, or vision or dental benefits. Some conferences have been forced to stop paying into retiree benefits plans entirely.

In 2003, the board provided a “Post-retirement Medical Programs Preliminary Report” that gives a summary and analysis of the plan provisions as reported by the annual conferences.

The report highlights access to medical benefits, clergy and lay employee eligibility and provisions for retiree benefits for individuals over 65 years old.

The analysis:

Access to retiree medical benefits

• Most conferences incorporate a general requirement that the participant be eligible to retire under the provisions of the applicable pension plan.
• Many conferences have moved toward a specific requirement of a minimum amount of conference service for eligibility so that they are not assuming liability based on service in other conferences.

Eligibility for clergy

• All conferences provide access to retiree medical benefits for clergy.
• The access is available from retirement to death.
• Most conferences provide access to the eligible spouse.
• Virtually all conferences provide access to the surviving spouse.
• General eligibility is usually tied to eligibility under the Ministerial Pension Plan, therefore, the normal eligibility is age 65 or 40 years of service.
• Most conferences also have an early retirement option based upon “age-and-service” criteria.

Eligibility for lay employees

• Most conferences provide access to retiree medical benefits for lay employees of the conference.
• Some conferences provide access to retiree medical benefits for lay employees of the local churches.
• The access for the lay employee is generally available from retirement to death.
• Most conferences do provide access to the eligible spouse of a lay employee.
• Many conferences do provide access to the surviving spouse of a lay employee.
• General eligibility is usually tied to eligibility under the Cumulative Pension Benefit Fund, therefore, normal eligibility is usually age 62 with 10 years of service.

Plan provisions for pre-65 retiree medical benefits

• Usually, pre-65 retiree medical benefits are provided on the basis of the active medical plan.
• Benefits usually include both medical and prescription drug coverage.
• Benefits may include dental, vision and/or life insurance coverage.
• Virtually all conferences provide active and pre-65 retiree medical coverage through PPO programs. There are still seven conferences that offer benefits through a pure indemnity approach, although two of those conferences have other options available. There are five conferences that offer benefits through HMO arrangements, although three of those conferences have other options available.

Plan provisions for post-65 retiree medical benefits

• Post-65 retiree medical benefits are provided through two broad methodologies: Medicare Coordination and Medicare Supplement.
• Benefits usually include medical and prescription drug coverage.
• A few conferences also provide dental, vision and/or life insurance coverage.
• Under the Medicare Coordination approach, Medicare is the primary provider and the benefits are coordinated with those available under the active medical plan.
• The Medicare Coordination methods employed by the conferences include standard coordination of benefits, exclusion and carve-out approaches.
• Under the Medicare Supplement approach, the conference provides benefits above and beyond those available from Medicare through the purchase of insurance protection.
• Under the Medicare Supplement approach, Medicare is the primary provider and the benefits are for coverage above that available from Medicare.
• The Medicare Supplement methods employed by the conferences include supplemental insurance products, HMO and PPO risk-based products and Medigap products.

Cost-sharing issues

• Cost-sharing provisions vary greatly among the conferences.
• The most generous plans provide fully paid premiums for clergy and spouse after one year of service with the conference.
• Some conferences provide access to retiree medical benefits but require that the retirees bear the full cost of the coverage.
• Most conferences fall somewhere between providing access to benefits but requiring some payment by retirees.
• Clergy generally pay a lower percentage of total cost compared to lay employees, although some conferences have the same cost-sharing arrangements for clergy and lay employees.
• Most conferences do not pay for benefits before age 62.
• Some conferences have eliminated pre-65 coverage as a conference benefit.
• Many conferences base the cost-sharing arrangements on post-65 coverage and require the retiree to pay any amount above the base level for pre-65 coverage.
• Most conferences with a cost-sharing approach tie the actual amount to service; both conference service and denominational service are employed.

*Caldwell is a freelance writer based in High Point, N.C.

News media contact: Linda Green, Nashville, Tenn., (615) 742-5470 or newsdesk@umcom.org.