Board of Pensions continues healthcare conversation
SPRINGFIELD -- The IGRC Board of Pensions met Nov. 13 to continue the conversation on health care for our active pastors. We are not actively contemplating health care changes for our Medicare participants. The Board reviewed the current costs of our plan as well as the continuing escalations of our costs. Our initial estimates put the local church cost of the continuing the current health care plan into 2014 at approximately $20,000 per pastor -- up from the current annual cost of $17,500.
The election has brought more certainty as to the implementation of health care reform. Health insurance exchanges should be open by the beginning of 2014. These exchanges will be offering health insurance that is more affordable than our current plan. In addition over half of our pastors would be eligible to receive tax credits from the federal government that would further subsidize the cost of health insurance.
The Board had several reactions to this information. There was a consensus that our churches simply cannot afford health care costs of approximately $20,000 per pastor. If we were to continue maintaining a plan, we would have to implement plan changes such as high deductibles. We quickly realized that that these changes would make our plan fairly similar to those offered through the exchanges with one unacceptable problem. Our plan would be more expensive to maintain than participating in the exchanges because of the additional health risks and cost inherent in our relatively old group.
The Board also expressed concern for treating pastors as equally as possible. This concern needs to be balanced with providing pastors as much individual choice as possible in the level of insurance coverage they might prefer.
Health Reimbursement Accounts (HRAs) were discussed in detail as a possible solution. HRAs are funded by employer (not employee/pastor) contributions. HRA funds can be used to pay for health insurance, co-payments, deductibles and other medical expenses. Depending upon plan design HRAs can be established so that unused amounts in an employee's account carry forward for use in future years. Employees with low health costs could accumulate substantial balances for future health costs.
We understand that any plan changes create new winners and losers. Our lowest paid pastors, clergy couples, and clergy whose spouses have inexpensive family insurance would likely be the largest benefactors if we were to adopt these changes. The lowest paid pastors would receive the largest tax credits to subsidize their health care costs. It is possible that each clergy in a clergy couple would receive a full HRA contribution, if both are currently full-time and policy-holders in the current health insurance plan. Employer insurance from spouses would reduce the costs for their family.
Our highest paid pastors would not receive government subsidies in the form of tax credits. While there are no subsidies for this group, we anticipate that the cost of insurance still would provide substantial savings. We believe these pastors are positioned to best afford increased costs and if they cannot, we believe that our larger churches that employ these pastors can afford to share their cost savings with their pastors.
The Board believes that the health exchanges combined with a Conference sponsored HRA plan have the potential to provide the opportunity to provide a very attractive package. The Board also realizes this would be a substantial change for the Conference. Therefore, we did not take action with respect to the health care plan. We are not scheduled to meet again until February.
In the meantime we will continue to explore the more technical details of providing and administering an HRA plan. We will continue to explore the practical aspects of plan design and we need to consider what the proper annual contribution to each HRA might be. We will continue to monitor developments. We will seek input from IGRC lay and clergy members on several fronts. We will develop a resolution with our recommendations for Annual Conference. Our hope is that we will be able to approve the plan to be included in this resolution at our February meeting.
(David Hood is a member of Champaign Faith UMC, Iroquois River District, and serves the IGRC as chair of the Conference Board of Pensions and Health Benefits)