UMC Clergy, Conferences, and Health Reform General Board of Church and Society Health Organizers Call May 10, 2013 Jackson H. Day, D. Min, MPH, Chair Board of Pensions and Health Benefits Baltimore-Washington Conference Status Quo (Baltimore-Washington Conf.) • Group Health Plan – Healthflex – is mandatory for appointed clergy plus conference staff and elective for others (i.e. congregational lay employees). • Sponsored by Conferences and paid for by Congregations and Active Clergy or Conference and Retired Clergy. 2 Affordable Care Act Overview (From 40,000 Feet) Effective January 1, 2014 • For the poor: Expanded Medicaid up to 135% of Federal Poverty Level • For the employed: Health Insurance Marketplaces with tax subsidy up to 400% of Federal Poverty Level (In 2104 = $97,815 for family of four, $47,401 for individual) • For employers providing insurance currently: penalty for stopping insurance if 50 or more employees • For employees currently insured by employer: must continue with employer plan if cost for individual plan is less than 9.5% of household income. Immediate Impact to HealthFlex • BWC Healthflex meets all ACA tests – Does your Conference Plan? - Affordability Test – the single participant rate is less than 9.5% of household income. (current rate is $76/month or $912/year) - Minimum Value Test – BW Conference current plan is considered a “Cadillac Plan” and far exceeds the minimum value required - Since HealthFlex is mandatory for our ¾ and Full-time churches, our clergy will NOT be eligible for going to the Marketplace for health insurance in 2014 4 2014: The Road Not Taken • Our Board had to ask: Would it make sense starting Jan 1, 2014 to introduce the Health Insurance Marketplaces into our healthcare coverage for some or all of our active clergy? • The General Board and Annual Conference Boards around US asked the same question. • To my knowledge, all have chosen the status quo for 2014 • The reason: There are still too many unknowns to make a decision. 5 Marketplace Notices • HHS wants there to be maximum exposure to knowledge of the Health Insurance Marketplaces. • Each local church will need to provide notice to their pastor and staff about the Marketplace/Exchanges - Deadline has been slipping. Latest is October 1, 2013 - HHS will provide guidance on how to format the notice - BWC Board of Pensions will provide churches with a cover letter whose purpose is to ensure that everyone knows that the mandatory group policy will continue in 2014 and clergy are not eligible for the health insurance marketplaces. - All clergy will also receive a copy of this template to ensure notice is given. 6 Issue: Who is the Employer? • “God” may be theologically correct, but it doesn’t work for the IRS. • If Conference, current plan is large employer and cannot be cancelled without penalty. • If Local Congregation, some but not all pastors could be eligible for health insurance marketplace at subsidized rate. • Since congregation provides W2, consensus is moving toward congregation as employer, but this is by no means settled since UMC Conferences have hire and fire responsibility. Issue: Many Conferences Have Multiple Marketplaces • Health Insurance Marketplaces are state-based. - BW Conference clergy live in MD and DC (state-run), WV (federal-run), and PA (blend). - Some Insurance Marketplaces will have a rich choice of plans, others will not. - Differing Marketplace options must be reviewed when considering abolishing a conference-wide plan in favor of plans that are better for some than others, based on state of residence. Issue: Can We Preserve Equity in Appointments? • Currently BW Conference requires the same premium from congregations regardless of clergy age, family size or state of residence. • This permits the appointment process to focus on congregation’s needs and pastor’s skills, not health insurance. • Leaving health insurance up to the pastor and congregation could change this and create harmful disparities to both pastors and congregations in the appointive process. • If conference collects funds from congregations and dispenses to pastors for their own health insurance, there are unresolved tax implications. 9 2015 Issue: HealthFlex Changes Starting January 2015 GBOPHB Will no longer offer B500 plan (BWC Status Quo) administered by United Healthcare Options include: 2014 B500 2015 2016 B750 B1000 CDHP B1000 CDHP CDHP – Consumer Driven Healthcare Plan We will see more emphasis on consumer responsibility in making health expenditure decisions, prompting discussion on who actually makes these decisions. BW Conference Board of Pensioins and Health Benefits has a taskforce that is studying all options for 2015 10 2015 Issue: Can Conferences Retain a Group Plan Option? • The more traditional group plans may be a better option for highly paid clergy, clergy who cannot retain their doctors in a new plan, and clergy who live in states with a limited marketplace. • But group plans have depended on mandatory participation to keep their rates low by avoiding “adverse selection.” • Can a group plan be maintained on a voluntary basis without costs becoming prohibitive? Theoretical Options: 1 Continued Mandatory Group Plan • Advantages - continued control over health insurance program - continued employer input over wellness programs • Disadvantages - may be more costly to some or all congregations and clergy - may incur tax penalty if deemed a “cadillac plan” - congregations and/or clergy may attempt to break out and go to Marketplaces on own, prompting sanctions from conference or abandonment of group plan. Theoretical Option 2: Conference abandons health coverage • Permitted to some extent by 2012 Discipline, ¶639 - Must continue to provide administrative support - Must recommend appropriate and adequate level of Church financial support - Must continue to provide health and wellness programs to fulltime clergy and lay employees • Clergy then seek individual health insurance plans through Health Insurance Marketplaces and receive some level of congregational reimbursement as arranged with congregation at compensation-fixing time. Theoretical Option 3: Conference mandates Individual Plans • Conference exercises Disciplinary responsibilities as identified in Option 2. • Conference mandates that clergy will obtain individual health policies at a certain level and congregations will reimburse at a certain level • Conference standardizes congregational reimbursement level so as to facilitate ease of appointment transfers. • Conference does not handle health insurance funds Theoretical Option 4: Conference Collects and Funds Plans • Standardized Congregational Contribution identified in Option 3 is collected into a Conference-wide funding pool from which reimbursements are made to individual clergy for their payments for health insurance premiums. • This funding arrangement may or may not be a taxfree Health Reimbursement Account or Health Savings Account. Theoretical Option 5: Hybrid -Continued Group Plan with Higher Rates • Continue to offer a Group Plan, but make it optional. • Raise the participant rates to enable clergy under 400% FPL household income to qualify for insurance in the Marketplace and take advantage of the subsidies • Provide all clergy with a standard reimbursement paid by the church to cover the increased participant rates and any tax implications • Best guess is that “half” of clergy will opt into the Marketplace to take advantage of the subsidies which will result in a personal savings with “similar” coverage • Conference would pay a 10-15% higher Group Plan rate since the plan is not mandatory, but there are “half” the participants to cover. The standardized cost per church direct billing is reduced. Navigators • The Health Insurance Marketplaces will offer a large variety of choices of health insurance plan. • Many will find this confusing and overwhelming. Health Reform provides for “navigators” to help guide consumers through the process. • Some states have already confirmed grants to agencies to provide Navigators throughout the State. Maryland has awarded 6 grants, and each grantee has several subgrants. • Navigators will be provided through federal grants in States with federal or partnership Health Insurance Marketplaces. HHS issued a Request for Proposals on April 9 for these grants, and interested groups have a deadline of June 7 for response. • . Information Currently Pending Which Will Impact Decisions • Projected rates for continuing mandatory or voluntary group plans in 2015 and beyond • Rates for Individual Plans under Health Marketplaces • Impact of subsidies on total costs • Tax status of Conference-sponsored HRA, HAS, or similar arrangements. • Employment and source of compensation of Conference Staff as “Navigators” to assist clergy in making individual decisions in health insurance marketplace. Priorities for Clergy Health Insurance • BW Conference recognizes some change must be approved for calendar year 2015, and that there may be more than one option to consider. • What should the criteria be for selecting one option over another? • We are currently gathering inputs and invite interested persons anywhere to make suggestions!