CHICAGO (ELCA) -- The Church Council of the Evangelical Lutheran Church in America (ELCA) agreed to increase the church's contribution as part of a proposal to fully fund a program that helps retirees pay their health care premiums. Trustees of the ELCA Board of Pensions offered the five-point proposal to counter a growing unfunded obligation, mostly for retirees with predecessor church service.
The Church Council is the ELCA's board of directors and serves as the legislative authority of the church between churchwide assemblies. The council met here Nov. 15-17. Assemblies are held every other year; the next is Aug. 11-17, 2003, in Milwaukee.
The ELCA Board of Pensions provides health, retirement, disability and survivor benefits and related services for nearly 50,000 pastors, lay ministers and other church workers and their families, and nearly 11,000 congregations and other ELCA sponsoring organizations. The Board is based in Minneapolis. Three Lutheran churches merged to form the ELCA in 1988.
"Sharply increasing costs for retiree medical benefits," caused largely by rising costs for prescription medicine, and a closer look at trends in medical expenses showed that the nearly $6 million in the ELCA budget each year was not enough, David G. Adams, vice president for research and design, ELCA Board of Pensions, told the council. He said the Board estimates the ELCA would face an unfunded obligation of $129 million over the next 30 years, in today's dollars, if current funding continued unchanged.
The council gave its approval to the first provision of the five- point proposal -- the only part needing the council's consent. It agreed to increase the ELCA's budgeted contribution from $5.70 million to $6.20 million in 2003, $6.45 million in 2004 and $6.70 million in 2005. The budgeted amount will increase 1 percent each year after that to help cover post-retirement medical obligations.
The second part of the proposal will phase in, over the next four to five years, increases in the contribution amount early retirees and pastors on leave from call pay for health benefits coverage. For example, said Adams, if this were in place in 2003, then those under age 60 would pay an estimated $369 and those ages 60 to 64 would pay about $510.
In the early 1990s, when the ELCA established the subsidy for early retirees, "bishops felt the cost of health care was an obstacle" for those whose circumstances indicated they should retire before age 65, said John G. Kapanke, president, ELCA Board of Pensions.
"In the past 10 years, as a result of investment performance in the pension plan, people have a higher pension on average today than they had 10 years ago," said Kapanke. Although early retirees do face high medical costs, they are now potentially more able to absorb those costs than they were when the subsidy was established, he said.
The third part of the proposal will increase the contribution ELCA congregations pay monthly by 0.9 percent of defined compensation. The increase will be phased in over several years and will support retiree contributions. The Board of Pensions will eliminate a separate administrative expense and use health plan contributions to cover all health plan administrative expenses.
While the first three parts of the proposal increased funding from the ELCA, from congregations and from early retirees for the post-retirement health plans, the remaining two parts change the benefits of all health and pension plan members.
The fourth part of the proposal eliminates a separate pension plan administrative expense congregations pay and takes that money from investment earnings. "The Board of Pensions collects 0.6 percent of defined compensation for administration costs," said Kapanke. Instead, about three basis points or 0.03 percent of investment income will be used to cover those expenses.
After 35 years, Adams gave as an example, a member's pension would show about a 0.5 percent reduction.
The final part of the proposal will increase the amount plan members pay for prescription medicine. Generic drugs will increase from $5 to $6 per prescription; "preferred" brand drugs will increase from $12 to $20 per prescription; and "nonpreferred" brand drugs will increase from $27 to $40 per prescription.
In 2004, members who receive an ELCA supplement to Medicare benefits will be reimbursed for 80 percent of unreimbursed costs for Medicare Part A (hospital) and Medicare Part B (medical), after a $150 annual deductible.
After the proposed changes in funding and management, the church's unfunded obligation of more than $129 million would be cut to about $1 million, said Adams.
Kapanke commended the process it took to find a complex solution to a complex problem. There was "great collaboration" between the ELCA Church Council, the officers of the church and the Board of Pensions, he said. -- -- --
The Web site of the ELCA Board of Pensions is at http://www.elcabop.org/ on the Internet.
For information contact:
John Brooks, Director (773) 380-2958 or NEWS@ELCA.ORG
http://listserv.elca.org/archives/elcanews.html
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About the Evangelical Lutheran Church in America:
The ELCA is one of the largest Christian denominations in the United States, with 2.8 million members in more than 8,500 worshiping communities across the 50 states and in the Caribbean region. Known as the church of "God's work. Our hands.," the ELCA emphasizes the saving grace of God through faith in Jesus Christ, unity among Christians and service in the world. The ELCA's roots are in the writings of the German church reformer Martin Luther.
For information contact:
Candice Hill Buchbinder
Public Relations Manager
Candice.HillBuchbinder@ELCA.org
