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News Release -- 2002 BBT Board approves changes to the Brethren Medical PlanMay 10, 2002, Elgin, IlAfter months of considering ways to address concerns about medical insurance, the Brethren Benefit Trust Board on April 20 approved three major changes to the Brethren Medical Plan. A new insurance carrier will be utilized by most plan members beginning Jan. 1, 2003. The plan will also partially return to its pre-1998 days when it was self-insured, meaning that a portion of the plan’s liabilities will once again be covered by BBT. The third change pertains to the setting of rates, which now will be determined based on age and geography. “This new plan has the potential of doing a great job at meeting BBT’s diverse insurance needs for years to come,” said Jeff Garber, director of Brethren Insurance Plans. All of these moves were needed for BBT to continue providing high quality healthcare insurance while containing costs, a difficult challenge of late with skyrocketing medical costs and changes occurring throughout the industry, and with the Brethren Medical Plan’s aging membership and recent high medical claims. In fact, BBT insurance staff have sought bids from alternative carriers in recent years with no success. The BBT Board approved these changes during its spring meetings, April 20-21, held at the Church of the Brethren General Offices in Elgin, Ill. While approving the adoption of this plan for Jan. 1, 2003, it approved moving Bethany Theological Seminary to the new plan on July 1 in conjunction with the start of Bethany’s new fiscal year. The plan’s new insurance carrier will be the Congregational Employee Plan, a national plan for Anabaptist denominations, sponsored by Mennonite Mutual Aid. Given the Brethren Medical Plan’s current membership, BBT will immediately be the largest of seven church plans participating in CEP. This change will move BBT partially back into self-insuring the plan. From 1982 until 1998 the plan was totally self-funded. Under the new plan, BBT will self-insure the first $10,000 of claims for each participant per year, while claims above the $10,000 will be pooled with those of the six other church plans participating in CEP. This pooling of claims should reduce the impact large claims have on the plan, which in turn should help contain costs. Plan members will now be rated based on age and geography. All members of an employer group will be individually rated and then averaged to establish a single rate for that group. For members of the Ministers’ Plan, a “group” will be an individual congregation. Each church agency will be its own group. “We want to establish a plan that will work out over the long haul,” Garber said. “That’s why we’re moving to the age and geographic rating. This change will make our plan competitive with what individuals can go out and buy on their own.” Beginning this summer at the Church of the Brethren Annual Conference in Louisville, Ky., and continuing throughout the fall, BBT staff will hold a series of meetings throughout the denomination to highlight plan specifics and answer questions. Congregations and agencies that wish to join this new plan are required to have 75 percent of their eligible employees participate; eligible employees who have health insurance from their spouse’s employment are not included in this calculation. An open enrollment period will be held this fall, where any qualified agency and every Church of the Brethren congregation can sign up for this new plan regardless of the health or medical history of their employees. BBT’s socially responsible investments help initiate change Shareholder activism against companies with policies or procedures that are contrary to Church of the Brethren Annual Conference statements is one of the significant ways that BBT continues to pursue its social responsibility mandate. One such action, reported to the BBT Board, is a resolution with Tricon Global Restaurants, parent of Pizza Hut, Taco Bell, and KFC. The resolution, of which BBT is the lead filer, is asking the company to initiate a no-smoking policy at its Pizza Hut and KFC company-owned restaurants and at the company-owned restaurants of the Long John Silver’s and A&W restaurants chains, which Tricon currently is buying. This ban would not affect restaurants in these franchises that are independently owned. As a Tricon shareholder with stocks worth about $1,750,000, BBT’s action against Tricon is fitting in two ways, said Will Thomas, director of operations for BBT’s Brethren Foundation. The proposed ban on company-owned restaurants is in keeping with the 1981 Annual Conference statement on tobacco. The proposal also is in keeping with Tricon’s Taco Bell subsidiary, which instituted a ban on smoking in its corporate-owned stores prior to becoming a Tricon property. Thomas will present the resolution to other shareholders at the annual meeting of Tricon on May 16 in Louisville, Ky. Wil Nolen, BBT president, and Nevin Dulabaum, director of Communications and Information Services, will also be in attendance. BBT is also co-filer on several other resolutions, including PepsiCo (pertaining to recycling), Abbott Laboratories (drug access), and Nordstrom (sweatshop/vendor standards). In addition to shareholder activism, BBT practices socially responsible investing by investing in companies providing socially desirable services and products, and by screening out companies that derive more than 10 percent of their revenues from gambling, tobacco, alcohol, or defense. Board approves community development investments In another effort to advance social change through its investments, the BBT Board directed the Investment Committee to seek options for community development investments for the accounts of Pension Plan members and Foundation clients. Through community development investing, individuals and agencies place a portion of their investment portfolio with a community development bank or credit union, which then typically lends the funds to create new businesses and jobs within the local area. Interest payments are then returned to the investor while the loans enable previously impoverished people to build a more secure future for themselves and their families. “The liquidity of these funds is typically much lower than we normally expect, and the returns are usually a low fixed rate,” said Gail Habecker, Investment Committee chair. “But the committee feels it is appropriate for us to be involved as part of our mission.” Although BBT’s investment guidelines include the possibility of offering community development investments within the program, such an investment option has never been included and offered to members. Foundation clients to have high-yield bond fund option A new bond fund permitting the use of high-yield securities will be created for Foundation clients at the recommendation of the Investment Committee. Investment guidelines were revised following Board action in November to allow for investment of up to 15 percent of holdings in high-yield bonds. The Board concluded that inclusion of high-yield issues holds the potential, demonstrated in returns over a six-year period, to increase returns in the bond portfolio. High-yield thus joins corporate bonds, asset-backed securities, and mortgage-backed securities as sectors available for inclusion in the Foundation’s portfolios. “As with any diversification strategy,” said Will Thomas, “the goal is to improve returns over time and reduce risk, which is exactly what the data shows to have been the case for the past several years.” In response to the needs and concerns of Foundation participants, the current bond fund will be maintained with its present guidelines of no high-yield investments. This action will now give participants the choice of investing in the current bond portfolio, the new bond fund with high-yield investments, or both. Average age of Pension Plan retirees goes up Some Brethren Pension Plan members are opting to delay their retirement due to the stock market’s recent negative effect on their retirement accounts. As a result of these decisions to delay, the average age of new retirees has risen for the first time in recent years. A report presented to the BBT Board showed that in the months spanning Oct. 1, 2000, through Feb. 28, 2001, the average age of retirement was 61.32 years. One year later, the average age of new retirees was 62.77. “Some plan members have found that their Pension account values significantly decreased as stocks went down,” said Don Fecher, director of the Brethren Pension Plan. “Because of this, the decision by some to delay retirement by a year or two has become more prevalent.” Other business Insurance Plans
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