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News Release -- 2004 Brethren Benefit Trust Board takes several steps to ensure long-term health of Brethren Medical PlanDecember 27, 2004, Elgin, Ill.Meeting in Middlebury, Indiana, on Nov. 19 and 20, the Brethren Benefit Trust Board took several steps in an effort to ensure the long-term health of the Brethren Medical Plan. Foremost among their actions was public notice of a requirement that, beginning in January 2007, only districts with a 75 percent participation level among their eligible congregations would be able to continue as members of the Plan. The Board concluded its meeting by engaging in an extended conversation with approximately 30 pastors and church board chairs from the Northern Indiana and South/Central Indiana districts. The 75 percent participation requirement represents an attempt to stabilize premium levels by expanding the Plan’s membership base. Recent years have seen Plan membership drop dramatically as a spike in claims resulted in higher premium rates, which led members with better risk to find other insurance coverage. Their departure resulted in higher premiums for those remaining, which led to further departures and even higher premiums. The insurance industry refers to this cycle as a “death spiral.” Losing membership in the Brethren Medical Plan would prevent many congregations from offering guaranteed issue to their employees. Under a guaranteed issue medical plan, employees and their families are automatically eligible for coverage. Without guaranteed issue, employees and their families would be required to pass insurance company underwriting to receive coverage. For example, high blood pressure and high cholesterol are often enough to cause insurance coverage to be denied. By making the church employees in each district eligible — or not — as a group, the new requirement creates incentives for districts to encourage membership in the Plan. Concern for those who will otherwise be unable to secure coverage, the Board hopes, will bring in enough new members to stabilize premiums and allow the Plan to continue offering guaranteed issue. Along with pastors and board chairs, two representatives from the Pastoral Compensation and Benefits Advisory Committee joined the Board for presentations and discussion on the future of the Brethren Medical Plan. Several members of the Plan expressed concern with the 75 percent requirement as well as with what they described as challenges in the flow of information from Brethren Benefit Trust to Plan members. Ron Dueck, a representative from Mennonite Mutual Aid, which provides insurance coverage for the Brethren Medical Plan, described how it had been hoped that the Plan’s move to MMA’s Congregational Employee Plan (CEP) in 2003 would stabilize premiums and membership. However, 2003 brought a spike in claims experience to the Plan, which has contributed to increased premiums and a subsequent loss of membership. The good news, reported Dueck, is that claims experience in 2004 seems to have returned to more normal levels. He added, however, that participation has continued to drop throughout the year. Another guest commented on the importance of describing efforts to save the Plan in terms of mission. Although church members tend to think of “mission” activity in terms of those in foreign countries who need assistance, he pointed out there is also a mission component in preserving the ability of pastors with medical conditions to continue in their ministry. Jeff Garber, director of Insurance Plans, also described the potential benefits of Health Savings Accounts (HSAs), which BBT is exploring. Like existing Flexible Spending Accounts, HSAs allow an employee to accumulate pre-tax funds that can then be used to pay qualified medical costs. HSAs, though, allow unused funds at the end of each year to carry over, tax-free, until the employee’s retirement. At that point, the retired employee may use the fund for any purpose. Brethren Foundation Brethren Foundation (BFI) noted in its report to the Board that its asset management clients represent all 23 districts within the Church of the Brethren. BFI currently manages approximately $117 million, most of which represents asset management funds on deposit from about 200 congregations and other church agencies. The Foundation is also responsible for numerous charitable trusts and charitable gift annuities. Church of the Brethren Credit Union At the same time, CoBCU is exploring the possibility of offering members online access to their accounts. Kingery hopes to add these services by the end of 2005. BBT Investment Committee The Investment Committee also reviewed its investment strategy for the Retirement Benefits Fund. Assets in the Fund are the source of payments for Brethren Pension Plan retirees. With many experts predicting several years of below-average returns, the Committee decided to review current allocations. In response to requests from Pension Plan members and asset management clients, the Investment Committee also addressed the possibility of creating a “stable-value” fund. By investing in a socially responsible mix of short-term securities, such a fund would be able to generate positive returns under most market conditions. Although returns would be small, they would be unlikely to be negative in any given month. This fund would benefit those nearing retirement who could use a stable-value investment to park their Pension contributions and earnings up to six months before retirement, thus locking in a minimum level for their monthly annuity. Asset management clients of the Brethren Foundation would use a stable-value fund primarily when they want to protect funds they know they will be using within a relatively short period. This might occur, for example, when an organization has raised funds for a new building and construction payments are about to begin. Other Business
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