Facts and Possibilities Pat Haines, Senior Vice President, Benefits Todd Ingves, Director, Information Management.

Facts and Possibilities

Pat Haines, Senior Vice President, Benefits

Todd Ingves, Director, Information Management

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Objectives

• Serving MORE• Serving BETTER• Serving the CHURCH

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The Plan NOW

• Benefits• Funding

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Income Security: Retirement

• Defined Benefit Pension Plan• Credit accrual• Experience apportionments• Asset based• 11% dues

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Income Protection for Members and Survivors: Death and Disability

• Continued medical coverage and Pension Plan credit accrual during disability – no cost to employer

• Education benefits for dependent children under age 25

• Asset based• 1% dues

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Asset-Based Funding

Employing Organization12% Dues

Pension Plan11%

Death & Disability1 %

Short-TermInvestments

Pension, Death & Disability Benefits Paid to Members

Board of Pensions Balanced Investment

Portfolio

2014

Dues Paid$75 million

Investment Earnings$448 million

Benefits Paid$344 million

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In Sickness and In Health:Medical Plan

• PPO + Pharmacy • National networks: Blue Cross Blue Shield,

Catamaran and Cigna Behavioral Health• Member cost sharing through income-based

copayments and deductibles• Emphasis on wellness and prevention:

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The Economics of Healthcare

• Self-funded• Pay-as-you-go• Inherent volatility• 1% of the population = 30% of the expense• Cost contributors: Lifestyle choices, age• 23% / 24.5% dues, depending on family status

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Pay-As-You-Go Funding

Employing Organization23% / 24.5% Medical Plan

Dues

Medical Benefits Paidfor

Members

2014

Revenue$179.6 million

Benefits Paid$180.8 million

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Supplemental and Optional Benefits

• Supplemental Death and Disability• Dental• Long-Term Care• Retirement Savings Plan

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Actuarial Forecasting: Art and Science

• Key factors• Revenue: enrollment; salary increases;

investment return• Expenses: enrollment; third-party costs;

compliance; plan design; TREND

2015 – 2017 Forecast (October 2014)(in millions; rounded)

2015 2016 2017Revenue $187.5 $185.5 $183.4

Expenses $189.8 $196.8 $203.8

Balance ($2.3) ($11.3) ($20.4)

Prior Reserve

$52.5 $50.2 $38.9

Remaining Reserve

$50.2(26.7%)

$38.9(19.9%)

$18.5(9.1%)

2016 - 2017 Forecast (March, 2015) (in millions; rounded)

2016 2017Revenue $181.4 $177.8

Expenses $184.1 $188.6

Balance ($2.7) ($10.8)

Prior Reserve

$61.1 $58.4

Remaining Reserve

$58.4(31.7%)

$47.5 (25.2%)

Demographics

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Who Can Participate?

• Called and installed teaching elders are mandated

• All other church workers must work at least 20 hours a week in an eligible church service

• Includes non-mandated teaching elders and lay workers

Who Actually Participates?

MANDATED TEACHING ELDER

NON-MANDATED TEACHING ELDER

LAY

50%

16%

33%

5,6001,700

3,700

Mandated Teaching Elders

• 5,600 members at 4,700 employing organizations

• All serving at local churches

Average age 52 17.5 years of service

Non-mandated Teaching Elders

• 1,700 members serving 1,400 employing organizations

• Approximately half are serving local churches and half serving agencies/mid councils/other employers

Average age 5518 years of service

Lay Employees

• 3,700 members (36% non-exempt, 64% exempt) serving 1,100 employing organizations

• 62% serving churches, 20% serving agencies

Average age 51 10.5 years of service

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Employing Organizations

LOCAL CHURCH

OTHER EMPLOYER

MID COUNCIL

AGENCY

90%Employers

79%Members

7% Employers

8% Members

2%Employers

5%Members

>1%Employers

8%Members

Congregations with Plan Members

CONGREGATION SIZE250 or less

3700Churches

1.1 Average Members

1100Churches

1.7 Average Members

CONGREGATION SIZEBetween 251 and 500

CONGREGATION SIZE501 or more

700Churches

4.1Average Members

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Churches and Employing Organizations

75%

20%

3%1%

1MEMBER

2 - 5MEMBERS

6 - 10MEMBERS

More than 10MEMBERS

For churches and employing organizations covering members in the Traditional Medical Plan

Demographics

Small Churches

Large Churches

Lay Members

Mandated Teaching

EldersNon-

Mandated Teaching

Elders

Agencies

Church Affiliated

Organizations

Mid Councils

Medical Plan Challenges

Medical Claims Cost Trend

2009 2010 2011 2012 2013 20140%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

6.4%6.7%

8.9%

3.8%

7.1%

3.4%

Claims Cost Trend

Linear Trend

Cost Drivers

• Demographics• Chronic conditions• High-cost claimants• Prescription drugs

Chronic Conditions

DIABETES HYPERTENSION(High Blood Pressure)

HYPERLIPIDEMIA(High Cholesterol)

6.8% 21%21%

"The only way to keep your health is to eat what you don’t want, drink what you don’t like, and do what you’d druther not.”- Mark Twain

High Cost Claimants

1% of Medical Plan population responsible for 30% of Plan costs

Conditions include cancer, musculoskeletal and heart disease

Often complex cases with multiple co-morbidities

20% repeat rate over three-year period

Prescription Drugs

• Specialty drugs are less than 1% of prescriptions but account for 33% of drug costs

• Includes treatments for cancer, Hepatitis C, and rare conditions

• Specialty cost trends are significant and show no signs of abating

• Generic inflation also a growing concern

Cost Controls

• Vendor contracting• Call to Health initiative• High-cost claimant case review• Stop loss insurance

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Challenges

• Managing rising medical costs

• Keeping up with changing healthcare landscape

• Providing meaningful benefits at reasonable costs

Stability and Transition

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2016: Stability and Transition

• Board actions• March

• Apportionment• Disability reserves• Disability cost of living increase

• June• Medical dues• Alternate dues method

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2016 Dues Methods

Medical Member Only 23%Family 24.5%

Pension11%

D&D1%

Traditional Dues Method 2015/2016

Mandated, Non-mandated, Lay

MedicalNo Coverage Member Only

2016 ABP RatesMbr. and PartnerMbr. and ChildMember and Family

Pension11%

D&D1%

Alternate Dues Method 2016

Non-mandated, Lay

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Your Charge: Possibilities

• Reminders• Overall objective of Board of Pensions• Covenant with teaching elders• Context of facts and values• Wide range of benefits

“Start by doing what's necessary; then do what's possible; and suddenly you are doing the impossible." - St. Francis of Assisi

"The possibilities are numerous once we decide to act and not react." - George Bernard Shaw