Benefits Road Show

News August 31, 2013

By Nate Berneking

On our recent Benefits Road Show, Mark Conner of the General Board of Pension and Health Benefits, described several recent changes to the clergy’s death and disability (CPP) and pension (CRSP) programs. I then tried to describe the basics of healthcare reform and the Patient Protection and Affordable Care Act.

If you missed those conversations, I encourage you to watch the videos of each presentation. Those videos and accompanying documents will be available at www.moumethodist.org by clicking on the tab for “Offices” and then “Treasurer and Financial Ministries.” Because the information can easily overwhelm, I wanted to provide a short article describing what pastors and lay leadership should be doing with respect to the pension changes and healthcare reform.
Pension Changes:
CRSP & UMPIP

In 2012, General Conference reduced the rate at which future retirees will receive part of their pension known as the “defined benefit” (CRSP-DB). The defined benefit is a monthly payment to every retiree, the amount of which is based on the number of years a person has served as clergy. For years of service worked after 2013, the General Conferenced reduced the rate of pay by 20%. That reduction only affects years of service worked after 2013 and was intended to make the whole pension program more sustainable.

To achieve sustainability, a greater emphasis is now placed on individual savings, especially through a “personal investment plan” (UMPIP) and the “defined contribution” portion of CRSP (CRSP-DC). To encourage savings, General Conference created a matching program for the CRSP-DC. Since 2007, local churches have contributed 3% of their pastors’ compensation (housing plus cash support) to each individual’s CRSP-DC investment account. Unlike CRSP-DB, savings in CRSP-DC may be paid out as a lump sum at retirement. Beginning in 2014, the CRSP-DC contribution will be reduced to 2% unless the individual also contributes at least 1% to UMPIP.

The UMPIP contribution will now be matched with an additional 1% contribution to CRSP-DC, effectively restoring the 3% that has always been given by local churches. Clergy appointed to quarter-time appointments are no longer eligible to contribute to CRSP, but their charges are encouraged to make employer contributions of 8% of their compensation to UMPIP on their behalf.

What do clergy have to do to retain the full 3% CRSP-DC contribution?

Complete lines 3 or 6 on the 2014 Pastoral Support Form designating an individual contribution to UMPIP out of the pastor’s cash support;
Ensure that this amount is at least 1% of cash support PLUS housing;
Complete and Sign a Before-Tax or After-Tax Contribution Agreement and submit to your District Office or to Trudy McManus at the Conference Office;
Clarify the salary reduction and billing for CRSP and UMPIP with the charge’s treasurer.

Healthcare Reform

Despite all the confusion about healthcare reform, remember, our Annual Conference decided to remain with Healthflex, a mandatory product covering full-time clergy and administered by our GBOPHB. With respect to full-time pastors, local churches will continue to be billed for each pastor’s individual coverage. Because of this, the only things that pastors and churches should consider are the following:

Remember to distribute the Notice of Marketplaces to every full and part-time employee. The Department of Labor has dictated the form of these notices. Templates and instructions are available at www.moumethodist.org with the videos;
Churches employing fewer than 25 and desiring to provide health coverage for part-time clergy or lay staff should explore the “SHOP Marketplaces” and consider applying for a Small Business Tax Credit. The Marketplaces are scheduled to begin operation on October 1.
Clergy with families needing coverage and part-time clergy not enrolled in Healthflex, may explore the government’s individual Marketplaces where they may also be eligible for tax credit subsidies to pay for coverage.

All of this said, churches and individuals exploring the Marketplaces, must be wary of the actual coverage offered. Lower premiums mean lower coverage, which may entail more out-of-pocket costs, higher deductibles and lower contracted rates for certain healthcare. Clergy must also understand the tax savings achieved through Healthflex’s family coverage. These considerations may be unfamiliar territory for many clergy.

Questions or confusion about any benefits can be directed to me nberneking@moumethodist.org or Trudy McManus tmcmanus@moumethodist.org.