The Rev. David Tabor knew it was coming. After his report at Holston Annual Conference on June 27, he received letters, emails and phone calls from pastors disagreeing with a rate increase on their health insurance.
“We understand. We want to listen,” said Tabor, chair of Holston Conference’s Board of Pensions and Health Benefits.
Yet, the board knows the money has to come from somewhere to sustain Holston's self-insured health plan for clergy, lay staff, and retirees in a tough economy. In 2019, the health plan experienced a shortage of $2.6 million.
After covering the shortage with reserves, the 26-member Board of Pensions and Health Benefits determined what it had to do to keep from depleting reserves while covering Holston’s 1,512 total participants.
“We’re spending down our reserves,” said the Rev. Clair Sauer, a board member for the last eight years. “If we run out, nobody’s going to have insurance.”
The balance in Holston’s health insurance reserve fund is currently $4.91 million, according to Treasurer Rick Cherry.
The board responded by approving rate increases for lay individuals and for clergy families, each by $100 monthly. The board also reduced the stipend to help retirees meet monthly Medicare supplement premiums -- from $77 per year of service to $50 per year of service.
The board also made changes to the 2021 plan structure, including increases in some deductibles, out-of-pocket maximums and prescription co-pays.
“I hated it that we had to do it,” said Tabor of the 2021 changes, effective January 1. “It’s just not simple. Nothing is simple. There are a ton of moving parts here.”
The news wasn't going to be easy to deliver, anyway, at a time when all U.S. employees are concerned about their financial futures during a pandemic. To complicate matters, Tabor said he failed to mention the upcoming increase in premiums for lay individuals during his oral report at the virtual Annual Conference held on June 27. The oversight led clergy on the family health plan to believe they were the only group paying premium increases.
In a year when minimum salaries for clergy will not increase but stay the same in 2021, the 16 percent increase in annual premium payments for pastors on Holston’s family health plan is painful. That's the message Tabor and other board members heard loud and clear in some 30 letters, 70 emails and 15 phone calls received from pastors, Tabor said. (Minimum salaries for clergy are set by the Commission on Equitable Compensation.)
Tabor and Sauer said they understood the frustration of their colleagues.
“When we make these decisions as a board, we don’t ever come at that lightly and without a ton of discussion and how that impacts everybody,” said Sauer.
In the last three years, the board addressed rising expenses partly by increasing the amount required for local churches to pay toward clergy health insurance. Local churches paid $686 monthly in 2017, $760 in 2018, $844 in 2019, and $948 in 2020.
“The church portion of the insurance for clergy has increased 33 percent since 2017,” said Julie Graham, benefits administrator.
For example, for a clergy participant on the PPO family health plan, the current monthly premium is $1,578. The local church pays $948, the pastor pays $630.
Until this year, the letters received by Tabor have come from church treasurers, concerned about rate increases in the portion their churches had to pay.
“We didn’t want to do that anymore,” Sauer said, referring to raising rates for local churches. “So where do we go?”
Holston’s self-insured plan covers 1,041 individuals (including 493 active clergy and lay employees and their dependents) and 471 retirees (including retiree spouses), said Graham. BlueCross BlueShield of Tennessee administers Holston’s health plan.
To bring Holston’s health plan in line with the income it needs, BlueCross BlueShield recently recommended increasing rates 30 percent across the board. Such an increase could cause a $500 to $600 increase in monthly premiums for some plans.
The Board of Pensions tried to come up with alternatives to a 30 percent increase, Sauer said. In addition to the $100 monthly premium increase for lay individuals and clergy families – and the decrease in retiree stipends – the board also made changes in the 2021 plan structure to help cover expenses.
For example, in-network deductibles for individuals on the PPO plan will increase from $2,000 to $3,000. In-network deductibles for the PPO family plan will increase from $4,000 to $6,000. These changes in the 2021 plan structure could save $700,000 to $1 million next year, Graham said.
Although any rate or deductible increase is difficult to swallow for most participants, comparisons to other health plans show that Holston's plan is more generous than many, based on BlueCross BlueShield's assessment, Sauer said.
“We have a real good health plan at a lower than average cost, compared to what’s available out there,” Sauer said.
Tabor also addressed the concern that Holston’s demographic, with a higher percentage of aging participants compared to other populations, causes claims to be unusually high. Holston Conference is not exempt from the overall trend in the U.S. toward an increase in illnesses affecting younger people. The increase in claims is shared throughout Holston's population, he said.
“It’s not just the ‘old members’ that we want to take care of. To my last breath, we’re also going to take care of those precious children," Tabor said.
The future doesn’t look less challenging, Tabor and Sauer said. A loss in participants for Holston’s self-insured health plan is a blow to its sustainability. Earlier this year, the board braced for changes that could have come about if General Conference had happened in May 2020. The board was concerned not only about losing participants if a denominational split had occurred, but also about making sure clergy continued to have coverage as they were leaving the denomination.
The COVID-19 pandemic caused General Conference to be delayed until August 2021. In the meantime, Holston’s Board of Pensions and Health Benefits tries to keeps its eye on all the “moving parts” and the impact on participants as well as local churches, Tabor said. If churches can no longer afford to pay health insurance for their clergy, that not only affects the leadership of the local church but leads to the loss of health-plan participants.
“I’m worried,” Tabor said. “I know the way insurance is going, this is not the end of the changes we’ll have to make.”
The Board of Pensions and Health Benefits will meet again September 24 and will review the letters and phone calls they received about rate increases, Tabor said.
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Holston Conference includes 853 churches in East Tennessee, Southwest Virginia, and North Georgia.
Annette Spence is editor of The Call, the Holston Conference newspaper.