News Release -- December 9, 1998

BBT Board Meeting

The Church of the Brethren Benefit Trust (BBT) Board of Directors met Friday and Saturday, November 20 and 21, in Lancaster, Pennsylvania. The agenda included the following insurance and pension plan business.

1. Medical Plan Moves Forward
2. Pension Plan Adds Bond Fund
3. Annuitants Listen as Board Votes
4. Dental, Vision, and Section 125

Medical Plan Moves Forward

Jeff Garber, Director of Insurance Plans, reported, "Brethren Medical Plan staff are working to move all medical plan groups as quickly as possible to fully-insured insurance arrangements." Most agencies that have completed the transition have saved money.

For groups in the self-funded plan that are waiting for a fully insured arrangement, there will be no premium increase. Garber said, "I anticipate that we will have all groups converted to a fully-insured arrangement by April 1999."

The move to a fully insured medical plan has generated good news in the form of premium savings for active members. But there has been bad news as well.

Most insurance companies do not want to cover the retired members (i.e., Medicare primary retirees in the Ministers Group). The few companies that submitted bids asked for very high premiums. The best quote came from Mid-Atlantic Medical Services, Inc. (MAMSI). Even though theirs was the lowest bid by far, it still represents a premium increase of between 36 and 41 percent for about 300 of our retirees.

Garber said, "This is a bitter pill to swallow for folks living on a fixed income. What they may not have known is that, under the self-insured arrangement, their premiums were being subsidized by the contributions of the active pastors."

The Board acknowledged that there is no long-term solution to the higher premiums. As a stopgap measure, they authorized using up to $550,000 from the medical reserves to subsidize retiree premium costs over a two-year period. The objective of the supplement is to give this group a transition period with ample time to review all their insurance options.

Pension Plan Adds Bond Fund

For the Brethren Pension Plan, the board approved a fourth fund choice, a bond fund, to be offered during the first quarter of 1999. Currently the Plan has three choices:

• the Common Stock Fund (domestic and international)
• the Balanced Fund (60 percent stocks and 40 percent bonds)
• the Short Term Fund (a safe, but lower interest bearing option)

Gail Habecker, Investment Committee Chair, explained, "The allocation ratio of stocks to bonds in our balanced fund is set by the Board. Today our members are more sophisticated. A separate bond fund gives them the opportunity to create their own balanced fund by selecting an investment ratio that suits their needs. For example, a younger investor might select a mix of 20 percent bonds and 80 percent stocks, while investors who are approaching retirement age might be more comfortable with 20 percent in stocks and 80 percent in bonds."

Annuitants Listen as Board Votes

More than 30 area pastors, annuitants, and their spouses attended the board meeting in Lancaster. Of special interest to this audience were the votes that authorized extra benefits for retirees.

When making the recommendation, Gail Habecker cautioned, "The Board's first responsibility is to protect the assets that are earmarked for providing annuities. Only when investments generate more than is needed can we vote these benefits." Members who retired on or before September 1, 1998, will receive

• a one-time payment on December 15 equal to an extra month's benefit and
• a permanent 1 percent increase, effective January 1, 1999.

This action means that annuitants can look for two benefit checks in December and a larger amount in each monthly check beginning January 15, 1999.

Dental, Vision, and Section 125

In other business, the Board authorized the staff to provide dental and vision insurance and to implement an IRS Section 125 compliant plan.

Dental and vision insurance would be made available through a self-funded arrangement to groups who cannot find this coverage through other sources.

A Section 125 plan will allow members to use pre-tax dollars for medical premium payments and vision and dental coverage. It would also include a flexible spending account where pre-tax dollars can be set aside for medical reimbursement and dependent care. The plan will be offered to national agencies by mid-1999 and to pastors and other eligible organizations in 2000.