Table of Contents

1. Diocese of ConnecticutMedical Benefits ProgramInformational SessionsPresented by Diocesan Insurance BoardSummer, 2012

2. Table of Contents • Governance of Medical Programs • Denominational Health Plan (DHP) • Church Medical Trust • Contributions • Section 125 • Premium Only Plans (POP) • Flexible Spending Accounts (FSA) • High Deductible Health Plans (HDHP) • Health Savings Accounts • Resources • Action Steps Required by Parishes

3. Governance • General Convention of the Episcopal Church • Meets every three years • Sets policies and programs affecting All Dioceses • Diocese of Connecticut • Annual Diocesan Convention • Adopts policies and programs affecting parishes across the Diocese • Evaluates and adopts policies established by General Convention • Local Parishes and Mission Stations • Implements Policies set by General Convention and by Diocese

4. General Convention –Denominational Health Plan • General Convention (2009) authorized the DHP to take effect in 2013 • DHP affects medical coverage for ALL active employees (working at least 1,500 hours per year) – both clergy and lay employees (note: lay pension plan affects lay employees working at least 1,000 hours per year) • DHP requires parity in coverage of full time lay and clergy employees • Parity is required by DHP in the payment of coverage for full time lay and clergy employees • 2012 General Convention delayed this parity in payment mandate until 2015 • DHP requires that the only source of medical coverage for full time clergy and lay employees is through the Church Medical Trust

5. Diocese of Connecticut –Denominational Health Plan • Diocesan Convention, in 2011, amended a Canon and adopted the Denominational Health Plan for Connecticut effective in 2013 • In 2012, Diocesan Convention amended a Canon and authorized the Bishops and Diocesan Executive Council (BDEC) to annually establish operating rules for DHP in Connecticut • BDEC approved maximum employee contributions of 15% for the premium for selected plans for 2013 • Previous Canon required 0% clergy contribution, but made no provisions for lay employees • Parishes can set contribution rules for its employees (between 0% and 15% employee contributions) but the percentage must be the same for clergy and lay employees scheduled to work 1,500 or more hours per year • Insurance Board is recommending that BDEC revise the effective date of the contribution parity to comply with the effective date set by the DHP (presently 2015) • BDEC meets in early September and will address the recommendation then • Waiver of participation in the DHP may be approved by the Bishop with the advice of the Insurance Board • Examples of possible waivers include coverage under a spouse’s plan, other employer coverage, Medicare

6. Local Parishes and Mission Stations • Implements policies set by General Convention and adopted by Diocese of Connecticut • Denominational Health Plan Decisions • Identify all employees (clergy and lay) eligible for coverage under DHP (i.e. working at least 1,500 hrs/year) • Determine which employees might opt out of DHP due to waiver rules (i.e. coverage outside of DHP) • Establish parish’s employee contribution percentage for 2013 • Presently, required to be the same for clergy and lay employees • That will change if BDEC approves recommended delay in effective date • Understand Section 125 and High Deductible Plans • Implement Section 125 plan if appropriate • NOTE: Implementation of Section 125 Plans is NOT required

7. What’s New for 2013?What do Parishes Need to Do? • Ensure Parity of coverage and contributions for clergy and lay employees (1,500 hrs/yr) • Must offer same benefit plans to both clergy and lay employees • Must provide same employer contribution to both clergy and lay employees • Contribution parity may be deferred if BDEC approves recommendation for delay to conform with 2012 General Convention change to DHP • Determine maximum employee contribution levels • Maximum of 15% of total premium for whatever plan the employee elects • Formerly 0% for clergy; up to parish for lay employees • Vestry should approve the contribution levels and communicate to all plan participants, both lay and clergy as soon as possible • Understand plan design choices available for 2013 • High deductible health plan options as well as EPO and PPO choices • Consider Parish contribution toward Health Savings Account (HSA) under HDHP • Consider implementation of Section 125 programs (NOT mandatory) • Pre-tax employee contributions • Flexible Spending Accounts • Healthcare Savings Accounts (HSA) arrangements

8. When does this need to be done? • Parity evaluations – done by early fall • Maximum Employee Contribution Percentages – Vestry should set by early fall • Watch for BDEC decision whether contribution parity between clergy and lay employees can be deferred • Communicate employee contribution decisions to all plan participants, both clergy and lay employees – by early fall • Section 125 Implementation Decisions – before open enrollment IF parish plans to adopt a 125 plan • Open Enrollment for 2013 DHP participation – October/November

9. Section 125 – Premium Only • Why do I need a Section 125 Premium Only Plan? • It allows for plans contributions to be made pre-tax under a Section 125 Plan. Individual contributions are deducted pre-tax via payroll deduction. • There may be some savings to the parish due to savings on FICA contributions for lay employees.

10. Section 125 – Flexible Spending Account • A Flexible Spending Account (FSA) is an IRS approved pre-tax account, NOT an insurance plan • Allows tax free reimbursement of Eligible Healthcare and Dependent Care Expenses • Office Visit copays, Coinsurance, Deductibles • Vision expenses • Dental expenses • Prescription copays • Healthcare Expense FSAs may be used to reimburse eligible expenses incurred by: • Employee, Spouse, Dependent child • Use it or Lose it • Because of the tax advantages, the IRS has strict guidelines as to how money in the FSA can be spent. • Plan wisely – you must use the money set aside during the plan year only for claims incurred during that plan year.

11. Flexible Spending Account andPremium Only Plan • Flexible Spending Account / Dependent Care Account • Setup Fee - $325 • Monthly Admin Fee - $4.75/enrolled employee plus an additional $1.00/per participant for debit card ($57.00/year for each enrolled employee + $12/year for the debit card) • $325 for Annual Maintenance Fee • Premium Only Plan • Setup Fee - $225 • Account set up includes the following: • Announcement Letter • Employee Enrollment • Plan Document • Payroll Stuffers • Discrimination Testing

12. What is a High Deductible Health Plan? • High Deductible Health Plan (HDHP) • is a health insurance plan that contains certain requirements with respect to deductibles and out-of-pocket expenses. The deductibles are generally higher than for a standard health insurance plan, and out-of-pocket expenses are generally not covered (up to a maximum amount) until the annual deductible is reached. Due to the nature of these health plans, the premiums are generally lower than a traditional PPO. • High Deductible Health Plans are generally offered by employers who offer a Health Savings Account (HSA) plan

13. What is a Health Savings Account? • Health Savings Account • An account established exclusively for the purpose of paying qualified medical expenses incurred by the account beneficiary (eligible individual). • HSAs allow employers and employees to make tax-free payroll contributions to the plan to pay for certain out-of-pocket medical expenses. By paying for these expenses on a pre-tax basis your employees increase their take-home pay without costing you more money. You, the employer, save on payroll taxes for all participating employees. • It is a savings account owned by the eligible individual. Unlike an FSA there is no “Use it or Lose it”.

14. How Do They Work Together? Qualified Medical Plan (HDPH) Health Savings Account Tax-Advantaged HSA Plan = + • Qualified Medical Plan (HDHP) • Federal requirement • Provides coverage for current medical/pharmacy expenses • Must include high deductible medical plans • All expenses must be subject to deductible (except certain preventive services) • Health Savings Account • Contributions • You may contribute to the account on a pre tax or post tax basis • 2012 Maximum Total Contributions (Employer + Employee) • $3,100 Single/$6,250 Family • Age 55+ can “catch up” by contributing additional $1,000/year • No contributions permitted if Medicare Enrolled • Create Investment Bank Account owned by participant • Savings vehicle for your future • Money in account is generally not taxable if used for qualified expenses

15. Resources • Church Pension Group • “Common Questions”.  https://www.cpg.org/active-lay-employees/insurance/health-and-wellness/overview/ • Diocesan Website • https://www.ctepiscopal.org/Content/Medical_Insurance.asp

16. What’s Next • Treasurer’s Newsletter in August • More Information about likely rate changes for 2013 for Medical Plans • Some information about plan options for employees for 2013 • More details about plans options and rates in early fall (from Church Medical Trust) • Preliminary estimate is rate increase of about 8% • CMT plans to notify Diocese of rates and plans on August 31 • BDEC decision whether to defer parity in contributions between clergy and lay employees (early September) • Open Enrollment materials for eligible persons in October