Health and Life Insurance, Retirement Benefits

Canon XX.

Resolved, that Canon XX, be amended to delete Subsection 20.02(c), the last sentence in Section 20.03 and Subsection 20.04(d) as follows (deletions in bold strikethrough text):

Sec. 20.01. Group Coverage.

The Diocese shall provide group coverage for medical benefits through the Denominational Health Plan of the Episcopal Church Medical Trust; dental benefits; long-term disability benefits; term life insurance benefits; and such other benefit programs as the Personnel Practices Committee may approve with the consent of the Finance Committee.

Sec. 20.02. Eligibility.

The following persons, and their immediate family dependents, are eligible for coverage, and premiums shall be paid as specified:

  1. Every active Cleric who is personally resident within the Diocese, and scheduled to work a minimum of 30 hours weekly (equivalent to 1,500 hours annually) in the general work of The Episcopal Church in this Diocese; premiums for such insurance to be paid by the source of the Cleric’s salary;
  2. Members of religious orders and Clerics on leave of absence authorized by the Bishop for a specific period of time; premiums to be paid by the source of ecclesiastical salary, or as directed by the Bishop;
  3. Every retired Cleric who shall have attained age 65 and who shall have been Canonically Resident in this Diocese and regularly employed full time in the general work of the Diocese for the five years immediately preceding retirement, and who has ten years of credited service with the Church Pension Fund; premiums to be paid by the Diocese;
  4. All regular, lay employees of the Diocese, of the Cathedral, parishes and missions and other ecclesiastical organizations or bodies subject to the authority of The Episcopal Church and scheduled to work a minimum of 30 hours weekly (equivalent to 1,500 hours annually): premiums to be paid by the source of salary or the employing entity;
  5. Other employees of parish and Diocesan Institutions that elect to participate upon such terms as may be approved by the insurer as to the employees covered and the source of the premium payments.

Sec. 20.03. Mandatory Participation.

Each of the persons described in Section 20.02 shall be covered for all coverages available under the group plans listed in Section 20.01 of this Canon to the extent required by each such plan unless the person elects to opt out as permitted under the rules of the Episcopal Church Medical Trust. The source of salary shall not be required to pay that portion, if any, of the premium specified for voluntary life insurance under the group life plan. If the Diocese provides more than one health or dental benefit plan, the source of salary shall be obligated to pay no more than the cost of the least expensive plan, but may require Clerics and lay employees to pay the difference if they elect a more expensive plan. For retired Clerics who are eligible for Medicare, the Diocese shall be obligated to pay no more than the cost of the least expensive Medicare supplement plan available from the Episcopal Church Medical Trust, less the amount of any subsidy available from the Church Pension Fund.

Sec. 20.04. Voluntary Participation.

  1. Upon individual application, any Cleric and his or her immediate family dependents may participate effective as of the date of Canonical Residence in the Diocese, and upon payment of the applicable premium. Any Cleric and immediate family dependent eligible may, in the event of change of classification, continue coverage upon payment of applicable premiums so long as canonical residence is maintained.
  2. For purposes of this Canon, immediate family dependents shall include domestic partners registered with the State of California and their legal dependents, provided that an eligible Cleric or employee complies with the requirements of the Personnel Manual.
  3. The Convention may, by resolution, establish a minimum required employer cost-sharing policy for benefits for the dependents of any Cleric or lay employee, so long as the policy provides parity for medical benefits for all clergy and lay employees who are scheduled to work a minimum of 30 hours weekly (equivalent to 1,500 hours annually). The source of salary may elect to pay more than the minimum so long as it maintains parity for clergy and lay employees.
  4. The Diocese shall pay a Medicare supplement subsidy for the spouse or surviving spouse of a retired Cleric only for the least expensive Medicare supplement plan, and only if the spouse is an “eligible spouse” or “eligible surviving spouse” under the eligibility rules of the Church Pension Fund and/or the Episcopal Church Medical Trust. Any such subsidy shall be reduced by the amount of any subsidy available from the Church Pension Fund. However, the Diocese shall continue to provide coverage to any spouse or surviving spouse of a retired Cleric who was receiving health benefits as of October 26, 2013, notwithstanding any lack of eligibility under those rules.

Sec. 20.05. Administration.

The group health and life insurance plans shall be administered under the supervision of the Finance Committee, which shall have authority to grant exceptions for good cause when the terms of a particular plan so permit. The Finance Committee shall review and update plans and recommend to Executive Council such modifications of coverage, terms and benefits as may be appropriate.

Sec. 20.06. Salary Continuation Benefits.

The Diocese shall provide, to lay and Clerical employees working 20 hours or more per week and continuously employed for a minimum of 90 days, a salary continuation benefits program similar to the State Unemployment Insurance Program for the benefit of those employees whose employment within the Diocese of California is discontinued for reasons beyond the control of such employee. The terms and conditions of eligibility for such coverage and the benefits provided shall be determined and administered by the Personnel Practices Committee under such rules and regulations as they may from time to time adopt, amend or modify, consistent with sound actuarial practice. The Personnel Practices Committee is authorized to determine and to recommend to Convention not less than 60 days prior to Convention the level of benefits and the assessment upon employers necessary to fund such benefits on a sound actuarial basis.

Sec. 20.07. Lay Pensions.

All regular lay employees of the Diocese, the Cathedral, parishes, missions, or other ecclesiastical bodies subject to the authority of The Episcopal Church and scheduled to work a minimum of 20 hours weekly (equivalent to 1,000 hours annually) shall be eligible to participate in the Lay Employee Pension System administered by the Church Pension Fund. The employer shall contribute not less than five (5) percent of the employee’s compensation and match at least four (4) percent of the employee’s contributions, such benefit to be paid by the source of salary.

Proponent’s Explanation:

As currently constructed, Canon XX implies that the diocese is obligated to provide certain insurance coverages for retired clergy that are either not applicable or not in fact being paid for by the diocese. 

Taken together, Sections 20.01 and 20.02 suggest that certain retired clergy are entitled to long-term disability benefits and term life insurance benefits.  Disability is intended to compensate for loss of income due to an inability to work, and life insurance is intended to compensate dependents for loss of income due to death.  But in the case of retirees, there is no employment income to protect.  The diocese does not provide this coverage because it is not applicable.

At one time the diocese paid the supplemental Medicare insurance premiums of its retired clergy and their spouses.    In 1998, Church Pension Fund initiated a medical insurance benefit for eligible retired clergy, which in 2003 became payment in full (“subsidy”) of a supplemental Medicare plan called the Comprehensive Plan.  The diocese continued to pay the difference between the Comprehensive Plan paid for by CPF and more expensive Plus and Premium plans if retired clergy chose them.  By 2012 the diocese was paying about $143,000 in insurance premiums for retired clergy.  The 2013 Convention changed Canon XX to limit the diocesan retired clergy health insurance obligation to “no more than the cost of the least expensive Medicare supplement plan available from the Episcopal Church Medical Trust, less the amount of any subsidy available from the Church Pension Plan.”  Thanks to the 2013 change, the diocese now pays about $25,000 per year in retired clergy benefits for persons grandfathered in to their benefit for various reasons. Retired clergy who were on premium Medicare plans began paying the difference themselves or dropped down to the basic plan.

Canon XX provides for coverage of clergy with 10 years of credited service.  CPG pays the full Medicare subsidy only to retired clergy who have earned at least 20 years of credited service.  Clergy with between 10 and 20 years of credited service receive a subsidy that is pro‐rated.  It appears we are obligated to make up the shortfall between the partial subsidy and the actual premium for retirees with between ten and twenty years of credited service, but we don’t currently do so because CPG has no way to bill the diocese for the difference.

In short, adoption of this amendment to canon XX would result in no immediate change in current practice, but it would remove an apparent discrepancy between current practice and the canon.

If the amendment is not adopted, however, there is a potentially significant future exposure.  It is possible CPG could discontinue its subsidy of Medicare premiums for retired clergy. The Medicare subsidy is a voluntary benefit of CPG and not a required benefit as pensions are.  In the case of a significant financial or stock market reversal, CPG could and would legally be required to sacrifice the Medicare subsidy to continue meeting its pension obligations.  If the CPG subsidy had not been in effect in 2019, the cost to the diocese this year would have been  over $530,000 for the CPF Comprehensive Plan for our roughly 120 eligible retired clergy and spouses.  At the present time, CPG is well funded, and it does not seem likely that the Medicare subsidy will be cut any time soon.  It is worth noting, however, that a market downturn that would have such a major impact on CPG would also be likely to significantly affect diocesan investments and assessments and have a devastating effect on the diocesan budget.  Executive Council suggests that under such circumstances what to include or not include in the budget should be considered in the budget process and not be dictated by canon.

Finally, the inclusion of retiree benefits in the canons raises questions of equity and justice since there is no corresponding provision for lay employees.

Please note: Canon 20 in its entirety is shown for context. Only the sections referenced in the resolved clause are affected by this amendment.  Other amendments may be adopted affecting other sections, and the presence of unmodified sections above will not be deemed in conflict with those other amendments.

Submitted by: The Executive Council:  Lane Ringlee, Chair, ringlee@comcast.net; Christopher Hayes, Chancellor, christopher.hayes@borowsky.com.

Comments

Hi Lane and Christopher,
I just have a couple of questions:

1) Is there a reason that the two changes to Canon XX are not offered together? I notice that in 20.01 the language that contains "Personnel Practices" is still three but is struck in 20.06
2) What is the Denominational Health Plan of the Episcopal Medical Trust? In the TEC canons, it seems to only refer to CPG.

Thanks,
Deb

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