HEALTH PLAN COMMITTEE REPORT

The largest single item in the 2009 proposed budget for the Tennessee
Conference will again be the Clergy Health Plan. 2007 was a good year for
our Health Plan, but not a great year. The cost of paying claims and
administering our health plan continues to increase - less than national
averages, but more than we would have preferred. As we often mention our
self-funded plan is the least expensive form of funding insurance, but it can
also be volatile. We are still recovering from 2005’s catastrophic losses
resulting from claims far in excess of anticipated levels. Thanks to favorable
claim experience in 2006 and 2007, we dug out from 2005’s deficit position
to a reserve position in excess of $500,000 by year end 2007. This is still far
short of the level of reserves the Conference needs to provide the flexibility
we would like or the reserves necessary to reduce our reliance on stop-loss
insurance premiums, but it is a very positive step.

The plan is constantly scrutinized by the Health Plan Committee, balancing

our need for operational efficiency, savings, and coverage. A new set of
eyes, the Fiscal Task Force created by the 2007 conference, also considered
the structure of the plan. Their report found elsewhere in this Journal
confirmed the same issues and pressures with which this committee
struggles:

(1) Is there a less expensive structure that will provide comparable

levels of service and coverage?
(2) Can we change our covered population as a way to reduce
claims?
(3) Can we motivate efficiency and healthy lifestyles by changing
the way premiums, co-pays and deductibles are charged to churches and
pastors?
(4) Can we generate sufficient reserves to allow us to accept more
risk but reduce expenses for stop-loss insurance?

Those are all valid questions and observations, which the Health Plan
Committee will continue looking at in coming years.

At this time, our present structure is the most cost efficient, but we are open
to alternatives such as insured plans, or HealthFlex offered by the General
Board of Pension and Health Benefits.

Our Summary Plan Document, which gives a detailed explanation of

benefits, coverage, and eligibility, is incorporated into this report by
reference. It has now been amended 9 times since it was last printed as of
January 1, 2006. One recent amendment increased the maximum coverage
from $1,000,000 to $2,000,000 over the claimant’s lifetime. We anticipate
that the plan with amendments will be reprinted in the coming year, and
also posted on the Conference’s website.

Tennessee is now one of the few conferences that do not require clergy to
pay a percentage of their individual premium cost, or require churches to
pay the premium for their own clergy through some form of direct billing.
We recognize that two of the challenges to this premium participation are
the issues of mandatory participation and resolution of unpaid premiums.

The apportionment amount asked for the Clergy Health Plan in 2009 is
$3,972,232, a 5% increase over 2008. This includes $200,000 for Reserve
Funding, should the apportionment line be fully funded and all other costs
stay within projections.

Peggy Dixon, Chair

TENNESSEE CONFERENCE HEALTH PLAN

2008 PREMIUMS AND BRIEF SUMMARY OF ELIGIBILITY

Premiums: Standard premium rates for 2008 were set as follows:

Monthly Yearly
Individuals $ 720.00 $ 8,640.00
Dependents (spouse
with or without children) $1,045.00 $12,540.00
Dependent children only 430.00 5,160.00

A dependent premium supplement will be provided to elders, deacons,

commissioned probationers, associate members, and local pastors who are
eligible to be enrolled and are appointed full time to local churches; and
whose plan compensation for 2009 is below $53,771. If 2009 plan
compensation is $43,771 or below, the premium for dependent coverage
will be reduced by one-half. If 2009 plan compensation is between $43,771
and $53,771, the premium for dependent coverage will be reduced by one-
third.

Plan compensation (eff. 1/1/2009): For pastors with parsonages, “plan

compensation” will be defined as 125% of base compensation. For pastors
without parsonages, “plan compensation” will be base compensation plus
housing allowance. The plan compensation at which the dependent
premium supplement is provided is tied to the minimum salary for elders
set by the Equitable Compensation Commission.

Eligibility: All full time clergy under episcopal appointment to a local

church within the bounds of the Tennessee Conference, all full time
Conference staff, and all student local pastors under appointment to a local
church within the bounds of this Conference who do not have a relationship
to another Annual Conference may be enrolled and have their premiums
paid through the Clergy Health Plan apportionment. “Full time
appointment” status for clergy is determined by the Cabinet and the
Conference Board of Ordained Ministry under the guidelines of The Book of
Discipline.

Local churches and other entities related to the Tennessee Conference may
enroll their full time lay employees in the Tennessee Conference Health Plan
provided at least three-fourths of the full time lay employees of that church
are included. For this purpose, “full time” for lay persons is defined as
thirty hours per week.

Participants’ eligible spouses and dependents may also be enrolled.

Coverage may be requested through the Office of Administrative Services.

Upon the death of an enrolled clergy or lay employee, their surviving

spouse and their dependents are eligible to continue to participate in the
plan, provided they were enrolled at the time of the participant’s death.

Notice of change in participation status: Each participant is

responsible for reporting immediately in writing to the Office of
Administrative Services any change that could affect participation status.
Changes that should be reported include less than full time appointments,
births, deaths, marriages, divorces, and children who cease to qualify as
dependents.

Limited coverage for Clergy not under Appointment: Retired clergy

under age 65, clergy on approved Incapacity Leave, and clergy eligible to
receive continuation of coverage may be eligible for extended participation
in the Health Plan. See the Summary Plan Document or contact
Administrative Services for more information.

Spouses of retirees who were covered at the time of retirement may

continue enrollment until both the clergy and the spouse reach 65. If the
retired clergy is less than 65, the spouse may be covered as a dependent.
If the retired clergy is 65 or older, the spouse may be covered as an
individual participant until the spouse also reaches 65. Spouses who were
enrolled at the time of the participant's retirement will have 1/3 of their
coverage funded by the Clergy Health Plan apportionment, until they reach
age 65.
Premium payments must be received by the first of each month for that
month. Premiums for dependent coverage are the responsibility of the
participant whether paid by the participant or by the church. Premiums and
questions should be directed to:

Tennessee Conference Health Plan

c/o Administrative Services
304 S. Perimeter Park Drive, Suite 4
Nashville, TN 37211
Telephone (615) 327-1162 or (800) 359-1162

This is only a brief summary. See the Summary Plan Document (January 1,
2006, as amended) for a full explanation. In case of inconsistency the
Summary Plan Document controls. The Plan Administrator is James R.
Allen.