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BACKGROUND
The 1991 General Assembly directed the Board of Stewardship to
offer voluntary (employee paid) long term disability (LTD)
coverage to full-time ministers and other non-Center employees.
This program was originally scheduled to begin January 1, 1993,
but the required level of participation was not realized. The
1993 General Assembly reaffirmed the importance of this employee
benefit by adopting the following resolution.
That at an appropriate place on
the agenda of each presbyterial meeting, time be set aside to
inform presbyteries and ministers concerning costs and importance
of enrolling in the program. Materials shall be furnished by
the denominational Board of Stewardship and presentation of information
be under the guidance of each presbyterial Board of Stewardship
or other appropriate agencies.
After noting the large difference
in premiums between voluntary and non-voluntary plans, the General
Assembly further expressed a desire to have each presbytery defined
as a group as opposed to one large group, and thereby enable individual
presbyteries to take advantage of lower rates. In accordance with
this reasoning, another resolution was adopted.
That the [General Assembly's]
Board of Stewardship be instructed to approach presbyteries concerning
becoming pilot programs for a non-voluntary group, long term
disability insurance program.
Group plans that enroll all eligible
employees are non-contributory. That is, the presbytery as employer
must pay participant's premiums.
SECURING A PLAN
The challenge to the General Assembly's Board of Stewardship has
been to secure the best possible plan. From the outset many carriers
would not insure our program because we are a church group. Only
the selected insurer would agree to include the fair rental value
of a manse in the definition of a minister's salary. In all, several
obstacles were encountered and had to be overcome in the process
of procuring a viable plan. Nonetheless, all the major specifications
have been met in the plan that is provided. The benefits, provisions
and premiums of each presbyterial plan are the same across the
denomination, but each presbytery has the latitude to define the
eligible full-time employees to be covered by its program.
WHY LONG TERM DISABILITY?
Protecting one's income with long term disability insurance provides
a greater level of security and peace of mind. We often think
that a disabling illness or injury will not happen to us, but
we could be left unable to earn a salary to pay everyday living
expenses or to pay for our home and car. And with the current
level of medical technology, many more people are living with
disabilities that keep them from working. Our ability to earn
income is one of our greatest assets, yet it is often uninsured
while the home, automobile, and other possessions are fully covered.
In addition, during our working years the probability of becoming
disabled is greater than dying. This is why long term disability
insurance is considered to be as important as life insurance.
A measure of assurance can be gained by protecting a portion of
employee's income from these unplanned events through participation
in this program.
GROUP ADVANTAGES
The advantages of group participation versus having an individual
policy are significant. First, premiums are considerably lower
for groups. The rates for voluntary group plans (again, the premium
is paid by the employee) are usually half as much as rates for
individual plans. If a presbytery enrolls all eligible employees
in the non-contributory plan presented here, the rates are drastically
reduced even further. Assurance that all eligible employees will
be enrolled by the presbytery allows the insurance company to
provide the coverage at a lower cost.
Secondly, there is no medical qualification for employees when
presbyteries enroll them. This is very important for employees
with health problems.
Lastly, in the group plan that is offered, the fair rental value
of a manse can be included in a minister's income. The inclusion
of this item in income is a major achievement which permits disability
benefits to more accurately reflect a pastor's true compensation.
THE INSURER
UNUM Life Insurance Company of America has been selected by the
Board of Stewardship as the insurer. UNUM has been the number
one writer of group long term disability insurance for many years
and has captured approximately 40% of the market. Employee
Benefit Plan Review refers to UNUM as the leader in
group disability insurance since 1976. UNUM is a well-established,
financially strong company, having been founded in 1848 and among
the ten oldest of more than 2,000 life insurance companies operating
today.
GROUP ELIGIBILITY & PAYMENT
OF PREMIUMS
Once the decision is made to provide this protection, each presbytery
is free to specify who will be eligible, as stated earlier. Active
employees who work a minimum of thirty hours per week may participate.
The General Assembly resolutions concern ministers, but presbyteries
may elect to cover other full-time personnel as well. Once the
decisions are made, then they must be reported to UNUM and the
program administered accordingly.
Presbyteries may implement a program at the beginning of any calendar
quarter, provided that enrollment forms have been received for
all eligible participants. A minimum of ten employees is required
in order for a presbytery to form a group and all employees that
are in the eligible class must be enrolled, regardless of age.
Presbyteries with fewer than 10 participants may still implement
a program, but these groups will be combined under one division.
New employees can be added after one month of employment on the
first day of the next calendar quarter.
The monthly rate of .0050 is the same for every presbytery; it
is multiplied by each employee's salary to arrive at a monthly
premium. The quarterly premium is .0150 multiplied times the monthly
salary. Presbyterial programs vary greatly as to the number of
participants and the related premium. The smallest program has
two ministers enrolled with an annual premium under $200 and the
largest program covers twenty-four ministers at a cost of just
over $4,000 per year.
Because monthly premiums are relatively small amounts, presbyterial
treasurers will be billed by the General Assembly Board of Stewardship
on a quarterly basis. The enclosed employee enrollment form includes
a step by step calculation of one's quarterly premium. Premiums
are subject to adjustment each year on January 1 to allow for
changes in salary. However, when a covered minister moves to another
congregation, a new enrollment form will be needed to update the
salary figure in accordance with the new contract. Otherwise,
salaries will be changed only one time annually on January 1.
Ministers should submit new enrollment forms to this office as
soon as the annual budget is finalized, if his/her salary has
changed.
FORMS
In addition to this brochure, Enrollment Form is provided to employees
who are eligible to participate. Please contact the Board of Stewardship
if further information or assistance is needed.
OVERVIEW OF NON-CONTRIBUTORY PLAN
| Monthly Benefit | 60% of salary to a maximum benefit of $5,000 per month |
| Included in Definition of Salary | annual salary, housing allowance,
fair rental value of manse (not income from supply preaching or other variable income) |
| Elimination Period | a disabled employee must wait 180 days before benefits are payable |
| Maximum Period of Payment | Age of Disability Maximum
Period of Payment Less than age 62 To age 67 62 60 months 63 48 months 64 42 months 65 36 months 66 30 months 67 24 months 68 18 months 69 and over 12 months |
| Benefit Integration | benefits are reduced for-- employee and family Social Security benefits, Worker's Compensation income, some retirement benefits, other group disability benefits, and certain other income; there is no reduction for-- individual or franchise LTD plan benefits, military disability benefits, formal or informal salary continuation provided by a church, payments received from the Cumberland Presbyterian Retirement Plan No. 2 or other tax sheltered annuities |
| Pre-existing Condition Exclusion | a condition existing 3 months before enrollment is excluded for 12 months |
| Definition of Disability | you are limited from performing the material and substantial duties of your regular occupation due to your sickness or injury; and, you have a 20% or more loss in your indexed monthly earnings due to the same sickness or injury |
HOME LONG TERM DISABILITY BENEFITS For more information, contact Robert Heflin
Page updated on April 6, 2004 Information updated on March 1, 2001