Facts and Possibilities Pat Haines, Senior Vice President, Benefits Todd Ingves, Director, Information Management

Objectives Serving MORE Serving BETTER Serving the CHURCH 2

The Plan NOW Benefits Funding 3

Income Security: Retirement Defined Benefit Pension Plan Credit accrual Experience apportionments Asset based 11% dues 4

Income Protection for Members and Survivors: Death and Disability Continued medical coverage and Pension Plan credit accrual during disability – no cost to employer Education benefits for dependent children under age 25 Asset based 1% dues 5

Asset-Based Funding Employing Organization 12% Dues Pension Plan 11% Death & Disability 1 % Short-Term Investments Pension, Death & Disability Benefits Paid to Members Board of Pensions Balanced Investment Portfolio 2014 Dues Paid $75 million Investment Earnings $448 million Benefits Paid $344 million 6

In Sickness and In Health: Medical Plan PPO + Pharmacy National networks: Blue Cross Blue Shield, Catamaran and Cigna Behavioral Health Member cost sharing through income-based copayments and deductibles Emphasis on wellness and prevention: 7

The Economics of Healthcare Self-funded Pay-as-you-go Inherent volatility 1% of the population = 30% of the expense Cost contributors: Lifestyle choices, age 23% / 24.5% dues, depending on family status 8

Pay-As-You-Go Funding Employing Organization 23% / 24.5% Medical Plan Dues Medical Benefits Paid for Members 2014 Revenue $179.6 million Benefits Paid $180.8 million 9

Supplemental and Optional Benefits Supplemental Death and Disability Dental Long-Term Care Retirement Savings Plan 10

Actuarial Forecasting: Art and Science Key factors Revenue: enrollment; salary increases; investment return Expenses: enrollment; third-party costs; compliance; plan design; TREND 11

2015 – 2017 Forecast ( October 2014 ) (in millions; rounded) Revenue$187.5$185.5$183.4 Expenses$189.8$196.8$203.8 Balance($2.3)($11.3)($20.4) Prior Reserve $52.5$50.2$38.9 Remaining Reserve $50.2 (26.7%) $38.9 (19.9%) $18.5 (9.1%)

Forecast (March, 2015) (in millions; rounded) Revenue$181.4$177.8 Expenses$184.1$188.6 Balance($2.7)($10.8) Prior Reserve $61.1$58.4 Remaining Reserve $58.4 (31.7%) $47.5 (25.2%) 13

Demographics

Who Can Participate? Called and installed teaching elders are mandated All other church workers must work at least 20 hours a week in an eligible church service Includes non-mandated teaching elders and lay workers 15

Who Actually Participates? MANDATED TEACHING ELDER NON-MANDATED TEACHING ELDER LAY 50% 16% 33% 5,600 1,700 3,700

Mandated Teaching Elders 5,600 members at 4,700 employing organizations All serving at local churches Average age years of service

Non-mandated Teaching Elders 1,700 members serving 1,400 employing organizations Approximately half are serving local churches and half serving agencies/mid councils/other employers Average age years of service

Lay Employees 3,700 members (36% non- exempt, 64% exempt) serving 1,100 employing organizations 62% serving churches, 20% serving agencies Average age years of service

Employing Organizations LOCAL CHURCH OTHER EMPLOYER MID COUNCIL AGENCY 90% Employers 79% Members 7% Employers 8% Members 2% Employers 5% Members >1% Employers 8% Members 20

Congregations with Plan Members CONGREGATION SIZE 250 or less 3700 Churches 1.1 Average Members 1100 Churches 1.7 Average Members CONGREGATION SIZE Between 251 and 500 CONGREGATION SIZE 501 or more 700 Churches 4.1 Average Members

Churches and Employing Organizations 75% 20% 3% 1% 1 MEMBER MEMBERS MEMBERS More than 10 MEMBERS For churches and employing organizations covering members in the Traditional Medical Plan 22

Demographics

Medical Plan Challenges

Medical Claims Cost Trend

Cost Drivers Demographics Chronic conditions High-cost claimants Prescription drugs

Chronic Conditions DIABETESHYPERTENSION (High Blood Pressure) HYPERLIPIDEMIA (High Cholesterol) 6.8% 21% "The only way to keep your health is to eat what you don’t want, drink what you don’t like, and do what you’d druther not.”- Mark Twain

High Cost Claimants 1% of Medical Plan population responsible for 30% of Plan costs Conditions include cancer, musculoskeletal and heart disease Often complex cases with multiple co-morbidities 20% repeat rate over three-year period

Prescription Drugs Specialty drugs are less than 1% of prescriptions but account for 33% of drug costs Includes treatments for cancer, Hepatitis C, and rare conditions Specialty cost trends are significant and show no signs of abating Generic inflation also a growing concern

Cost Controls Vendor contracting Call to Health initiative High-cost claimant case review Stop loss insurance

Challenges Managing rising medical costs Keeping up with changing healthcare landscape Providing meaningful benefits at reasonable costs 31

Stability and Transition

2016: Stability and Transition Board actions March Apportionment Disability reserves Disability cost of living increase June Medical dues Alternate dues method 33

2016 Dues Methods Medical Member Only 23% Family 24.5% Pension 11% D&D 1% Traditional Dues Method 2015/2016 Mandated, Non-mandated, Lay 34 Medical No Coverage Member Only 2016 ABP Rates Mbr. and Partner Mbr. and Child Member and Family Pension 11% D&D 1% Alternate Dues Method 2016 Non-mandated, Lay

Your Charge: Possibilities Reminders Overall objective of Board of Pensions Covenant with teaching elders Context of facts and values Wide range of benefits “Start by doing what's necessary; then do what's possible; and suddenly you are doing the impossible." - St. Francis of Assisi "The possibilities are numerous once we decide to act and not react." - George Bernard Shaw 35