​The session of Hosanna Presbyterian Church, a 650-member church with moderate resources, is adding a new position to the staff: a full-time Music Director. For years the church has had a parttime choir director, who worked 15 hours per week for a $15,000 salary with no benefits. With the retirement of the choir director and recent increases in the number of families with children joining the church, the church would like to hire a full-time person to lead the existing choir and establish graded choirs for children and youth.

The Personnel Committee is exploring benefits options with the Board of Pensions Church Consultant. The Church Consultant inquires about Hosanna’s other employees and learns that there is only one other staff member, other than the pastor, who works 20 or more hours per week; an administrative assistant works 40 hours per week. After consultation with the Church Consultant, the Personnel Committee recommends that the church offer benefits to full-time other employees as follows (through menu options):

  1. the exclusive provider organization (EPO)
    1. Employer will pay 80% of Member-only cost and 50% of any elected family coverage; the employee pays the balance of desired coverage.
    2. Employer offers employees the opportunity to elect the PPO (preferred provider organization) option at their own expense (the employee pays the cost differential from EPO).
  2. The employer enrolls full-time other employees in the defined benefit pension. The employer pays dues at 11% of effective salary.
  3. The employer enrolls full-time other employees in the Death and Disability Plan. The employer pays dues at 1% of effective salary.

The session has approved a $36,000 salary for the Music Director. They have identified a candidate for the position. Kim is 42 years old, married, and has one child, 16 years old. Kim’s spouse, Karen, is a highly compensated professional with access to very good medical coverage for the employee, entirely paid by the employer, and the same coverage for family, for which the employee contributes 20% of the cost.

Kim and Karen review the available options for medical coverage. After assessing cost and coverage, they decide to waive participation in the medical benefits provided by Hosanna Presbyterian Church. Securing medical coverage through Karen’s employer is more attractive financially.

What are the benefits of this approach?

The Board's perspective

  1. There is flexibility to meet the medical coverage needs of the employee, who waives medical and utilizes the medical coverage available to his spouse for less out-of-pocket cost.
  2. The plan’s increased flexibility still allows access to the Board’s defined benefit pension. The church pays the 11% contribution of $3,960. Kim accrues credits at the national median of $41,000 for other employees; this benefits the employee through accumulation of pension credits on an additional $5,000 of imputed salary and the church through acquisition of those additional credits at no cost. The subsidy to the cost for the church is $550, a reflection of community nature of the plan.*
  3. Death and disability benefits coverage is provided.
  4. Access to supplemental benefits coverage is provided.
  5. Access to the Retirement Savings Plan of the Presbyterian Church (U.S.A.) is provided.
  6. Access to educational programs is provided (other than CREDO, which is for ministers who meet criteria).
  7. Access to certain Assistance Program benefits is provided — Income and Housing Supplements if he’s in the pension 20 years; and Shared and Emergency Grants. He is not eligible for Adoption Assistance or Transition-to-College Assistance Grants since the children are not dependents in the Board’s medical program.

* $41,000 - $36,000 = $5,000 x 11% = $550 subsidy