Effective January 1, 2013, there are new national and diocesan requirements for the provision of health insurance and pension benefits for clergy and lay employees in all congregations in the Diocese of Newark. A synopsis of these requirements is below; questions may be directed to John King or Leslie Thomas in the Diocesan office.
Summary of Changes Effective January 1, 2013
Pension Benefits
- Clergy – No change to current employer requirements of 18% of Total Compensation
- Lay employees – All Episcopal employers with lay employees scheduled to work at least 1,000 hours/year (20 hours/week) are required to participate in the Church Pension Fund’s Lay Employee Pension System, with employer contribution of 5% plus an additional 4% match of voluntary employee contributions
Health insurance Benefits
- Clergy – No change to current employer requirements, with accountability and process mandates described below
- Lay employees – Congregations with lay employees scheduled to work at least 1,500 hours/year (30 hours/week) are required to provide and pay for health insurance benefits for all eligible lay employees, in parity with the health benefits provided to the congregation’s clergy.
Details as Mandated by National and Diocesan Conventions
Pension Benefits
- Clergy – There are no changes relating to the provision of pension benefits for clergy working in congregations or other Episcopal organizations and agencies. The employing entity is required by national canon to pay the full pension assessment of 18% of the cleric’s Total Compensation, as defined by the Church Pension Fund (which includes cash stipend, housing allowance or calculated value, financial value of utilities if provided, social security offset, housing equity contributions, and any other cash/taxable payments). Please note that this requirement applies to any ordained person receiving payment from an Episcopal entity of $200 or more for 3 or more consecutive months. Congregations or other Episcopal entities which pay priests or deacons -- regardless of the requirements of the position -- are required to contribute under the national canon. Furthermore, congregations paying clergy to provide services on a “supply” basis are required to adhere to the “$200 for 3 or more consecutive months” provision.
Congregations paying clergy who are currently receiving pension benefits do not need to pay into the pension system. However, compensation to these clergy must adhere to the Pension Fund restriction that Total Compensation, as described above, must not exceed 50% of the annual median compensation of clergy working full-time -- $34,500 in 2012. Any congregation paying in excess of this amount should be in touch with Leslie Thomas (lthomas@dioceseofnewark.org) to discuss the option for an exception.
- Lay Employees – Effective January 1, 2013, all Episcopal employers (congregations, schools, pre-schools, nursery schools, day care centers, Community Development Corporations, agencies) with lay employees who are scheduled to work 1,000 hours per year (approximately 20 hours per week) must participate in the Lay Employee Pension System administered by the Church Pension Fund. With limited exceptions[i], employing entities must enroll these lay employees prior to January 1, 2013, and must make a contribution to each employee’s pension account equal to 5% of pay plus up to an additional 4% of pay to match contributions voluntarily made by the employee.
Health Insurance Benefits
- Clergy – The Special Diocesan Convention in June did not approve a proposed new diocesan canon related to health insurance benefits for clergy, leaving the prior canon in effect. The text of that canon is in the appendix. Accordingly, all congregations are required to provide and pay for health insurance benefits for the eligible clergy being paid by that congregation. The June Convention did approve a resolution (also in the appendix) that provides additional specifics in this regard. Congregations are to provide and pay for the level of coverage needed by their clergy. Such need is to be determined annually following an explicit process of conversation and discernment, taking into consideration such factors as household structure and spousal employment, and is to document this process and submit a report thereof to the Office of the Bishop. Sample documents to assist you with this process will be available on the diocesan website in mid-September.
- Lay Employees – In accordance with national canons and the resolution approved by the Special Diocesan Convention in June, congregations employing lay employees who are scheduled to work 1,500 hours per year or more (approximately 30 hours per week) are required to provide and pay for the level of health insurance benefits needed by eligible lay employees and in parity with health benefits provided to the congregation’s clergy. As described in the Clergy paragraph above, the insurance needs of eligible clergy and lay employees should be determined through a documented and reported process.
Congregations that currently provide health insurance benefits to their eligible clergy and lay employees that is not in parity (for example, providing family coverage to clergy and single coverage to lay employees, or paying 100% for clergy and 75% for lay employees, or other non-equal benefit offerings) have the option, under diocesan resolution, to move toward parity over a five-year period under a plan developed by the congregation and approved by the Office of the Bishop.
The full text of the resolutions and canons relevant to these requirements is provided in the appendix below. Deputies to Diocesan Conventions in January and June should be familiar with these requirements and may be helpful to congregational leaders with questions. For additional information, please contact John King or Leslie Thomas at the Diocesan office.
[i] Entities that currently provide a defined benefit program for their employees may elect to continue that plan as long as the plan delivers pension benefits not less than those provided through the Church Pension Fund Lay Defined Benefit Plan; annual certification may be required.
Schools currently providing pension benefits through a plan administered by TIAA-CREF that provides contribution levels equal to or exceeding those required by national canon may retain that plan; annual certification may be required.
Appendix:
Pension Benefits for Lay Employees and Clergy
Adopted at the 2012 Diocesan Convention
RESOLUTION III: Pension Benefits for Lay Employees and Clergy - Adopted
RESOLVED, that the 138th Convention of the Diocese of Newark, in accordance with Resolution A138 of the 2009 General Convention and Canon 8 as amended at that Convention, mandates that pension benefits be provided through the Church Pension Fund to the following persons working for congregations and other entities subject to the authority of the Church, effective January 1, 2013:
1) all clergy, including bishops, priests and deacons but excluding those who have retired and are receiving pension benefits from The Church Pension Fund, who are paid at least $200 per month (excluding travel expenses) for three or more consecutive months
2) all lay employees scheduled to work a minimum of 1,000 hours annually.
Supporting Information
Clergy have been provided pension benefits through The Church Pension Fund since 1917. This resolution restates this requirement and clarifies the eligibility. Since 1993 the General Convention has required that lay employees of the Church working a minimum of 1,000 hours annually receive pension benefits. In 2009, this requirement was made part of our national canons. This resolution implements this requirement in our diocese. All congregations, pre-schools, nursery schools, Community Development Corporations, schools or other organizations in the Diocese of Newark who pay clergy and/or lay employees for their work must provide pension benefits to these eligible persons under the rules set forth by The Church Pension Fund in accordance with the national canon.
Canon 14 Insurance
Adopted at the 1984 Diocesan Convention
The Diocese of Newark shall obtain a group policy or group policies which will provide life and health insurance coverage for the clergy of the Diocese. Participation by Parishes, Aided Parishes, Incorporated Missions and Missions is mandatory. The premium cost attributable to insurance coverage for clergy employed by a Parish, Aided Parish, Incorporated Mission or Mission shall be paid by that Parish, Aided Parish, Incorporated Mission or Mission. The effective date of this shall be January 1, 1985.
Resolution on the Implementation of the Denominational Health Plan (DHP)
Adopted at the June 9, 2012 Special Convention
Resolved, that the Special Convention of the Diocese of Newark held on June 9, 2012, mandates the implementation of the Denominational Health Plan, as defined in Title I, Canon 8 of The Episcopal Church, in all congregations within the Diocese and in the Diocesan Office, and as described below,
- That congregations and the Diocesan Office (hereinafter referred to as “employers”) shall provide health insurance, selected from the offerings included in the Diocesan Health Plan and administered by the Church Pension Fund’s Medical Trust, to all eligible clergy and lay employees, and
- That eligible lay employees are those scheduled to work 1,500 or more hours annually, and eligible clergy are those contracted to work half-time or more, and
- That the level of insurance coverage needed by eligible clergy and lay employees be determined annually by congregational leaders (clergy-in-charge and wardens), taking into consideration such factors as household structure and spousal employment, following an explicit process to be completed prior to the open enrollment period that solicits open and honest input from each eligible clergy and lay employee, and
- That employers shall not reduce coverage levels for eligible clergy and lay employees, and
- That employers are required to make the same offering (coverage and contribution levels) to all eligible clergy and lay employees, under the parity provision of the Denominational Health Plan, and
- That employers with existing health insurance provisions that are not in parity must achieve parity within five years under a plan filed with and approved by the Office of the Bishop. This five-year period notwithstanding, any employers entering into an employment agreement with a new eligible clergy or lay employee must meet the parity standard at the beginning of that agreement, and
- That eligible clergy and lay employees may elect not to participate in the Diocesan Health Plan if alternate coverage is available and approved by the Medical Trust, and
- That schools, day care facilities, community development corporations and other congregational and diocesan institutions and organizations, regardless of the independence of their incorporation or tax status, are encouraged to adopt the principles articulated in this resolution, and
- That all employers will report annually on the process used to determine the level of insurance coverage needed by their eligible clergy and lay employees, the percentage of health insurance costs contributed by the employer, and any issues that arose in the determination of the employer’s health insurance benefits policy. This report will be made to the Office of the Bishop and is to be filed at the end of the open enrollment period and not later than December 1 of each year, with reference to the insurance coverage for the following calendar year, and
- That to ensure just implementation of the process for determining the level of insurance needed by eligible clergy and lay employees, a Compensation and Benefits Ombudsmen Committee will be appointed by the Bishop to hear appeals on those decisions made by employers on the provision of health coverage which in the mind of the eligible clergy or lay employee are not fair and just. The Committee will consist of three people, at least one of whom shall be a clergy person and at least one a layperson, for a term of three years. The appointments shall be made by the Bishop, after consultation with the Diocesan Council Steering Committee, and ratified by Diocesan Council. None of the members shall be a member of the Diocesan staff. The appeal request shall be submitted to the Bishop who will forward the request to the Committee whose review shall be conducted within thirty days of its receipt.
For additional information, see the Human Resources page.
