Make-Up Account for the Medicare Supplement Health Plan Subsidy
If your monthly Total Assessable Compensation is below 1/12 of the 2018 Hypothetical Minimum Compensation ($18,000 / 12 = $1,500) and you would like to earn Credited Service toward the Medicare Supplement Health Plan Subsidy, you may open a make-up account to pay Assessments on the difference between $1,500 and your monthly Total Assessable Compensation. You may personally pay a make-up Assessment (including interest, if applicable) for any or all months in which your Total Assessable Compensation is less than $1,500.
Following is an example of how this works based on the 2018 Hypothetical Minimum Compensation of $18,000:
- The Rev. John Smith’s Total Assessable Compensation for January through December is shown in the chart below.
- If all Assessments are fully paid on time, Father Smith will earn 12 months of Credited Service toward his pension and only nine months of Credited Service toward the Medicare Supplement Health Plan Subsidy because the Assessments paid in January, February, and March are based on monthly Total Assessable Compensation that is below $1,500. However, if he personally pays Assessments to a make-up account for those three months, he will receive Credited Service toward the Medicare Supplement Health Plan Subsidy.
Total Assessable Compensation
Credited Service for Pension
Credited Service for Medicare Supplement Health Plan Subsidy
|April||$1,500||1 month||1 month|
|May||$1,550||1 month||1 month|
|June||$2,000||1 month||1 month|
|July||$2,000||1 month||1 month|
|August||$2,000||1 month||1 month|
|September||$2,000||1 month||1 month|
|October||$2,000||1 month||1 month|
|November||$2,000||1 month||1 month|
|December||$2,000||1 month||1 month|
|Total||20,050*||12 months||9 months**|
* Note that Father Smith’s annual Total Assessable Compensation is actually above the Hypothetical Minimum Compensation of $18,000 per year. However, whether his Credited Service counts toward the Medicare Supplement Health Plan Subsidy is based on whether his monthly Total Assessable Compensation is equal to or above 1/12 of the Hypothetical Minimum Compensation.
** If Father Smith would like the Credited Service that he earns for January, February, and March to count toward the Medicare Supplement Health Plan Subsidy, then he can personally pay a make-up Assessment for any of those months. In this example, the monthly make-up Assessment he would have to pay would be 18% of $500 ($1,500 - $1,000), or $90 per month.
Important note: To earn monthly Credited Service toward your pension and the Medicare Supplement Health Plan Subsidy, both you and your employer must fully pay your share of the Assessments due for that month. If you pay Assessments to a make-up account for a particular month, but your employer does not pay, you will not earn Credited Service for that month for your pension or the Medicare Supplement Health Plan Subsidy until your employer pays in full.
If you have 20 or more years of Credited Service toward the Medicare Supplement Health Plan Subsidy, it is not necessary to open a make-up account as you will receive the full subsidy. If you marry after retirement and subsequently return to active ministry, however, you may need to open a make-up account in order for your spouse to be eligible for the subsidy.
No guarantee: CPF plans to continue to provide the Medicare Supplement Health Plan Subsidy. However, given the rising cost of medical care, coupled with the uncertainty regarding the structure of Medicare in the future, this should not be viewed as a guarantee of the Medicare Supplement Health Plan Subsidy in perpetuity.
Your eligibility for other benefits provided outside of the Clergy Pension Plan (please see About the Clergy Pension Plan for a complete list of plans) is based on your status (Active/Inactive) and/or vesting status under the Clergy Pension Plan rather than the compensation on which your Credited Service is earned. The amount of those other benefits, however, may be affected by your compensation. Please see Benefits if You Are Disabled Prior to Retirement and Benefits for Your Survivors for more information.