Andrew, after teaching for 15 years, is ordained at 45 and accepts a permanent supply position in a small parish. Andrew is married to Eric and they have no children.
The parish can only afford to pay Andrew a small salary, which is below the Hypothetical Minimum Compensation. Fortunately, Andrew can afford to pay the differential in assessments to ensure that he earns CS toward the Medicare Supplement Health Plan subsidy.
After serving at the parish for five years, the church closes. Andrew is unable to find another permanent position and accepts interim positions throughout the diocese. Over the next ten years, Andrew is able to find interim positions most of the time, but due to the cyclical nature of interim work, he has frequent breaks in service.
When he is 60, Andrew is in a car accident and is unable to return to work. He is eligible for short term disability and then transitions to long term disability.
Key events during Andrew’s career related to her pension
What this means for Andrew
Andrew will be eligible to participate in the Clergy Pension Plan (the Plan) if he is “regularly employed” and compensated by an Episcopal organization. His participation in the plan will be mandatory if he is scheduled to work five or more consecutive months for the same employer. If he is scheduled to work for less than five months (for example, in his various interim positions), he and his employer may opt in to the plan if there is a letter of agreement directing the payment of assessments for his interim work.
Since the Total Accessable Compensation (TAC) Andrew earns in his first position is below the Hypothetical Minimum Compensation (HMC) ($1,500 per month in 2018) in effect under the Clergy Pension Plan, the Credited Service (CS) he earns will be applied toward his pension and life insurance benefits, but not his eligibility for the Medicare Supplement Health Plan subsidy. Since Andrew was able to pay personal assessments on the difference between 1/12th of the HMC and his monthly TAC, he was able to earn CS for the Medicare Supplement Health Plan subsidy.
- For example, if Andrew’s TAC were $1,400 per month, then he’d have to pay a make-up assessment of $18 a month (18% of the $100 difference between $1,500 and $1,400) in order to receive CS toward the Medicare Supplement Health Plan subsidy. Note that Andrew will not receive any CS (for pension and life insurance benefits or the Medicare Supplement Health Plan subsidy) unless his employer also pays the full assessment due each month.
- He can pay assessments personally for up to 24 months following each break in service.
- He can choose to pay the assessment on either his Highest Average Compensation (HAC) or the HMC.
- If Andrew pays the assessments on his HAC, he will earn CS for pension and life insurance benefits, but if 1/12th of his HAC is lower than the HMC of $1,500 per month, then he will not earn CS toward the Medicare Supplement Health Plan subsidy.
- If Andrew chooses to pay assessments on the HMC, then at the current assessment rate of 18%, he would expect to pay $270 a month in personal assessments, and he will earn CS toward pension and life insurance benefits as well as the Medicare Supplement Health Plan subsidy.
If Andrew is unable to return to work due to his injuries and the Medical Board of The Church Pension Fund determines that he is disabled, he is eligible for disability benefits if he is an Active participant at the time he became disabled.
- If Andrew was not Active at the time of disability, he would not be eligible for disability benefits, and would not be able to establish a between cures account. However, he may be eligible for fully subsidized medical coverage for up to the first 23 months while he is on long term disability as explained in more detail below.
- The first 26 weeks of Andrew’s disability (including a 14-day elimination period) will be the short term disability period. If Andrew continues to be disabled after 26 weeks, he will transition to long-term disability.
- If Andrew maintains his Medical Trust medical coverage for the short term disability period, once he transitions to long term disability, he will receive fully subsidized medical benefits (at the same coverage level) through the Medical Trust for the first 23 months of long term disability or until he becomes Medicare-eligible, whichever comes first. If Andrew is eligible for the Medicare Supplement Health Plan subsidy, he will receive the subsidy once he becomes Medicare-eligible, even if has not yet reached age 65.