Anthony Cota AVP Policy and Design, Benefits Policy

Clayton Crawley EVP Chief Church Relations Officer

October 1, 2019

Episcopal Business Administration Conference

Working After Retirement/

Working While Pensioned

Working While Pensioned Roadmap

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Universal

WWP

Rules

Age 65

Medicare

Secondary

Payer Rules

Bona Fide

Severance

Age 72

Pension Plan Rules

Working While Pensioned Rules

Clergy Pension Plan Rules

• Do NOT work in same church or institution from

which you retired (regardless of compensation)

• If at a different employer, do NOT exceed the

compensation limit for a 12-month period (limit

beginning in 2019 is $39,000)

• No limits on work outside the Episcopal Church

Criteria not met?

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Working While Pensioned Exceptions

Under Age 65• Same or Different Employer

– Application executed by geographic bishop

– Obtain approval from CPF

• Same Employer

– Must be a different position with limited scope

and compensation

– “Bona fide” severance from employment

• Two-year lifetime limit

Age 65 or Older– Comply with Medicare Secondary Payer rules

Bona Fide Severance—IRS Rules

Must have bona fide severance from employer if retiring prior to

age 65 and return to same employer

(Treas. Reg. Section 1.401(a)-1(b))

What is bona fide severance?

• Will look at intent of cleric and employer when cleric retired

• Facts and circumstances

– Were normal termination procedures followed?

– Was the rehire prearranged?

– Was employer actively looking for replacement?

Bona Fide Severance—IRS Rules (cont’d)

Failure to Comply

• Qualified plan issue

• Impact to cleric’s pension benefit

Working While

Pensioned Examples

Bona Fide Severance

Facts of the Case

• Age 63 cleric

• Same employer, limited job after retirement

• Exception requested

• Letter stated that the rehire date is part of a “plan”

– Result– Since the rehire was part of a plan, a bona fide severance

was not demonstrated

– CPF declined the exception

– Cleric decided to return to work and suspend pension benefits

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Working While Pensioned

Facts of the Case

• Age 67 cleric

• Same employer, same job after retirement

• Worked for 24 months

• Received CPF pension

• Failed to notify CPF

– Result– Pension payments ceased immediately

– All pension payments plus interest were required to be

paid back by cleric

– Assessments plus interest were required to be paid by employer

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Medicare Secondary

Payer Rules

Medicare Secondary Payer (MSP) Rules

MSP Rule Highlights

• Outlines when Medicare does not pay first for

health claims

• All employees must be offered the same health

plans—regardless of Medicare eligibility

Medicare beneficiaries can reject employer

coverage

• Retain Medicare as primary coverage

• Purchase secondary coverage

– BUT, not from employer group plan

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Medicare Secondary

Payer Examples

Medicare Secondary Payer

Facts of the Case

• Age 67 deacon

• Same employer, limited scope and compensation

• Working While Pensioned exception granted

• Eligible for Active Medical Trust Coverage,

but declines coverage

– Result

– Employer notified CPF of eligibility for Active Medical Trust Coverage

– CPF terminated Medical Trust Medicare supplement coverage

and subsidy (for the cleric and, if applicable, his/her eligible spouse)

– Employee remained on Medicare

– Employee purchased individual Medicare supplement plan

– In compliance with Medical Trust and MSP rules14

Working While Pensioned Exceptions

Age 72 or Older

• Mandatory Church Retirement Date

• No Working While Pensioned restrictions

• Medicare Secondary Payer rules still apply

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Questions & Answers

Important Disclosures

This information is provided for general informational purposes only and is not

intended as financial, investment, legal, tax, or other professional advice. Neither

The Church Pension Fund nor any of its affiliates (collectively, the “Church

Pension Group”) provides, and none of this information is intended to be or

should be viewed as, financial, investment, legal, tax, or other professional

advice. This presentation is provided for your information only. In the event of a

conflict between the information contained in this presentation and the official

plan documents or policies, the official plan documents or policies will govern.

The Church Pension Group retains the right to amend, terminate, or modify the

terms of any benefit plans described in this presentation at any time, without

notice, and for any reason.

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#2019CPGEBAC

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