2021 Rates for NRECA Group Benefits Program and RS Plan
During these unique times, NRECA remains committed to providing our members with reliable, comprehensive and affordable benefit plans. As announced yesterday during the NRECA Employee Benefits Update as part of the Benefits & HR in Focus webinar series, 2021 base premium rates for the NRECA Group Benefits Program will not increase over 2020 premium rates, and there will be a 3% increase in base contribution rates for the Retirement Security (RS) Plan.
Group Benefits Program rates
To provide cooperatives with significant relief from the financial impacts you and your communities are experiencing and facing from the COVID-19 pandemic, NRECA will hold base 2021 premium rates steady at 2020 premium levels (a 0% increase) for all group benefit plans for experience rated and non-experience rated systems. Adjustment slightly up or down may occur for the life and disability plans depending on co-op-specific demographic and claims factors, or if you make changes to any of your group insurance program designs.
NRECA is able to make this special adjustment because of the strong capital reserves for the NRECA Group Benefits Trust that have been built up over the past decade. The strength of these reserves has been made possible by past premiums, positive investment returns, and lower claims expenses due to decreased use of health care services year-to-date due to state and federal quarantines and travel restrictions. As Peter Baxter, senior vice president of Insurance and Financial Services, noted, “These reserves operate to backstop the group insurance trust, similar to a “rainy day” fund. For many of our members it is or may be raining soon—in terms of cash flows—so what better time to use these funds to help support them and their employees.”
RS Plan billing rate
While lump sum interest rates remain at historically low levels and the 2020 market drop has affected the RS Plan’s performance compared with actuarial assumptions, the plan continues to benefit from special multiple-employer rules contained in the Cooperative and Small Employer Charity Pension Flexibility Act of 2014 that allow it to average annual investment returns over the next five years. This regulatory relief, coupled with further diversification of how RS Plan assets are invested, as well as the reduction in PBGC premium costs associated with the passage of the Setting Every Community Up for Retirement Enhancement Act of 2019, means there is no need for the type of double digit increases in RS Plan contribution rates that were necessary after the 2009 economic downturn.
As a result, the fiduciary committee for the RS Plan decided to limit the base contribution rate increase for next year to 3%. That means that if your co-op’s base contribution rate was 20% in 2020, it will now be 20.6% for 2021.
2021 rate information
Primary benefits administrators for each subgroup in the NRECA Group Benefits Program will receive their 2021 annual renewal rates by email on August 12. CEOs and benefits administrators should also look for their co-op’s RS Plan contribution rates for 2021 to arrive by email in mid-August.
If you have questions about your co-op’s group benefit or RS Plan rates or would like to make any adjustments to your plans, speak with your NRECA field representative.