LCMS Convention Workbook St. Louis, Missouri — 1983, Page 157

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ADMINISTRATION AND PROGRAM IMPLEMENTATION 157

After satisfaction of a calendar year deductible, the Plan pays a major
portion of hospital bills as well as other medical and dental costs
incurred by members and their enrolled dependents. Protection for each
covered person ranges up to a lifetime maximun of $500,000.

Under Plan amendments effective January 1, 1982, the Plan no longer
provides lump sum death benefits and temporary disability benefits for
claims incurred after 1981, The cost of euch claims and the related
benefits are provided for by the Concordia Disability and Survivor Plan
effective January 1, 1982.

A wore comprehensive description of Concordia Health Plan and its
benefits is contained in its Summary Plan Description, which is availabie
from the Worker Benefit Plans office.

NOTES TO FINANCIAL STATEMENTS--Continued EXHIBIT A
Page 5
CONCORDIA HEALTH PLAN

NOTE B-~DESCRIPTION OF PLAN--Continued

The Plan can be terminated by The Lutheran Church - Missouri Synod in
convention. Based upon such action the Board of Managers would then
dispose of the net assets of the Plan as instructed. The Plan prohibits
any part of the net assets being directed to purposes other than for the
exclusive benefit of members and their dependents.

NOTE C--INVESTMENTS

During 1982 and 1981 the Plan's investments (including investuents
bought, sold, as well as held during the year) appreciated (depreciated)
in fair value, as determined by quoted market prices, by $1,358,930 and
$628,631 as follows:

Net Appreciation (De- Fair Value
preciation) in Fair at End
Value During Year of Year
Year ended December 31, 1982
Short-term {nvestments $ $ 1,669,000

Bonds, notes and debentures 1,358,930 10,565,193
$1,358,930 $12,234,193

Year ended December 31, 1981

Short-term investments $ $3,508,533
Bonds, notes and debentures (628,631) 4,693,576
$(628,631) $8,202,109

The fair value of individual investments that represent 5% or more of
Plan assets as of December 31, 1982 and 1981 are as follows:

Fair Value at December 31,

1982 1981

United States Treasury Notes
principal amount $9,000,000 in
1962 and $1,800,000 in 1981 $10,078,736 $ 1,744,75¢

General Motors Acceptance Corporation

Demand Note, $950,000 par value 950,000
American Brands, Inc., Discount
Note, $500,000 par value 494,219
Duke Power, Discount Note,
$560,000 par value 552,666
Owens Corning Fiberglass, Discount
Note, $785,000 par value 775,933
EXHIBIT A
Page 6

NOTES TO FINANCIAL STATEMENTS-~Continued

CONCORDIA HEALTH PLAN

NOTE D--AMOLNT DUE FROM INSURANCE COMPANY

The amount due from insurance company in 1981 is an experience balance
which under the terms of the policy is due from the insurance company and
Tepresents the insurance company's estimate, based on the latest informa-—
tion available, of the difference between premiums paid by the Plan plus
interest earned and the sum of claims paid, claims provided for, and the
insurance company's retention.

NOTE E--INCOME TAX STATUS

The Internal Revenue Service has ruled (March 8, 1979) that the Plan
qualifies under Sections 51] through 515 of the Internal Revenue Code
CIRC) and is, therefore, not subject to tax under present income tax lav.
Once qualified, the Plan is required to operate in conformity with the
IRC to maintain its qualification. As further disclosed in Note B, the

Plan has been amended and a ruling from the IRS as to continued qualifi-
cation is in the process of being requested. It is management's opinion
that the Plan will continue to qualify under the Internal Revenue Code.

NOTE F--ACCOUNTING CHANGES

In 1982, the Plan changed its method of accounting and reporting to
couply with the provisions of the audit and accounting guide entitled,
Audits of Employee Benefit Plans, issued by the American Institute of
Certified Public Accountants. Adoption of this guide required changing
the method of accounting for investments from amortized cost to market.
Also, the Plan has reconsidered its policy with respect to the accounting
for the cost of non-contributory benefits. Prior to 1982 the Plan had
provided for the estimated future cost of non-contributory benefits for
all participants then eligible for such coverage (estimated to be
$5,200,000 at December 31, 1982 and $5,46C,000 at December 31, 1981).

The Plan has determined this policy is no longer appropriate under the
guide and the cost of such coverage is now accounted for based upon the
date claims are incurred as are all other benefits provided by the Plan.
The actual claims paid for those eligible for such coverage were $906,743
in 1982 and $594,471 in 1981. Previously reported information pertaining
to 1981 has been restated to present that information on a comparable
basis.

The effect of the change in accounting for investments reduced net assets
as previously reported at January 1, 1981 by $748,741 and increased
(decreased) the change in net assets by $1,254,620 and $(138,65%) for the
years ended Decenber 31, 1982 and 1981, respectively.

EXHIBIT A

NOTES TO FINANCIAL STATEMENTS~-Continued Page 7

CONCORDIA HEALTH PLAN

NOTE F-~ACCOUNTING CHANGES--Continued

The effect of the change in accounting for non-contributory benefits
increased net assets as previously reported at January I, 1981 by
$4,405,000 and increased the change in net assets by $790,000 and
$1,055,000 for the years ended December 31, 1982 and 1981, respectively.

EXHIBIT B
Page 1

Ernst & Whinney 10 Broadway

St. Louis, Missour: 62102

314/231-7700

Board of Managers

Concordia Plans

Lutheran Church - Missouri Synod
St. Louis, Missouri

We have examined the stateuents of net assets of the Concordia Disability
and Survivor Plan (formerly the Concordia Survivor Plan) of Tne Lutheran
Church - Missouri Synod as of December 31, 1982 and 1981, and the related
Statements of changes in net assets for the years then ended. Our
exaninations were made in accordance with generally accepted auditing
standards and, accerdingly, included such tests of the accounting records
and such other auditing procedures as we considered necessary in the
circutstances.

in our opinion, the financial statements referred to above present fairly
the net assets of the Concordia Disability and Survivor Plan of The
Lutheran Church - ‘Nissouri Synod at December 31, 1982 and 1981, and the
changes in net assets for the years then ended, in conforsity with
generally accepted accounting principles applied on a consistent basis
after restatement for the change, with which we concur, in the method of
accounting and reporting by the Pian, as described in Note 1, to comply
with the provisions of the audit and accounting guide entitled, Audits of
Ecplovee Benefit Plans, issued by the American Institute of Certified

Public Accountants.
Grwetv Where

St. Louis, Missouri
March 8, 1983