SAG-AFTRA Health Plan Trustees Say Employer Contributions Haven’t Kept Up With Soaring Health Care Costs

EXCLUSIVE: Representatives of trustees of the SAG-AFTRA Health Plan have told members in a series of Zoom conferences that employer contributions to the Plan and participant premiums have not kept up with the skyrocketing cost of providing health care coverage to some 33,000 participants and their 32,000 family members. Facing projected deficits of $141 million this year and $83 million next year, the restructuring of the Plan’s earnings qualifications thresholds is expected see some 10% of the participants, and 9% of their family members, dropped from coverage next year.

During a Zoom conference Friday, Plan CEO Michael Estrada explained that the Plan is referred to as a “Robin Hood” benefits plan because “thee higher earners contribute more money into the Plan and we use that money to subsidize the care for the lower earners.” Over 75% of employer contributions coming into the Plan are for individuals earning at least $35,020 a year, he said, while currently anyone earning $18,040 can qualify for lower-tier benefits. “So that gives you a sense of the concentration at the higher levels of earners contributing more into the Plan,” he said.

Even so, employer contributions on top earners are subject to caps that are too low to maintain the current level of benefits. For actors in theatrical films, those employer contributions are capped at the first $232,000 the actor is paid, even if they make $20 million a film. Similarly, for TV actors, the caps are $15,000 on earnings for a half-hour show, per episode; $24,500 for a one-hour show per episode; $33,000 for a 90-minute show; and $40,000 for show that’s two hours or longer. Those caps were not set by the Plan’s trustees, but by the union – which is separate from the Plan – in its negotiations with employers, including management’s AMPTP. Clearly, the trustees would prefer much higher caps, but the companies have balked because it would cost them a lot more money.

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Employers contribute about 7.5% of members’ covered earnings to the Plan, Estrada said, but the average cost for one year of coverage for a family of two under the lower tier of the benefits plan is $11,530. “In order for us to receive $11,530 in contributions,” he said, “an individual would have to earn about $153,000 in covered earnings reported to the Plan.” ($153,000 x 7.5% = $11,475.)

That $153,000 “break-even” threshold is nearly nine-times higher than the $18,040 in earnings it currently takes SAG-AFTRA members to qualify for the lower tier of benefits. “So when we talk about this ‘break-even,’” he said, “for somebody to break-even, you’d have to have at least $153,000 of earnings to cover for Plan 2 benefits (the lower tier). Plan 1 is a little bit higher – you’re probably looking at something more than $150,000 to do so for Plan 1 coverage.” That, he said, “gives you some idea of how much money someone would have to earn in order for the contributions to pay for the average cost of care.”

David White, SAG-AFTRA’s national executive director – and a trustee of the Plan – said that numerous options were considered to keep the Plan viable. “At one point,” he said on the Zoom conference, “we were looking at raising eligibility as high as $70,000-75,000 under Plan 1 and raising significantly the earnings requirements for Plan 2. And even doing that, we would have had to hollow out the Plans. But hollowing out the Plans where exceedingly few people will be able to qualify for the $75,000 rate, and hollowing out the benefits for anyone who makes it into Plan 2 – where that threshold would have increased dramatically – doesn’t allow the Plan to provide a meaningful benefit for folks who achieve that eligibility.”

White noted that “there is at least one other industry plan where the eligibility threshold is as high as $116,000 for their premium plan, and in the mid-$30,000s for their basic plan, and we were looking at something like that as well, without being able to provide any meaningful benefits with a structure like that.”

He didn’t name it, but he was referring to the DGA-Producers Health Plan, where the minimum earnings threshold to obtain coverage under the DGA Choice Plan for all earnings periods that begin in 2020 is $35,875, while the minimum earnings threshold to obtain coverage under the DGA Premier Choice Plan for all earnings periods that begin in 2020 is $116,000.

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Instead, the trustees opted to scrap the two-tier plan, with better benefits for those who earn at least $35,020 a year, and adopt what he calls a “blended plan,” with eligibility starting at $25,950 a year. “The reason to move the blended plan from $35,020 down to $25,950,” White said, “was an effort by the trustees, even with these changes, to ensure as low a threshold as possible that supports a meaningful benefit structure that maximizes the number of people who can actually achieve eligibility, while protecting the financial viability of the Plan. That’s the reason for lowering the threshold from the current Plan 1 level to the new blended level.”

SAG-AFTRA’s recently negotiated film and TV contract includes $54 million in additional funding for the Health Plan – if the pandemic subsides and work resumes. That includes a one percentage point increase in employer contributions during the first year of the three-year contract, and 0.5% increases in each of the second and third years, which the union has the option of taking from the built-in annual pay increases. But that added $54 million alone won’t fix the problem.

“The negotiations prioritized contributions into the Plan,” White said on Friday’s teleconference. “That 2% increase has only been achieved one time since the founding of the Plans back in the early ‘70s. There was a negotiation in 2011 where we achieved less than that – 1½ percent – and that was basically the entire negotiation. That was the singular priority. And in this negotiation, we got more than that. We got 2%, and the first percentage goes directly into the Plans.”

Increasing employer contributions to the struggling health plan “was absolutely a priority” during the negotiations, he said, “but it needs to be emphasized that this is an expense problem. Even if we had double that amount, that would not have prevented the need to make dramatic changes on the expense side to ensure that we were addressing these deficits. This was a structural issue that was addressed by the trustees.”

White also noted that previous changes to the Plan to meet rising health care costs have also resulted in members being dropped from coverage. For instance, he said that when premiums were first introduced to the Plan, “thousands of participants dropped off the Plan. Every time we have an eligibility increase, participants drop off the Plan. Any one of the changes we make lead to participants dropping off the Plan.”

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Critics argue that dropping coverage for thousands of participants and their family members during a pandemic is “unconscionable.” To date, more than 14,000 SAG-AFTRA members and their supporters have signed a petition calling on the Plan to rescind the changes. But White and Estrada – who were joined in the Zoom meeting by former SAG presidents Barry Gordon and Richard Masur, emphasized that the massive loss of members’ earnings as a result of the pandemic made the changes even more necessary to ensure the Plan’s survival.

The trustees held another Zoom conference on Monday, where they answered questions from members, and will hold another tomorrow. Members can log in here to attend.