The board of trustees of the SAG-AFTRA Health Plan said today that it will “vigorously contest” a class action lawsuit filed on Tuesday, calling it “entirely without merit.” Facing staggering deficits, the Plan announced in August that it will be raising premiums and earnings thresholds for coverage on January 1 in order to stay afloat, which will remove thousands of current recipients from coverage.
The lawsuit, filed in U.S. District Court in Los Angeles, claims that the coming benefit changes “illegally discriminate based on age and violate the Age Discrimination and Employment Act of 1967,” and are a breach of fiduciary duty under the Employee Retirement Income Security Act. The 10 named plaintiffs in the suit include former SAG president Ed Asner and David Jolliffe, currently a vice president of the union’s Los Angeles Local – both of whom are leaders of the union’s dissident faction that spearheaded the lawsuit. SAG and AFTRA merged in 2012, and their health plans merged in 2017.
“The lawsuit filed against the Board of Trustees of the SAG-AFTRA Health Plan (and the former SAG Health Plan) is entirely without merit,” the trustees said in a statement today. “The Board of Trustees has always taken its responsibilities very seriously, consulting with respected and experienced experts in connection with the Health Plan merger and the ongoing design of the Plan. The complaint misrepresents the facts and omits material information about the diligence that preceded the decision to merge as well as the circumstances leading to the recent benefit changes. We will vigorously contest this lawsuit and demonstrate that our actions were fully consistent with our legal responsibilities.”
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The Plan has said that “without restructuring the Health Plans, we are projecting a deficit of $141 million this year and $83 million in 2021, and by 2024 the Health Plan is projected to run out of reserves.” Trustees have projected that some 3,500 performers and 2,800 of their dependents will lose benefits under the restructuring, although the vast majority of them are eligible for coverage under Medicare or Obamacare.
The lawsuit claims that the trustees could have taken less “draconian” measures to save the Plan. “On August 12, 2020, in the midst of a pandemic and a work shutdown and economic crisis,” the suit states, “the SAG-AFTRA Health Plan participants were shocked when the SAG-AFTRA Health Plan Trustees suddenly announced draconian changes to the SAG-AFTRA health benefits structure. The trustees blame the Covid-19 pandemic for the suddenly urgent need to impose the benefit cuts and drop thousands of participants from SAG-AFTRA health coverage. This blame ignores the facts and readily available measures that could have addressed such a one-time event without dramatically ending SAG-AFTRA health coverage for primarily older participants, including many performers who surrendered their right to pre-1960 film residuals to start the SAG pension and health plans for all members.”
In a message to its members about the lawsuit, SAG-AFTRA said today: “There’s no easy way to say this: You are being misled. Since the changes to the SAG-AFTRA Health Plan were announced in August, there has been a deliberate public and social media campaign spreading misinformation and fear. We understand that change, myths and rumors have led to anger and frustration. We also know that truth is the best balm in uncertain times. Here are five facts you need to know about changes to the SAG-AFTRA Health Plan:
1. “Without significant changes, the SAG-AFTRA Health Plan’s reserves would have vanished for ALL participants by 2024. Ask yourself this: Why would the Health Plan want to reduce coverage for members if there was any other option?
2. “Senior Performers are not losing their healthcare coverage; they will continue to have Medicare as their primary insurance, as they do today. Plus, they will receive a stipend under the new Health Reimbursement Account Plan to use for supplemental coverage of their choosing through Via Benefits. For many Senior Performers, this will mean comparable coverage at a comparable price.
3. “Spouses aren’t getting “kicked off” the plan. If you meet eligibility requirements and your spouse DOES NOT have access to their own employer-sponsored health plan, your spouse can still be covered by the SAG-AFTRA Health Plan. If they are covered by their own employer-sponsored health plan, they will also be eligible for secondary coverage under the SAG-AFTRA Health Plan.
4. “There’s a new reduced cost COBRA safety net available specifically designed to help ease the transition for many participants. Those who qualify will be eligible to maintain their SAG-AFTRA Health Plan coverage with significantly reduced COBRA premiums — at only 20% of the regular COBRA premium — for 12-18 months after their current eligibility expires. For detailed information, please visit sagaftraplans.org/health.
5. “The idea that premium increases or higher employer contributions alone could have fixed the Health Plan is simply wrong. The root of the problem is the exorbitant cost of healthcare — a problem made worse by our industry’s production shutdown due to the pandemic crisis. The cost of healthcare remains a top issue for Americans, and the SAG-AFTRA Health Plan is not immune from this and other economic forces. Structural changes were required to put the Plan on a secure footing now and into the future.”
The union went on to say that “We understand that change is not easy, but it’s crucial that you have the facts. As we have learned in our country and on social media, not all claims are factual. Always check the credibility of your sources. If you have questions about changes to the SAG-AFTRA Health Plan, please visit the FAQ section at sagaftraplans.org/health for verified, accurate information and updates.”
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