SAG-AFTRA Health Plan Raising Premiums & Eligibility To Stay Afloat

Facing staggering deficits, the SAG-AFTRA Health Plan is raising premiums and earnings thresholds for coverage come January 1. “While this restructuring will preserve access to an excellent health plan for the majority of our participants, the changes will be disruptive for some,” the Plan said today in a letter to participants, noting that those who lose coverage because they don’t meet the new earnings requirements may be eligible for coverage under Obama Care.

“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. We must prevent this from happening,” the letter states. Last year, the Plan paid out nearly half-a-billion dollars to provide coverage for 65,000 participants and their families.

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Under the restructuring, premiums will increase to $375 per quarter for coverage of one participant; to $531 per quarter for a participant with one dependent, and to $747 per quarter for a participant and two or more dependents. Under the new earnings thresholds, participants under the age of 65, for instance, will now have to earn at least $25,950 – including seasonal and residuals earnings – during a 12-month base earnings period to qualify. Alternately, they’ll be able to qualify by working 100 days during a base earnings period under specified contracts.

See the newsletter here.

“It’s no secret that over the past several months, we have been living through extraordinary physical, emotional, and financial pressures that have had a particularly heavy impact on our industry,” the letter says. The SAG-AFTRA Health Plan has not been immune.

“Throughout our history, the Plan has provided high-quality health coverage to hundreds of thousands of participants and their families. However, the continued high cost of health care, the global pandemic, and the industry shutdown have created an urgent need for the SAG-AFTRA Health Plan to be restructured.

“We’ve all seen the headlines – the cost of healthcare continues to rise exponentially. This isn’t just an isolated area of the healthcare industry. Across the board, prices are surging. Relentless inflation has nearly doubled annual U.S. healthcare spending in the last decade, and we’ve seen especially sharp increases in Health Plan benefit costs in just the past two years, as illustrated below:

“We have been working diligently to try to control the growing costs of healthcare by negotiating better contracts and reducing costs within our control. Examples of this include negotiating $30 million in savings from our pharmacy benefit manager contract in 2017, and an additional $29 million in savings with a new contract for 2021. We have also worked continuously to reduce our operating costs, finding ways to do more with less. Last year, just 8 cents of every revenue dollar was spent on the Plan’s operations, leaving more money to pay for participant benefits.

“However, despite our success at managing costs within our control, ever-increasing healthcare costs have resulted in unsustainable deficits, requiring the use of our reserves to fund current expenses. Last year, we paid almost $468 million in expenses for our 65,000 participants and their dependents. This marks an $82 million increase in healthcare related costs in the last two years alone.

“Rising healthcare costs have also increased the Health Plan’s subsidy of participant costs (i.e., healthcare costs covered by the Plan in excess of employer contributions and participant premiums). While premiums and contributions have remained relatively stable, the Health Plan’s subsidy has grown dramatically.

“The reality is that employer contributions and participant premiums do not cover the cost of care. Without restructuring the Health Plan, 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. We must prevent this from happening.”

Noting that the implementation of the Affordable Care Act (ACA) “has changed the way health insurance works in this country,” the Plan said that “participants may be unaware of the highly affordable options available to individuals and families with low incomes.

“While the restructured Plan will feature a single, higher eligibility threshold, those who previously qualified for coverage at lower levels could actually be eligible for similar or better coverage – at lower or no cost depending on household income – through the ACA Exchanges. These options are available only to those who don’t have health coverage or eligibility through their employer or the Plan.

“We understand that no one welcomes the disruption of changing health coverage – even if similar, less costly alternatives are available – but it’s important to note that those participants who lose Plan coverage may still have good, affordable health insurance options.

“We recognize that any change right now is difficult and want to assure you that, in exploring all options, we have obsessed over the details, exhausted every alternative, and worked tirelessly to reduce costs within our control. We know every choice we make affects people who depend on us. While difficult, these changes are necessary to protect the financial sustainability of our Plan, now and into the future.”

The newsletter notes that the Plan is also offering improved COBRA coverage for those who lose their SAG-AFTRA coverage. “While we’ve taken great care to establish eligibility thresholds that many of our participants can meet, we recognize some will no longer qualify,” the newsletter says. “That’s why we’re introducing a new benefit for the long term, designed for performers working continuously in the industry, but who may work and earn less than anticipated during a given year. Here’s how the new Extended Career COBRA benefit works. When you’re not able to maintain eligibility for your next benefit period, you can choose to continue SAG-AFTRA Health Plan coverage through COBRA. And, if you qualify for our new Extended Career COBRA benefit — and timely elect COBRA — you will pay a reduced premium of 20% of the COBRA rate.”

“In the coming weeks,” the Plan told participants, “we will provide you with detailed information, tools, and resources to help you plan for these changes. We are confident that together we will be able to navigate the road ahead successfully and will continue to support you throughout this change – as we have for decades.”

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