SAG’s 2008-09 Contract Stalemate Continues to Batter Its Pension and Health Plans (Graphical Analysis)
The previous installment of this three-part series showed that the SAG pension and health plan has been suffering much more than AFTRA’s. This final installment examines why.
The 2008-09 SAG Stalemate Pounded the SAG Pension and Health Plans
Could the premium increases, benefit cuts and eligibility constriction have been avoided?
Yes – if SAG contract negotiations in 2008-09 hadn’t stalled. According to SAG estimates and considering only the losses from mid-2008 through mid-2011, that yearlong stalemate cost the guild’s pension and health plan an eye-popping $77 million in lost contributions.
About $46 million of that would have gone to the health plan, or $15 million per year. That’s significant, given that participant premiums in aggregate were about $23 million per year – and it’s larger than the aggregate premium increase (a $10 million increase from 2009 to 2010). That means that the jumbo increases and some of the benefit cuts wouldn’t have been necessary were it not for the stalemated negotiations.
Both the pension and health losses will continue to grow though at least 2014, since SAG minimums remain 3.5 percent lower than they otherwise would have been.
Had the Stalemate Not Happened, Wages and/or Contract Terms Could Have Been Improved for SAG and AFTRA
That $77 million loss in P&H contributions is about 8.5 percent of the total P&H contribution from employers over the 2008-11 contract cycle. By comparison, for the contract cycle starting in 2011, the guild negotiated a 10 percent increase in P&H contributions (from 15 percent to 16.5 percent, which is an increase of 1.5 percent, which in turn is 10 percent of 15 percent).
That suggests that part of the 10 percent P&H contribution increase wouldn’t have been necessary if the SAG stalemate hadn’t occurred. Perhaps the guild and AFTRA -- which negotiated the 2011 contract together -- would have opted to push for an increase only a third or half as much, from 15 percent to 15.5 percent or 15.75 percent, rather than to 16.5 percent. That would have left more money for wage increases or contract improvements – for both SAG and AFTRA.
Perhaps some of that money would have been used to reduce the differential between SAG and AFTRA contract minimums. Instead -- now that the merger has been approved -- this battle will have to be fought in the negotiations for the 2014 contract, which will be complex enough already, since the unions will be pushing to unify the SAG and AFTRA TV contracts.
The Stalemate Also Might Have Impaired 2011 Contract Negotiations for the DGA and WGA
The SAG P&H increase had a ripple effect, due to the pattern bargaining that prevails in entertainment labor contracts. The studios negotiated the SAG/AFTRA 2011 contract in fall 2010, before the DGA’s or WGA’s. That meant that SAG set the pattern for P&H. Had SAG requested a lower increase in P&H contributions, the other guilds might have too, which – as with SAG/AFTRA – would have left them more money for wage increases and contract improvements.
The AFTRA Plans are Doing Better, in Part Because of Television
Why haven’t the AFTRA plans suffered as much? Here again, look to the 2008-09 SAG stalemate, which drove television work to AFTRA:
SAG’s loss of television earnings is unlikely to disappear if the unions remain separate. Indeed, AFTRA is virtually guaranteed to have increased its earnings -- and SAG to have further lost ground – in the 2012-13 season, because 2012 pilot season was 80 percent AFTRA. That continued a pattern that began in late 2008 and early 2009, when SAG was working without a contract and operating under an administration that threatened a strike:
That was a full-tilt reversal from previous years, where the figures were as high as 93 percent SAG. The result was that the guild's fall season market share declined, and has continued to do so:
As early as summer 2009, the SAG plan trustees wrote in their newsletter that “so far this year, contributions generated from employment-based earnings are down 10%."
The trustees added that the figure “represents the largest drop in Plan history and does not account for the full impact of the decrease in SAG-covered television pilots, which has yet to be realized.” A year later, they wrote of the “historic and unprecedented decline in employer contributions under the television agreement,” and in fall 2011, they said those contributions “have continued to steadily decrease.”
SAG Is – Temporarily – Insulated from the Full Effect of the TV Shift
It could have been worse. Overall SAG earnings were up 10 percent in 2010:
The main reason for the uptick was an increase in commercials residuals:
However, at least one element of that mix, in addition to television session fees, is bound to decline: television residuals. Those payments are triggered by reuse, many forms of which -- such as broadcast syndication, basic cable and home video -- occur several years after initial broadcast. Thus, a drop in session fees in one year is echoed by declining residuals in later years.
In addition, the commercials world has become an uncertain place, and the advertising industry is expected to press for implementing major changes when the commercials contract is up for renewal in March 2013. The new system being discussed -- called a Gross Ratings Point, or GRP, approach -- is intended to be revenue neutral, but it might not turn out that way if adopted. In addition, sources close to SAG express concern that non-union commercials are growing.
Yet another factor that will impair theatrical and television residuals is the shift to new-media exhibition, where producers’ revenue and guild formulas are often lower. Among the most significant examples is the shift in reruns from network primetime to ad-supported platforms like Hulu. That’s a shift from a lucrative formula to an anemic one.
So the guild might not be able to rely indefinitely on other sources to make up the losses in television work. If overall earnings start to decline again, it will be even harder for performers to qualify for pension credits or health insurance.
There Also Might Be Differences in Management Style Between the Plans
As cited by the trustees, other factors stressing the SAG plans are external: the 2008 financial crisis, spiraling healthcare costs and the impact of federal healthcare legislation. Those issues affect the AFTRA plans as well, of course. Indeed, both unions’ plans lost about the same 25 percent of asset value in the 2008 meltdown.
That leaves the shift in television work as a key difference between the plans. However, the dramatic shift in pilots and new series does not mean that overall SAG earnings have dropped as drastically. Thus, one wonders if there are other differences between the plans.
That indeed might be the case; some evidence points to divergences in management style.
For instance, in addition to a lower accrual rate, the AFTRA plan trustees report a pension funding percentage of 88.8 percent, while the SAG plan’s number, at 82.81 percent, is less than three percent above the government-defined yellow, or endangered, zone. (These figures are per the 2011 funding notices, which are the latest available, and reflect data as of Dec. 1, 2009, and Jan. 1, 2010, respectively.)
That suggests a more cautious approach by the AFTRA trustees, because the two factors are related: A lower accrual rate translates to lower benefits and, thus, less demand on pension plan assets or income. That’s reflected in a higher funding percentage, since that percentage is a measure of how adequate the assets (which generate much of the income) are to meet the demands that will be placed on them.
On the health side, the AFTRA approach of raising premiums at a steady but manageable rate contrasts with the gyrations and sticker shock reflected in the SAG premiums.
Whatever the reasons, the trend lines for the SAG health plan -- and thus, probably, for the pension plan as well -- can give little comfort to anyone who hopes to maintain the status quo. The trustees are duty bound not to allow the pension plan to slip into the yellow zone, but fulfilling that duty might mean, in their anodyne words, that “additional benefit modifications” lie ahead.
Appendix – Notes on Data
Missing AFTRA Health & Retirement Fund Data: In several charts, some AFTRA P&H (technically referred to as H&R, i.e., Health & Retirement) data is missing, as indicated by notations on the charts and diamond marks where data is present and none where missing. This is because the necessary data in those instances required access to Form 5500’s that THR doesn’t have. Although the forms are public information, the Department of Labor website only includes the most recent calendar year or two.
That led THR to contact the plans and request copies of older forms. The SAG plan provided copies of several years worth of its forms after some prompting.
However, the AFTRA plan was unwilling to share public data with the public, at one point saying it would “take time to gather the material” – i.e., photocopies of Department of Labor/IRS filings, which are the sort of thing most people keep readily available in file folders and on their hard disks.
Ultimately, the AFTRA plan simply refused to provide the forms at all, offering only the explanation that by law it didn’t have to. Even plan participants can’t obtain copies without making a written request, paying an $18 fee per form – there are two per year, one for pension and one for health – and then waiting for hard copies to arrive.
That’s an approach that deters participants and other stakeholders from understanding the state of the AFTRA plans and the disposition of almost $2 billion in assets and hundreds of millions of dollars that flow through the plan every year.
There’s no obvious reason why a decade of Form 5500’s and funding notices shouldn’t be publicly available on both plans’ websites.
Dates: All dates shown are calendar years. AFTRA plan years run from Dec. 1 to the following Nov. 30. Thus, for instance, all but one month of AFTRA plan year 2008 falls in calendar year 2009, and so we graph AFTRA plan year 2008 data as calendar year 2009. If the data in December 2009 happen to be very different from December 2008, this process might introduce a noticeable error. But this is likely to usually be slight, and there’s no way to correct for it, since the AFTRA plan (like all plans) reports only on a plan-year basis. SAG’s plan years run from Jan. 1 through Dec. 31, and thus correspond directly to calendar years.
Appendix – Comparison of the SAG and AFTRA Health Plans
Below is a comparison of key aspects of the two unions’ health plans.
Either plan can cut benefits, raise premiums, eliminate coverage and tighten eligibility at any time. Every effort has been made to create an accurate summary as of March 19, 2012, but the definitive terms and conditions are found on the SAG P&H and AFTRA H&R websites and in the documents referenced there. Neither THR nor the plans or unions will be responsible for any errors in this summary.
("Covered earnings" means earnings from work under the applicable union’s jurisdiction. For instance, $15,100 of SAG-covered work will not qualify the performer for an AFTRA health plan.)
In the charts, where one or more plans offer coverage and the other(s) don’t, the plan(s) with coverage are awarded a score of at least 4. In the eligibility lists, if premiums are marginally different, the lower premium plan(s) score 1; where differences are greater, the score is higher. In the benefit lists, where all plans offer coverage, the scores are based on the number of items where one plan is better than the others.
- Eligibility – Covered Earnings Under $10,000: Neither union offers a plan, other than self-pay (SAG) or COBRA (AFTRA), both of which allow limited-time continuation of coverage for individuals who previously had coverage but lost it due to low earnings or certain other reasons. The AFTRA COBRA premiums are $200 to $600 more per month than the SAG self-pay premiums for Plan I (which is only available to participants who were on Plan I when they lost coverage); the difference is even more pronounced between AFTRA COBRA and SAG Plan II self-pay.
- Eligibility – Covered Earnings between $10,000 and $15,100: SAG does not offer a plan, other than self-pay. AFTRA offers individual coverage with an optional buy-up to cover dependents (spouse/partner and/or children if any). The AFTRA premiums for an individual are much less than the SAG self-pay premiums for Plan I or II; for an individual plus one dependent, the AFTRA buy-up premiums are significantly less than SAG self-pay for Plan I and about the same as for self-pay Plan II. For an individual plus two dependents, the AFTRA premiums are about the same as SAG self-pay Plan I but SAG self-pay Plan II is significantly less expensive than the AFTRA plan.
- Eligibility – Covered Earnings between $15,100 (or 76 days of work) and $30,000: SAG offers Plan II (the less desirable of the two key SAG plans) and AFTRA offers individual coverage with optional buy-up for dependents. For an individual, the premiums under the two plans are similar (the AFTRA plan is $20 more per month), but for one or more dependents, the SAG plan is far less expensive than AFTRA’s: the premiums under the latter are a surprising $750 more per month for individual plus one dependent and $1,400 per month more for an individual with two or more dependents.
- Eligibility – Covered Earnings between $30,000 and $30,750: SAG offers Plan II and AFTRA offers family coverage (the benefits are the same as individual coverage, but the premiums for an individual plus dependents are not as high as for individual coverage plus buy-up). For an individual, the premiums under the two plans are similar (the AFTRA plan is $20 more per month), but for one or more dependents, the SAG plan is $100 per month less expensive than AFTRA’s.
- Eligibility – Covered Earnings $30,750 and above: SAG offers Plan I (the more desirable of the two key SAG plans) and AFTRA offers family coverage. The SAG plan is less expensive than AFTRA’s, by $40 per month for an individual and about $125 per month for an individual plus one or more dependents.
- Eligibility Threshold Increases: The SAG trustees have set a target of three percent annual increases for future years, whereas the AFTRA trustees have not, and have not increased the threshold since at least 2007 (possibly longer). Of course, that doesn’t necessarily mean they won’t.
- Eligibility – Dual Coverage (Coordination of Benefits): Performers who earn enough from SAG-covered work to qualify for a SAG plan and AFTRA-covered work to qualify for the AFTRA plan can enroll in both plans and avoid many of the percentage coinsurance requirements. However, if they do so, they have to pay two premiums.
- Eligibility – Seniors: Both unions offer senior plans for participants 65 and older who have a certain number of qualifying years of service (i.e., years where they met specified earnings thresholds). For individual coverage, the AFTRA plan is easier to qualify for; for individuals plus one or more dependents, the SAG plan is easier. Also, the SAG premiums are $25 less per month for an individual (plus any dependents) as compared with the AFTRA premiums for an individual, and $125-$150 less for an individual with one or more dependents. The SAG plan is Plan I. All three plans offer benefits for spouses and dependent children of senior performers who died at age 65 or older, or under some other circumstances, while the AFTRA plan also offers a $5,000 cash benefit.
- Eligibility – SAG Plan II – Age and Service: SAG offers a lower threshold, $10,000, to qualify for Plan II for performers who are least 40 years old and have had ten years of health plan eligibility based on earnings (as listed above). AFTRA plan offers no equivalent.
- Hospital – In-Network: Copay: SAG $0, AFTRA $100/admission. Deductible – SAG Plan I, $250/person, $500/family (or $150/$300 for The Industry Health Network (TIHN)), Plan II $500/$1000 (or $150/$300 for TIHN), AFTRA $0 deductible. Coverage: SAG plans 90 percent, AFTRA 90 percent. Out of pocket max/yr.: SAG Plans $1,750/$3,500, AFTRA $1,000/individual.
- Hospital – Non-Network: AFTRA plan covers this (copay $100, $0 deductible, coverage 60 percent, max $2,800), SAG plans don’t. Covered percentage for non-network services is calculated on the basis of scheduled allowance of usual, customary and reasonable charges.
- ER: SAG plans have a deductible ($100 for Plan I, $200 for Plan II) for outpatient use of ER; the AFTRA plan doesn’t.
- Major Medical – In-Network: Copay -- SAG Plan I $15/visit, Plan II $25, AFTRA $10. Deductible -- SAG Plan I, $250/$500 (or none for TIHN), Plan II $500/$1,000 (or none for TIHN), AFTRA $200/$400. Coverage: all three plans 90 percent. Out of pocket max/yr. -- SAG Plans $1,000/$2,000, AFTRA $1,000/person.
- Major Medical – Non-Network: Copay -- SAG Plans $0/visit, AFTRA $10. Deductible -- SAG Plan I, $500/$1,000, Plan II $750/$1,500, AFTRA $400/$800. Coverage -- SAG plans 70 percent,AFTRA 60 percent. Out of pocket max/yr. -- SAG Plans $2,500/$5,000, AFTRA $3,200/person.
- Wellness (routine physicals, immunizations, etc.): SAG Plan I – $15 copay, no deductible, coverage 100 percent (70 percent for non-network); Plan II -- 100 percent, in-network only, age and other limitations; AFTRA 80 percent in-network or non-network.
- Hospital/Medical Network: SAG uses Blue Cross / Blue Shield and The Industry Health Network, while AFTRA uses CIGNA.
- Prescription Drug – Retail (1 mo. supply): Deductible -- SAG plans $150/$300, AFTRA $75/$150. Copay -- SAG Plans – the greater of $10 or 10 percent for generic, $25 or 25 percent for preferred brand, $40 or 40 percent for non-preferred brand; AFTRA: generic $10, brand 25 percent. All plans: in addition, if brand dispensed where generic exists, must pay entire difference in cost between brand and generic.
- Prescription Drug – Mail Order (3 mo. supply): Deductible -- SAG plans combined deductible w/retail, AFTRA $0. Copay -- SAG Plans (the greater of $20 or 10 percent for generic w/$50 cap, $50 or 25 percent for preferred brand w/$125 cap, $100 or 40 percent for non-preferred brand w/$300 cap); AFTRA -- generic $30, brand 25 percent w/$150 cap. All plans: in addition, if brand dispensed where generic exists, must pay entire difference in cost between brand and generic.
- Mental Health and Chemical Dependency: SAG Plan I -- by law this is same as hospital (inpatient) or major medical benefits (outpatient); Plan II not covered, AFTRA lists various items that are different from hospital or major medical benefits, but presume that this is outdated, since law requires otherwise.
- Dental: Deductible -- SAG Plan I $75/person, $200/family, Plan II $100/person, no family max, both plans deductible waived for diagnostic and preventative; AFTRA $0. Coverage – Diagnostic and Preventative: SAG Plan I 100 percent in-network, 75 percent non-network, Plan II 100 percent, 60 percent, AFTRA 100 percent. Coverage – Basic Services (in network or out): SAG Plan I 75 percent, Plan II 60 percent, AFTRA no coverage. Coverage – Major Services (in network or out): SAG Plan I 50 percent, Plan II 50 percent, AFTRA no coverage. Out of pocket max/yr.: SAG Plan I $2,500, Plan II $1,000, AFTRA $1,000.
- Vision: SAG Plan I covers eye exams, glasses and professional services for contact lenses. Plan II and AFTRA no coverage.
- Life Insurance: SAG Plan I $10,000, Plan II no coverage, AFTRA $30,000.
- AD&D: SAG Plan I $10,000, Plan II no coverage, AFTRA $18,000.
Appendix – Health Plan Improvements and Reductions
The THR review of improvements and reductions looked at plan newsletters issued from June 2009 to present. The SAG plan’s newsletters listed 30 reductions (premium increases, benefit reductions or eliminations and eligibility contractions) and three improvements, for a net change of 27 reductions. The corresponding figures derived from the AFTRA plan’s newsletters were 12 reductions and four improvements, for a net change of eight reductions.
These figures exclude changes required by law, as well as changes – which both plans made – related to same-sex marriage, since those are assumed to be a response to social and political changes rather than strictly economic.
The reductions and improvements for each plan were as follows:
SAG Health Plan Reductions
Jan. 1, 2010: Premium increase; Senior premium instituted; Deductible added to mental health and chemical dependency coverage; RX deductible increased; Sleep aids RX limited to 21 days/mo.; Coverage eliminated for non-sedating antihistamines; Plan II out-of-state hospital coverage limited to in network; Allowable charges reduced for injectible RX in doctor's office; Plan I eligibility threshold increased; Plan II eligibility threshold increased; Plan II age & service eligibility threshold increased.
Jan. 1, 2011: Plan I eligibility threshold increased; Plan II eligibility threshold increased; Plan II days of employment for alternative eligibility increased; Plan II age and service eligibility threshold increased; Plan I non-network hospital coverage eliminated; In-network major medical coinsurance reductions; In-network hospital coinsurance reductions; Non-network hospital coinsurance reductions and increase in out of pocket maximums; Plan II mental health and substance abuse benefits and RX eliminated; Non-preferred brand name RX copays increased; Plan II lower cost self-pay mental health and substance abuse benefits and RX eliminated.
June 1, 2011: Nurseline benefit eliminated.
July 1, 2011: Plan I earned eligibility premiums increased; Plan II earned eligibility premiums increased; Plan II age and service earned eligibility premiums increased.
Jan. 1, 2012: Plan I eligibility threshold increased; Plan II eligibility threshold increased; Plan II age and service eligibility threshold increased; Hospital out of pocket maximums increase; Long term care insurance eliminated.
SAG Health Plan Improvements
Jan. 1, 2010: Cervical traction units covered. Jan. 1, 2011: Lactation consultant benefits added; Coverage of Remicade RX improved.
AFTRA Health Plan Reductions
Jan. 1, 2010: Family premiums increase; Individual premiums increase; Senior plan premiums increase; Changes to senior citizen coordination of benefits w/Medicare.
Jan. 1, 2011: Family premiums increase; Individual premiums increase; Senior plan premiums increase; Mail order RX required for long-term or specialty drugs; $10K earnings qualifies for active plan only, not senior.
Jan. 1, 2012: Family premiums increase; Individual premiums increase; Senior plan premiums increase.
AFTRA Health Plan Improvements
July 1, 2009: Immediate enrollment after COBRA. April 1, 2010: Enhanced ambulance reimbursement. Jan. 1, 2011: $10K earnings & senior family plan allows active family plan at individual rates. Oct. 1, 2011: MPTF added to network.
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