Frequently Asked Questions

Transcription

1 165 West 46th Street New York, NY Phone: (212) or (800) Fax: (212) Website: We have heard from many Fund participants who have questions about the decision to change the Self-Pay After COBRA benefit. Below are the most frequently asked questions the Fund has received over the last several weeks. If you have a question that isn't answered below, please don't hesitate to call one of the Fund's health staff at Frequently Asked Questions 1. Who controls the Equity League Health Fund and how are decisions made? The Equity League Health Fund is an independent entity known as a Multi Employer Trust Fund, governed by a Board of Trustees, made up of an equal number of representatives appointed by Actors' Equity Association (the Union) and Employer representatives from different segments of the theatre industry. Multi Employer Trust Funds are legal entities separate from the Union and from any Employer Organization, and neither representatives from AEA nor Employers can unilaterally makes changes to the Fund. While acting as Trustees, these Union and Employer representatives are not agents of the Union or the Employer Organizations; as Trustees they are legally obligated to administer the Fund in accordance with the governing documents and to provide the best possible coverage to the greatest number of Fund participants. Decisions are made by Trustee vote. 2. How did the current Self Pay After COBRA program come into being? When the Equity League Plan was first instituted in 1961, long before COBRA, any member could stay on the plan when employment related coverage ended by paying a premium. This was referred to as the Fund s Direct Pay program. After COBRA came into being, the benefit was redesigned to allow members who had exhausted their COBRA benefit to continue their coverage by paying premiums at the COBRA level. During the early 1990s, the Fund was close to insolvency, driven in great measure by the gap between the extremely high claims costs of the post COBRA direct pay participants relative to the premiums for post COBRA coverage. Consequently, the Trustees had to restrict the option to self pay premiums at COBRA rates by continuing the option only for those who were considered to have a significant attachment to the industry. After much consideration and debate, the criterion was determined to be ten years or more of pension vesting service. Even in this more restricted version, this was a unique benefit that exists nowhere else in our industry and is extremely rare anywhere in the United States. 3. Who is covered by the SPAC program and how is it paid for? Less than 300 people currently participate in SPAC, representing around 4% of Fund participants. These participants

2 range in age from 33 to 64 and have earned at least 10 pension credits. The participants continue to pay the same rate as COBRA premiums on their own after COBRA expires in order to continue their coverage. For more information on the SPAC program, please see this memo prepared by the Fund s consultants. 4. Why is the benefit being changed now? The decision to change the Self Pay After COBRA benefit was not an easy one. Though the number of participants is small, rising costs of the program and new requirements mandated by the Affordable Care Act threatened the Fund s ability to maintain comprehensive benefits for all Fund participants. The very substantial premiums SPAC participants pay do not even cover half the actual cost of providing benefits to SPAC participants. To make up the difference, the Fund has subsidized the SPAC program by an average of approximately $3.5 million per year in recent years, and the subsidy per participant has grown dramatically. In 2014, this deficit is expected to grow to more than $12,000 per year per participant, or approximately $3.7 million total, and the costs per participant were projected to continue to grow unless changes were made. For more information on the costs of the SPAC program, please see this memo prepared by the Fund s consultants. Despite these losses, the Trustees of the Fund have continued the SPAC program for as long as possible, and would not be changing the program now if it were not a financial necessity to keep the fund in a solid fiscal position. To continue the SPAC subsidy in its current form, the Trustees would have had to eliminate out of network coverage for all 6,000 Fund participants or at least double the quarterly premiums for all participants from $100 to more than $225, or increase the number of work weeks required for eligibility, or some combination of those unacceptable options. It is the Trustees duty to provide the best possible coverage to the greatest number of people working under contract. 5. Is the SPAC benefit ending completely? No, it will be available for up to 18 months after COBRA benefits expire for any participant who has at least 10 years of pension vesting credits, for a total of three years of self pay insurance coverage. Those who are currently on Self Pay After COBRA and have been on the program for at least 18 months will exit the plan as of December 31, 2014 unless they qualify for one of the exceptions listed in Question #9 below. We anticipate that approximately one third of members who currently use the SPAC benefit will qualify for an exemption and will continue to receive the benefit. Those who are already in the SPAC program but who will not have hit 18 months at the end of 2014 will keep their coverage until they reach 18 months as well. Participants who have more than 10 years of pension vesting service can bank one additional month of SPAC coverage eligibility for each year of pension vesting beyond 10 years should they go on COBRA again in the future (see the chart below), but only 18 months can be used consecutively. Years of Pension Vesting Bankable SPAC Months Post COBRA 10 years 18 months 15 years 23 months 20 years 28 months

3 25 years 33 months 30 years 38 months In addition, SPAC will continue unchanged for participants 65 and older who purchase Medicare supplemental coverage, and anyone turning 65 in 2015 will be able to stay on SPAC until they qualify for Medicare. There are currently more than 150 people in the Medicare supplemental program. 6. Were these benefits guaranteed indefinitely or vested? Although the SPAC program has been referred to by some as Vested Beyond COBRA, eligibility rules for the program have changed many times since it was established, and the Fund has always said that the program was subject to change as the healthcare system changes and costs increased. The Fund s Summary Plan Description states that The Trustees reserve the right to amend, modify or terminate the Plan (in part or in whole) at any time. It is essential to remember that NO Fund health benefit has ever been promised for life, nor could it realistically be promised, given the volatility of the health care costs that have caused the Fund to change health benefits for those covered by employment, and SPAC participants, over the years. Trustees have a fiduciary duty to amend or discontinue any part of the plan of benefits that is unsustainable. The decision to change the Self Pay After COBRA benefit again was not an easy one, and the Trustees would not have chosen to do so unless it was essential to maintain the current level of benefits for all participants and secure the financial security of the Fund for future generations of Actors and Stage Managers. The Trustees have held out making this necessary change until there were other viable options, particularly for those with pre existing conditions, through both the Affordable Care Act and the expansion of Medicaid. 7. Is the Fund trying to stop insuring older participants? Absolutely not. Participants in the SPAC program range in age from 33 to 64 years old. The determining factor for changing this benefit was the unsustainable cost of claims above and beyond premiums paid by participants in the program, regardless of age. These costs would necessitate making unacceptable changes to benefits for all Funds participants should they continue, such as eliminating out of network service or raising work weeks for eligibility. SPAC will continue unchanged for participants 65 and older who purchase Medicare supplemental coverage, and anyone turning 65 in 2015 will be able to stay on SPAC until they qualify for Medicare. There are currently more than 150 participants in the Medicare supplemental program. 8. What are the options for affected members going forward? It is important to understand that no one who currently participates in the SPAC program will face being uninsured as a result of these changes. Under the Affordable Care Act, many affected members will be able to find new coverage on the health Marketplaces/Exchanges, or through expanded Medicare eligibility, at a similar or lower cost. Some participants will find they are eligible for new subsidies toward the purchase of health insurance under the ACA that cannot be used currently to pay for SPAC coverage. We understand that changing health insurance providers can be a difficult process, and we also understand that many SPAC participants have used these benefits for years. For those who need assistance navigating the healthcare options available on the ACA Marketplaces, we have contracted with the Actors Fund to provide special expert counseling for current SPAC participants. For more information or assistance please call the Actors Fund at , or e mail

4 9. Are exceptions being made for SPAC participants who cannot find coverage through the ACA? Yes. There are several exceptions that will allow SPAC participants to remain in the Fund if there is no alternative access to coverage available for them. Participants, who live in states where healthcare reform has not been fully implemented, or where there is still no competitive individual market, will be granted an exemption to stay in the Fund. That includes participants in states where: The exchange was unable to attract 3 or more insurers; The exchange does not offer at least two silver and bronze level plans; The exchange failed to achieve 2/3 of its enrollment goal; Or where Medicaid has not been expanded. All participants in the 35 states that do not meet the criteria will be permitted to remain in the SPAC program. If a participant lives in a state that passes these tests, but does not pass them in the county where live, they will also be given an exemption. In addition, exceptions will be given to participants who: Demonstrate that they cannot find needed care for an existing condition or illness on the healthcare exchanges; Worked at least one week under an AEA contract in the last two years in an area to which they could not reasonably commute, and their own state health exchange only offers coverage for a local network, or if they secure an Equity contract before the end of 2014 showing they will have work in 2015 outside commuting distance; Are within 12 months of turning 65 and qualifying for Medicare; Or if the lowest price silver plan in their area exceeds the Fund s current self pay rates. Participants can also have their coverage extended if they can demonstrate they will have employment based coverage by April 1, 2015 (whether through a new employer or if you are currently working under an AEA contract that will ensure your eligibility by that date). We anticipate that approximately one third of affected members will qualify for one of the exemptions listed above. 10. Can the Fund increase the SPAC premium rate and continue the program? Unfortunately, no. If the Fund raised premiums for the affected members, only the members who require the most care would tend to remain in the program, which would cause a cycle of further increases in premiums and cause even more participants to drop from the program. This problem sometimes called a death spiral in the healthcare industry is what the Affordable Care Act was created to address by offering coverage to everyone, even if they have pre existing conditions. That is why many post COBRA participants will be able to find coverage at a lower price on the health exchanges, where costs are pooled and shared across a much larger number of people.

5 11. Can the Fund lower administrative expenses to continue the program? The administrative expense ratio for the Fund, including staff salaries, has averaged 5.5% in recent years well below the industry benchmark of 10% and below the average expense ratio for similar funds. In fact, the Fund s entire administrative costs have been less than the Fund s losses on the SPAC program in most recent fiscal years. 12. Can Actors Equity or another group raise contributions to keep the SPAC program going? The Trustees of the Fund gave serious consideration to the suggestion from some affected members to raise donations or hold charity events as a way to continue the benefit without changes. Our attorneys advised us that, unfortunately, the Fund cannot rely on donations to maintain the current SPAC benefit because they will vary from year to year and may or may not cover the cost of the benefit as it continues to rise. The Fund cannot cover the current SPAC program in return for donations that are unpredictable and not guaranteed. 13. Is CIGNA to blame for the costs of the SPAC program? No. The Fund pays all claim costs directly. While CIGNA once provided insurance for the Fund, as of 2006, the Fund is self insured. The Fund uses CIGNA s network and CIGNA administers the process of paying claims, but the Fund pays all claim costs directly. The increased costs experienced by the Fund are due to the rising costs of healthcare and in part to the new requirements mandated by the Affordable Care Act, not fees or expenses from CIGNA. 14. Are some Employer, Broadway League, and AEA staff covered by the Fund? Yes, however organizations that have staff members covered by the Fund pay premiums that cover 100% of the costs that their plans generate. There are currently less than 100 staff members of producers covered by the Fund; there are less than 400 non AEA members overall in the Health Plan. Because their premiums cover all the costs of their plans, these plans are cost neutral for the Fund and have no impact on the continuation of the SPAC benefit.