Good coverage in industry is hard to find

One anxiety runs deeper in Hollywood than awards season, weekend boxoffice, primetime ratings or even the recent studio shakeups: Retaining health care benefits.

As Congress grapples with health care reform, its champions cast it as a crisis for “average” Americans. If anyone in D.C. ever thinks of Hollywood, they imagine it as a town so awash in high salary and perks that its workers must be immune to such concerns.

In fact, it’s an urgent issue for showbiz, where guilds and unions face dramatic declines in funding for benefit plans. And the perilous quest to maintain coverage is often much shakier for industry workers — who move from show to show — than for those who rely on employer-provided coverage.

“The best day I had this year was finding out that I was still eligible,” says Peaches Johnson, a commercials actress and stand-in for Viola Davis.

A producer of a recent Oscar-nominated best picture says, “You’d be shocked to know how many people have asked me to cast them in one of my movies — even just one line — so that they can maintain their SAG health benefits.”

Hollywood faces several issues — some distant from the larger debate, and some not — that are causing headaches for the trustees of the health and pension plans:

  • With the decline in the amount of work in Hollywood comes a decline in the contributions that employers put into the plans.

  • There is uncertainty over the impact of federal government reforms, which may include taxing “Cadillac” plans — the nickname for well-regarded health and retirement plans that provide a high level of coverage to well over 100,000 participants.

  • There have been declines of more than 20% in the value of the plans’ portfolio over the past year (although the plans have managed to recover slightly).

  • And costs continue their inexorable rise.

Amid all this, showbiz folk want to work enough to stay eligible under the DGA, SAG, WGA and AFTRA plans — all of which operate on the basis of accumulated earnings that must meet thresholds over the previous four quarters.

For example, the Screen Actors Guild’s basic plan requires four quarters of earnings totaling $14,070; or 74 days of employment; or $10,200 if the thesp is at least 40 years of age with 10 years of previous eligibility.

In the past year, Hollywood has learned a lot about the national health crisis. In January, some were outraged when the Motion Picture & Television Fund announced the closure by year’s end of its acute care hospital and long-term care facility in Woodland Hills. They were incredulous at the org’s statements that the unit was too expensive and draining the resources of the fund’s other facilities and programs. Since then, protests have quieted as patients departed and execs asserted repeatedly that the economy had left them with no alternative.

The guilds have suffered alarming declines in their pension plans, signals that the health plans are also in a worsening situation because they also rely on portfolio investments. In March, AFTRA’s pension fund announced it had taken a 23.4% loss in the value of its assets to $1.53 billion and tightened eligibility requirements for vesting, accrual and participation.

SAG’s pension plan disclosed around the same time that the value of its assets declined 22.7% in 2008 for a stunning loss of $800 million, leaving it with a value of about $2.1 billion. That left the SAG plan at 78% funding for its obligation, placing it in the “seriously endangered” category — and forced a 43% reduction in benefit accrual rates.

In September, the “Take II” newsletter for SAG participants contained the bracing news that employer contributions were down 10% in 2009.

“This 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,” the plans said in their newsletter. “The health plan also faces a continuing threat of inflation as the cost of health care continues to rise about 9% annually.”

As of January, Plan I monthly premiums will hike from $50 to $83, with Plan II rising from $65 to $98. The plan will also charge senior performers a premium, for the first time, of $25 a month.

The DGA’s basic pension plan disclosed in early 2009 that its assets were down 26.6% last year (it’s rebounded 14.6% this year).

Also in March, IATSE agreed to cuts in health plan by agreeing to a hike in the eligibility threshold during the final year of the pact. Members will have to work 400 hours over six months to qualify, up 33% from the previous 300-hour requirement, That change caused an uproar among below-the-line workers: “That should tell you something when IATSE rank-and-file get upset because it doesn’t happen often,” one insider notes.

In July, the Writers Guild of America West disclosed that member earnings had plunged nearly 18% to $801.4 million for the fiscal year ended March 31. That meant a corresponding decline in employer contributions to the pension and health plans.

“Younger writers are going to get hurt because there’s no way to keep the current benefits,” one insider noted. “You aren’t increasing revenues and costs are going up. You either have to get the studios to increase their share or you have to cut benefits — probably both.”

WGA West spokesman Neal Sacharow says, “There’s no doubt that these are tough economic times for writers, but maintaining and improving member benefits over time is a top priority for us and we are committed to doing everything possible to achieve that goal.”

Anxieties over maintaining health benefits are not new. Many of the stars who appeared on “Murder, She Wrote” jumped at the chance to guest on the show — not just for the attention, but to meet eligibility requirements at a time when they were beginning to need them most. In some cases, Angela Lansbury specifically requested some Hollywood vets because she knew they needed help to meet eligibility goals.

Health benefits are so desired that leaders of the WGA West promised at the start of the 2007 strike that the clock would be “stopped” on the calculation of eligibility for the duration of the strike, even though the plan’s trustees hadn’t agreed to such a step. Making that adjustment at the end of the 100-day strike cost the plan $4 million, a source said.

The need to maintain coverage is more than just an academic concern — and has even given birth to at least one major hit series. CBS’ “Two and a Half Men” came about when scribe Lee Aronsohn approached TV producer Chuck Lorre and said he needed to write something quickly in order to keep his WGA insurance.

Against the advice of friends, Lorre got involved, and the rest is TV history. “How do you mend a broken heart?” Lorre wrote on one of his websites, recounting the show’s origins. “The Bee Gees never figured it out but I did — you help a friend keep their health insurance from lapsing.”

Aronsohn had previously lost health coverage temporarily in the 1980s, then worked steadily as a writer-producer for roughly a decade. At the point where he sought Lorre’s help, he says, he had hit another dry spell and had two sons, one of whom needed braces. He needed guild-covered work to prevent his benefits from lapsing.

“I asked him to consider (the project) so I could get a paycheck and get my insurance back,” Aronsohn says, noting his half of the pilot fee would have been enough. “That’s all I was really looking for. … I can only imagine about people who aren’t eligible for a group plan at all.”

It’s common for actors or crew members to take jobs strictly to preserve insurance. One producer recalls quickly writing a part for an actor on a Saturday and having him in on Monday after learning the performer was in danger of losing benefits.

The struggle over health care is not going away any time soon, what with the unions starting to prep for the next round of contract negotiations next year. Probably first up will be the 3,000 drivers covered by the Teamsters, with a July 31 contract expiration.

Currently, employers pay 14% (8.5% to health, 5.5% to pension) for the DGA, 14.5% (8.5% health, 6% pension) for the WGA, 15% (9.25%, 5.75%) for SAG and 15% (9.75%, 5.25%) for AFTRA on top of every dollar of compensation into the pension and health plans. It would not be surprising if the unions focus their proposals on increasing those figures.

“I think P&H will replace new media as the dominant issue at the next round of negotiations,” one labor insider notes.

The plans, operated jointly by trustees representing guilds and the entertainment industry, tend to stay under the Hollywood radar. The plans also have faced a crunch before. In 2002 and 2003, all showbiz plans were forced to cut benefits and boost eligibility thresholds due to increased costs.

In October, SAG’s national board unanimously passed a resolution reiterating its opposition to any tax on healthcare benefits, after hearing longtime SAG plan administrator Bruce Dow offer a sobering view of the plan’s future.

According to those in attendance, Dow said employer contributions were down 10%-11% this year, underlining the alarming recent developments in the SAG plan. That’s due to a variety of factors, including fewer movies, TV work shifting to AFTRA and a new ad contract that cuts so-called “overscale” contributions for top paid actors.

Unfortunately, it is the type of drama actors would rather not see play out. Ned Vaughn, a spokesman for the moderate SAG faction Unite for Strength, says, “When you talk about possible changes in pension and health, people are on the edge of their seats.”

Brian Lowry and Tatiana Siegel contributed to this report.

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