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A lawsuit filed against the SAG-AFTRA health plan, which claimed eligibility changes for benefits that “unlawfully discriminated” against older members, was settled. The lawsuit was filed in federal court in December 2020 by former SAG president Ed Asner and nine other SAG-AFTRA members. The health plan, which faced staggering deficits, said the changes were necessary to keep it from going bankrupt.
Asner died in 2021, but a federal judge allowed the case to continue.
The plaintiffs filed the action in December 2020 after the plan’s August 2020 announcement of major changes to its benefit structure and eligibility requirements that, in effect, eliminated plan health coverage for certain plan participants age 65 and older and shifted them to Medicare coverage. Plaintiffs claim that a breach of fiduciary duty by the plan’s trustees resulted in the loss of plan assets that led to the change.
In a joint statement, attorneys for both sides said today that “under the terms of the settlement agreement, participants, known as ‘senior performers,’ who are no longer eligible for the same health coverage from their previous plans in 2021. The 2020 changes will receive financial relief worth $15 million, the court said. -Lower authorized attorneys’ fees and expenses. The plan will allocate up to an additional $700,000 per year for eight years (up to a maximum of $5.6 million in 2023-2030) to heath reimbursement accounts for certain senior performers who are no longer eligible for active health coverage from the plan. These allocations That will be based on the residual earnings of senior performers.
“In addition, the plan has agreed to implement certain changes for the next four years that will benefit all plan participants. These changes include formalizing the process by which SAG-AFTRA is periodically informed of the plan’s expected financial condition to determine whether additional changes to the plan will be necessary. as well as for the purpose of pre-negotiating various collective bargaining agreements; and retaining an additional consultant to explore the possibilities of cost reduction measures beyond those that the plan has consistently implemented since its inception while ensuring benefits are secured.
“As reported in court, class attorneys recommend the settlement because they believe it provides substantial financial relief to plan participants who were affected by the 2020 plan amendment as well as structural changes that will benefit all plan participants. , and avoids the risk and expense of continued litigation. Class participants, who brought this complaint on behalf of performers who were negatively affected by the 2020 benefit changes, believe this settlement is a start to restoring trust and benefits.
“The defendants likewise agreed to the settlement to avoid the time and expense of litigation. They believe that the 2020 changes, including those affecting senior performers, were necessary to preserve the plan’s financial health and the plan’s continued ability to continue to provide high-quality benefits to the greatest number of participants, and that the changes were properly achieved. That’s the result.”
If the court approves the settlement, as expected, it will give the parties a formal notice of the settlement to all plan participants and an opportunity for them to present their views before a final hearing, where the court will decide whether. To approve the settlement.
Six years after SAG and AFTRA merged, the story of the plan’s declining fortunes began in 2018, though they maintained separate health plans until they merged on the first day of 2017. The new SAG-AFTRA health plan ended that first year with an $18 million surplus, with nearly $500 million in reserves. But due to skyrocketing health care costs and growing demand for health services, the plan faces a $48 million deficit in 2018, a $50 million deficit in 2019, a projected deficit of $141 million this year and another projected deficit of $83 million in 2021 if trustees fail to act to stem the flow of cascading deficits. .