Pension Fund Remains “Safely in the Green Zone;” Health Fund Still Healthy
The Trustees of the Equity-League Pension & Health Trust Funds have been quite active in the past few years due to legislation that has demanded our attention. We have been working with plan professionals to ensure our compliance with the Pension Protection Act of 2006, the Mental Health Parity Act, the Affordable Care Act, the Pension Relief Act of 2010 and, most recently, the Supreme Court ruling on the Defense Of Marriage Act (DOMA). The changes we have effected due to DOMA have been fairly simple; we have redefined Spouse to read “a person to whom you are legally married under applicable law,“ among a few other necessary language changes. The term “Domestic Partner” will still appear in plan documents as both same sex and opposite sex couples retain the right to be domestic partners if they do not wish to marry.
The Equity Trustees are pleased to report that our pension plan continues to reside safely in the green zone. Our most recent actuarial valuation shows a funded percentage of
The Investment Committee has re-tooled its long-term funding policy, increasing diversity without significantly increasing risk. They continue to monitor the performances of the various money managers, requiring them to meet or exceed their benchmarks.
As the fabled Baby Boomers continue to age, the Pension Fund is experiencing unprecedented numbers of ne pensioners. Between the years of 2003 and 2007 there was an average of 288 new pensions awarded per year. Between 2008 and 2012 that number rose to 435. To date, in 2013 there have been 532 new pensioners. Fortunately, our long-term funding goals have anticipated and planned for these phenomena.
The Trustees regret that it has not been possible to make improvements to pension since 2007. We are unable to do so until at least 2016, due to the requirements of the Pension Relief Act of 2010. The opportunity to spread the 2008- 2009 losses over a longer time period comes with the restriction that no pension improvements can be enacted without requiring increased contributions from our employers. The Trustees will consider pension improvements as soon as we are both legally and fiscally able to do so.
The health plan remains stable with approximately 15\ months of reserves. There has been considerable activity to make the health fund compliant with the Affordable Care Act (ACA). In order to meet the provisions of the 90-day waiting period, the Trustees have approved changes to eligibility implementation. Instead of the current quarterly look back period, work weeks will be counted on a monthly basis. In addition, once sufficient weeks have been accumulated, the waiting period to enter into coverage will be shortened from three months to two.
The ACA requires two new fees that affect the health fund. The first, the Comparative Effectiveness Fee requires health funds to pay $1 per participant in the inaugural year, which began in July 2013, and rises to $2 per participant the second year, for an approximate price tag of $7,300 and $14,600 respectively. This fee will be recalculated and assessed each year and sunsets in 2019. The purpose of the Comparative Effectiveness Fee is to fund the new Patient Centered Outcomes Research Institute (PCORI) which will endeavor to make some sense of the wildly uneven medical charges and outcomes with a goal of setting new standards. Group health plans, such as ours, are also subject to a much more costly Reinsurance Fee which is intended to reimburse insurance companies for losses they may sustain by insuring higher risk participants. This fee will commence in 2014 with an initial charge of $63 per participant, or a total cost of approximately $459,900, depending on the actual numbers of participants at the time. This fee will sunset in 2016 and the amount charged per participant after 2014 is yet to be determined.
As a self-insured fund, the Trustees must pay close attention to claims data. In a typical group health plan approximately 20% of the participants account for 80% of the annual medical and prescription costs. Before exploring this topic further, we wish to remind our members that the commitment of the Trustees is to provide quality health coverage to the largest number of working members possible. Our goal is to continue to provide the benefits of the plan without requiring a continuing upward spiral of employer contributions or a more restrictive level of eligibility. Currently, the news is favorable. A recent review of claims data with CIGNA shows that most of our participants are reasonable health care consumers. For instance, it is important to know when it is appropriate to see a doctor or visit an urgent care clinic as opposed to going to the emergency room. Conversely, it is quite critical in some cases to go immediately to the emergency room. Our participants seem to be making the appropriate choices. Our claims data cannot definitively demonstrate that our members engage in healthier lifestyles than the average population. But we assume that to be true based on a lower trend of increases than most plans.
In a typical group health plan the biggest cost drivers are cancer, heart disease and diabetes. In our plan the largest claims come from HIV/AIDS, mental health and PT/chiro. Under the provisions of the Mental Health Parity Act, we have had to remove the annual cap on therapy. It is too soon to say if there will be a significant adverse impact from this requirement. In addition, we have removed the annual limits for PT/chiro to comply with the ACA. Our out-of-network utilization results in an almost double spend than other group plans. By using the professional services of in-network providers, our members will help the plan maintain stability of the plan overall.
In recent years the Equity- League Fund office has been implementing new information technology with an aim to containing administrative costs as well as to improve member services. Soon, our participants will be able to monitor their profiles online and will be able to track health weeks and pension calculations. We expect this aspect of our IT system to go live in early 2014. And we want to remind members that the Equity- League Trust Fund is a separate organization from Actors’ Equity. We encourage members to visit the Equity-League site and to maintain current address, phone and email information. The Equity Trustees work closely with the League Trustees (Employer Trustees, appointed by The Broadway League) and plan professionals to safeguard and improve benefits for AEA members. We are grateful that the League Trustees equal our commitment. We will remain responsive to the various challenges and opportunities that affect benefit plans.
On behalf of the Equity Trustees—Doug Carfrae, Brian Myers Cooper, Steve DiPaola, Alan Hall, Thomas Joyce, Francis Jue, Mary McColl, Ira Mont, Carol Waaser and Nick Wyman—I submit the annual report.