The Equity-League Pension plan remains in the “green zone” and is well funded. The most recent actuarial valuation shows that as of June 1, 2014, our plan has a funded percentage of 120.7 percent with an actuarial value of assets of $1.6 billion.
After the global market meltdown of 2008, the trustees of the Equity-League Pension Trust Fund voted to take advantage of the Pension Relief Act of 2010 that offered an extended time period to recognize the losses of 2008-09. We were not permitted to make pension improvements while operating under that legislation. However, we will soon exit from that status and are beginning the process of working with our actuarial advisors to consider our options.
Meanwhile, we continue to struggle with multiple issues to keep the Health Fund sustainable. We are currently stable with 17 months of reserves. These reserves are critical. We are a self-insured plan. CIGNA administers the claims but our Fund pays them on a dollar-to-dollar basis. Guide lines for self-insured plans recommend a minimum of 12 months of reserves to protect the Funds from various cost overruns. Actuarial projections show a gradual decline in reserves in the next few years and steps must be taken to keep the funding at an adequate level.
There are a number of factors which could affect our ability to maintain our current stability. The first, and most critical, is the excessive cost of health care in the United States. Unlike the rest of the developed world, our system is primarily a fee-for-service arrangement with no accountability for outcomes. All group health plans struggle with high claims. Our Fund’s costs are further impacted by extremely high out-of-network usage, particularly in musculoskeletal claims.
The Affordable Care Act brings its own set of cost drivers, such as the elimination of annual and lifetime limits on claims and the requirement for funds to pay certain per capita fees, which are costing us nearly a half million dollars in the current plan year (June 1, 2014 - May 31, 2015). In the near future, we will also be required to pay for all preventative services as well as for experimental treatments.
Another significant cost driver has been our Self-Pay After COBRA (SPAC) benefit, which has allowed Fund participants with at least ten (10) years of pension credit to remain on the Equity-League plan once COBRA ran out by paying a designated premium. Now that the Affordable Care Act has eliminated pre-existing conditions as a basis for denial of coverage, the SPAC benefit has been modified and will only be available to those who meet certain new criteria. The FAQs on this can be found at equityleague.org.
The trustees have a federally mandated fiduciary duty to manage employer contributions to provide benefits for as many working members as possible. Despite the challenges described previously, it is our goal to maintain the current benefits for those who achieve eligibility under our contracts.
Previous annual reports, which have been published in Equity News, have detailed the many initiatives that the Trustees have taken to contain costs. We will continue to work with the fund’s professional advisors to analyze data with an eye toward maintaining stability.
We remind the Council that the Equity-appointed Union Trustees comprise one half of the Equity-League Board of Trustees. There are also Employer Trustees who are appointed by The Broadway League. We are jointly committed to providing quality benefits.
On behalf of the Equity Trustees: Nick Wyman, Ira Mont, Doug Carfrae, Brian Meyers Cooper, Thomas Joyce, Francis Jue, Mark Zimmerman, Mary McColl and Steve DiPaola, I submit this annual report.