Articles from Take 2
Summer 1999
Volume XII, Number 2



Effective January 1, 1999

• Benefit Formula Increased to 3.5% of Earnings

• Pensioners Receive 5% Increase

• Maximum Monthly Pension Increased to $6,000

The Board of Trustees is again pleased to announce major improvements to the Pension Plan. A vibrant economy and a strong, diversified investment program have enabled the Plan to provide pension benefit increases that have exceeded the inflation rate over the last eleven years.

The three benefit improvements discussed below are retroactive to January 1, 1999. That means they will apply to earnings reported and benefits payable on and after January 1, 1999.

New Benefit Formula Added for Pension Credit after January 1, 1999

A new benefit formula has been added for active Participants. For Current Service Credit earned on and after January 1, 1999, the monthly benefit will be calculated based on 3.5% of all covered earnings. Unlike the previous formulas, the percentage in the new formula does not change with different earnings amounts. The Plan's previous formulas will still apply to Pension Credit earned before January 1, 1999.

The new formula will also benefit pensioners who retired prior to January 1, 1999, because it applies to the Current Service Credit you earn after retirement and after age 65 which is used to increase your pension amount. For example, if you are a pensioner age 65 or over and return to work and earn a Pension Credit ($10,000 in covered earnings) after January 1, 1999, any increase to which you are entitled for that Pension Credit will be based on the new 3.5% formula.

Pensioners Receive 5% Increase

Pensioners whose pension effective date is on or before December 1, 1998, are entitled to a 5% increase for monthly pension benefits payable on and after January 1, 1999. The new benefit amount will not be reflected in your monthly pension check until January 1, 2000, or later. At that time, you will receive a separate check representing the increased amount for each month in 1999 that you were retired.

Monthly Maximum Increased to $6,000

The monthly amount of the maximum pension is increased from $5,000 to $6,000 for all current and future pensioners. This amount is reduced if you retire before age 65 or if you elect an optional form of pension payment. If your pension is currently limited by the maximum benefit, your new pension amount will include the 5% increase or, if greater, the new maximum. However, you are not entitled to receive more than your accrued benefit - that is, the amount of pension you would have received if the Plan had no maximum.

The Trustees are pleased that such significant increases could be provided and believe this will offer added security to pensioners currently retired as well as those retiring in the future.

If you have any questions about any of the Pension Plan improvements, please contact the Pension Department at the Plan Office.

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The Board of Trustees is pleased to announce a new program which will allow Participants and their dependents to purchase long-term care insurance from John Hancock Mutual Life Insurance Company. The Health Plan will not be paying the cost of the coverage, but Participants will get the benefit of paying group premium rates which are generally lower than individual rates. In addition, this program will provide for less stringent medical underwriting than policies available on an individual basis.

Many of you may have personal experience providing care for a parent or other relative and realize the emotional and financial stress this can place on a family. Long-term care services are expensive and, for many people, can be financially devastating. According to the United Seniors Health Cooperative, annual nursing home costs can reach up to $80,000 in some parts of the country. Long-term care insurance can help preserve and protect your financial resources and provide peace of mind to you and your family.

The need for long-term care increases with age. The New England Journal of Medicine estimates that of those age 65 and over, 43% will enter a nursing home at some point in their lives. Additionally, some people may be able to live at home or with relatives but still require assistance for normal activities of daily living such as bathing, dressing and eating.

The objective of this program is to offer you access to affordable coverage that will provide meaningful benefits for most long-term care and in-home health care expenses, even adult day care expenses. There are many details to work out before the program becomes effective on April 1, 2000. Once these have been finalized, all Participants who are eligible for the new program will receive communication materials explaining the options available, the premiums and the enrollment procedures.

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Maximum Copay Per Prescription Capped at $35

The Plan's retail prescription drug program with Merck-Medco currently has an annual deductible of $50 per person/$l00 per family and a copayment of $10 or 20%, whichever is greater. The Trustees are pleased to announce that effective October 1, 1999, the maximum copayment will be $35. This means that once your annual deductible is met, you will pay no more than $35 for any one prescription at the retail pharmacy.

For example, if your prescription costs $200, your current copay is $40 (20% of $200). Starting October 1, 1999, your copay for this same prescription will be $35.

The $35 maximum copay does not apply to the mail service program. Under that program, your copay is a flat $10 per prescription. Additionally, the $35 cap does not apply to drugs used to treat infertility because they are covered under the major medical benefits and are not subject to the prescription drug program deductibles and copayments.

Prescription Drug Program Insured

Effective October 1, 1999, the prescription drug program will change from a self-funded arrangement to an insured arrangement with Merck-Medco. This simply means that instead of paying for all prescription costs directly with Plan dollars, the Plan will pay Merck-Medco a flat monthly insurance premium for each covered Participant. This change will not affect the benefits you receive.

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From time to time, the Trustees make changes to the Plans which are of a legal nature. This section includes two legal changes recently made by the Trustees.

90-Day Limit For Filing Lawsuit

Under ERISA, Plan Participants have the right to file a lawsuit in state or federal court once they have exhausted the Plans' internal appeals process. The Plans have been amended to limit the period of time during which a lawsuit can be filed.

Effective October 1, 1999, Participants who have completed the internal appeals process will have 90 days to file suit in state or federal court. Participants will receive a written notice of the 90-day limit along with the written notice of the decision on their appeal.

4-Year Limit For Honoring Expired Benefit Checks

Most Participants promptly cash the checks they receive from the Pension and Health Plans. Checks that have expired or been lost will be reissued by the Plans. However, effective October 1, 1999, the Plans have been amended to provide that replacement checks will not be issued for any lost or expired checks if more than four years has elapsed from the date of issue.

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Many of you may be concerned about how Y2K will affect your benefits. As early as 1997, the Plans established a strategy to deal with the potential impact to our computers of the change from 1999 to 2000 - better known as the Y2K problem. It was an enormous task involving not just the Plans' computer systems, but also the vendors with whom the Plans do business, such as Blue Cross of California, PHCS and Merck-Medco, as well as our banks and investment managers. We are pleased to report that the Plans' computers are now Y2K compliant - that means, they will be able to function efficiently and effectively at the start of the new year. In addition, we have received assurances from our vendors that they will be Y2K compliant. You will continue to receive your benefit checks in a timely manner from the Plan Office.

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When you move, you must notify the Pension and Health Plan Office so that you will continue to receive information about your eligibility and benefits. You can change your address with the Plan Office three different ways:

• Call the Participant Services Department
• File a Change of Address Card
• Write or Fax a letter to the Plan Office

Remember, the Screen Actors Guild is a separate entity from the Pension and Health Plans and requires a separate notice for change of address.

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