Writers Guild Agreement with Studios Alters Health Plan

The Writers Guild of America (WGA) announced a new agreement with major studios on Wednesday, which will see TV and film writers facing increased medical expenses. In exchange, studios are set to contribute a record-setting $321 million to sustain the health fund for screenwriters. This change to the medical plan is a key aspect of a four-year contract that was finalized over the weekend between the WGA and the Federation of Motion Picture and Television Producers.

Both the WGA East and West boards unanimously approved the deal on Tuesday, and members will vote on ratification later this month.

In a message to members, the WGA Negotiations Committee expressed pride in the outcomes achieved through these talks, emphasizing the importance of member support. They indicated that restoring the health plan to a sustainable level was the most significant achievement, especially amid challenges from industry downsizing and soaring health care costs.

Studio representatives highlighted that this is the largest increase in the medical insurance system’s history. The new funding is roughly five times greater than the $65 million provided by studios in 2017 during a previous major financing push.

The agreement also includes enhancements to streaming residuals, raising the “success bonus” for the most popular streaming shows from 50% to 75% of base residuals. Additionally, most minimum fees will see annual increases of 1.5%, 3%, 3%, and 3% over the four years, along with measures aimed at preventing producers from asking writers to do “pro bono work.”

However, the deal maintains many existing conditions. When it comes to artificial intelligence, the AMPTP has agreed to continue discussions with the WGA and notify them if any of their works are licensed for AI training. Yet, they did not agree to compensate writers for this training, as the union had requested.

Furthermore, the agreement keeps certain minimum staffing requirements for television productions intact, a crucial aspect that emerged during the 2023 writers’ strike. Although the AMPTP sought to relax these requirements to facilitate temporary “mini-rooms,” the WGA insisted on adhering to the terms established during the strike.

Most significant changes relate to health care. The WGA’s health fund has faced a $200 million deficit in the past four years, driven by a drop in production and rising health costs. If this trend continues, the fund could run out within three years.

The union’s aim was to secure greater funding from employers, aware that this would also mean higher wages for writers.

“We’re trying to manage our cost curve,” a WGA representative remarked, noting that expenses within the network have surged by 13% annually since 2019. “These adjustments are crucial for long-term sustainability, focusing on maintaining quality and keeping out-of-pocket costs manageable.”

Studios prioritized a contract extension in these negotiations, hoping for a longer deal without the looming threat of strikes. Initially proposing a five-year agreement, they settled on a four-year term.

The studios have also committed to raising health insurance contributions from 13% of writers’ total compensation to 16.75%. They’ve adjusted the revenue cap for calculating these contributions, estimated to be worth $280 million over the next four years. Additionally, $41 million will be transferred from paid parental leave to bolster medical insurance.

Insurance premiums, deductibles, and out-of-pocket maximums are set to rise for writers. The WGA will also increase the income threshold for compensation by 10%. Major reforms to the “extended coverage” system are also in place, enabling writers to earn points to maintain coverage up to five years while not actively working.

Currently, writers pay no monthly premiums for individuals and $50 for families. Under the new arrangement, premiums will rise to $75 for individuals and $200 for families, although still lower than current SAG-AFTRA rates.

Out-of-pocket maximums will increase from $1,000 to $2,500 per person, with individual deductibles rising from $400 to $500 and family deductibles from $1,200 to $1,500.

The current income threshold for coverage stands at $46,759, but the WGA has agreed to hike this amount by 10% starting July 1, 2027.

The new deal complicates earning extended coverage points, with a minimum annual earnings cap of $200,000 now established. Previously, writers needed to meet a minimum of $46,759 to start accumulating points. Though this change won’t disrupt current points for interviews, it will slow down future accumulation.

A new low-cost healthcare option called Centivo will also be introduced, featuring a more limited network of providers.

The WGA aimed to tackle the issue of “unpaid work,” wherein writers may submit drafts before being compensated for the “first draft.” Companies have been reminded that only they can request rewrites, with this focus intended to deter producers from seeking unpaid revisions. The deal allows TV pilot writers more flexibility and prevents companies from keeping them in exclusive or “first position” arrangements without compensation.

Additions to the agreement also include new, higher minimum rates for “Page 1 Rewrites,” which involve more extensive edits than standard rewrites.

The ratification vote is set to take place from April 16th to April 24th.