Insurance and Retirement

Retirement Information

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Retirement Matters

Be sure to visit the brand new "Retirement Matters" section on the AFA International Web site.  Included in this new area are the following resources:
• Is your Pension in Jeopardy?
• Retiree Benefits
• Web Resources for Retirees

Retirement Eligibility
See also >>  Retirement Eligibility Chart (.pdf format)

Retirement ages and choices that result in relation to benefits:

1)     If you are 50 by May 1, 2003, you may early retire before July 1 and you are eligible for benefits including medical benefits paid at the old amount as outlined on page 196 of our Contract.  If you retire after July 1, you are still eligible for benefits but must pay the new medical contribution.

2)     If you are 50 after May 1, but before July 1, you may retire before July 1 and be eligible for benefits including medical benefits at the rate outlined on page 196 of the Contract.  If, however, you wait until after July 1, you would not be eligible for the medical and other benefits until age 55.

3)     If you are not 50 before July 1, you must wait until you are 55 before you are eligible to receive benefits other than pension.

4)     If you are over 55 you may early retire at any time and receive benefits.  Before July 1, you pay the retiree medical contribution outlined on page 196; after July 1 you pay the new contribution amounts for retiree medical.

Notes:   In all cases you are eligible to receive your vested pension at age 50, whether you retire or terminate. In order to retire before July 1, contact your supervisor to receive direction about how to submit your request.

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Pension and Bankruptcy Q and A

Q.      Can the Retirement Plan be terminated?

A.      Under the collective bargaining agreement, the company may terminate the Retirement Plan only with AFA’s consent. However, if the company is in reorganization in bankruptcy and meets certain stringent conditions specified in the Bankruptcy Code, including in Section 1113, a bankruptcy court could allow abrogation of the collective bargaining agreement in this respect and permit the company to terminate the Retirement Plan without AFA’s consent. Even if a termination instituted by the company (a “voluntary termination”) is permissible under the foregoing, it may not occur unless it also meets the requirements for either a “standard termination” or a “distress termination,” which are discussed in the following questions.

In addition, the Pension Benefit Guaranty Corporation (PBGC), the federal government agency that administers and guarantees certain pension benefits, could act on its own to terminate the Retirement Plan (an “involuntary termination”), if it determines that the plan has not met applicable minimum funding standards or will be unable to pay benefits when due, or if it determines that its possible long-run loss in providing guaranteed benefits under the plan will increase unreasonably if the plan is not terminated.

         The Employee Retirement Income Security Act of 1974 (ERISA), as amended, requires that the plan administrator provide 60-day advance written notice to all affected parties of its intent to terminate a plan. If the PBGC is advised that the proposed plan termination violates a collective bargaining agreement and that the termination is being challenged under procedures specified in the collective bargaining agreement, the PBGC will suspend the termination proceeding until resolution of the challenge. However, the PBGC still has the authority to proceed with an involuntary termination, if the requirements of an involuntary termination are met.

Q.     What are the requirements for a “standard termination,” and how are plan assets allocated in that event?

A.      If a pension plan’s assets exceed its liabilities, it may be terminated in a “standard termination.” In a standard termination, plan assets are used to purchase insurance company annuities designed to cover all liabilities of the plan (for all active, retired and terminated participants and survivors). The Retirement Plan provides that any assets remaining after such a fully funded termination would revert to the Company.

Q.      What are the requirements for a “distress termination”?

A.      If a pension plan’s liabilities exceed its assets, the Retirement Plan may be terminated only in a “distress termination.” A distress termination may occur only if the PBGC determines that the entity sponsoring the plan (i.e., the Company), as well as each entity in the sponsor’s controlled group of entities, satisfies one of four alternate criteria for a distress termination, pursuant to Section 4041(c) of ERISA, as follows:

• The entity is in liquidation in bankruptcy, or the entity is in reorganization in bankruptcy, and the bankruptcy court determines that unless the plan is terminated the entity will not be able to pay its debts pursuant to a plan of reorganization and will be unable to continue in business outside the reorganization process, and the court approves the plan termination, or

• The PBGC determines that termination is required to enable the entity to pay its debts and continue in business, or

• The PBGC determines that termination is required for the entity to avoid pension plan costs that have become unreasonably burdensome solely as a result of a decline in the entity’s workforce covered by all of the entity’s pension plans.

Q.         If the pension plan undergoes a distress termination or an involuntary termination (which means the plan’s assets do not cover its liabilities) does the PBGC guarantee all the benefits to which a plan participant is entitled?

A.         Generally, the PBGC will guarantee a maximum monthly benefit of $3,579.55 for a participant who retires at age 65. The chart on the next page provides the guaranteed amount for various retirement ages. There are specific rules that determine whether other types of benefits are guaranteed by the PBGC and if so, to what extent.

PBGC Guarantee Maximums for Plans That Terminate in 2002

Following are the PBGC guarantee maximums that are applicable to any defined benefit retirement plan that terminates in 2002. The following amounts reflect a single life benefit, payable for the retiree’s life only. If, at the time of his retirement, the retiree elects to receive his benefit in some form other than a single life benefit, such as in the form of a 50% joint and survivor benefit, the amounts guaranteed by the PBGC will be less than those listed below. PBGC guarantee amounts for ages in between those listed below will be pro-rated to the nearest full month.

Flight Attendant’s Age on Later of Benefit Commencement or  Plan Termination Date	PBGC Maximum Monthly Guarantee	PBGC Maximum Annual Guarantee
70	$5,942.05	$71,304.60
69	$5,333.53	$64,002.36
68	$4,796.60	$57,559.20
67	$4,331.26	$51,975.12
66	$3,937.51	$47,250.12
65	$3,579.55	$42,954.60
64	$3,328.98	$39,947.76
63	$3,078.41	$36,940.92
62	$2,827.84	$33,934.08
61	$2,577.28	$30,927.36
60	$2,326.71	$27,920.52
59	$2,183.53	$26,202.36
58	$2.040.34	$24,484.08
57	$1,897.16	$22,765.92
56	$1,753.98	$21,047.76
55	$1,610.80	$19,329.60

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Merck-Medco Replaces Caremark
Changes in the mail order prescription drug and retail pharmacy network take effect January 1, 2002. This vendor change does not change the prescription drug coverage under the medical plan. Flight Attendants who are enrolled in the Traditional Medical Plan will receive additional information from Merck-Medco that will be mailed to their home address. Blue Cross Blue Shield will also mail your new medical ID cards.

MetLife replaces CIGNA as the insurance carrier for the Short Term Disability (STD), also known as “weekly loss of time” and Long Term Disability (LTD). A major enhancement will be the implementation of telephonic claim filing.

The LTD premium will increase from .46/$100 to .49/$100 of monthly salary beginning January 2002. For an LTD monthly benefit of $1500, this translates to an increase of 45 cents per period (costing 7.35 per check vs. 6.90). This is in accordance with Section 33.E.9. of the Contract. (the maximum F/A premium amount is $.55 per $100.00)

Flexible Spending Account (FSA) reimbursements were distributed and made available on November 10 in the same manner in which you receive your paycheck; direct deposit or from the domicile office.

Retiree HMO’s are being offered to those Flight Attendant retirees for the first time beginning 2002. Retirees who take advantage of this are responsible for the portion of the HMO premium that exceeds that of the UA traditional medical plan. This is the same as for any active Flight Attendant who elects HMO coverage versus the Traditional Medical Plan.

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Melinda York, LEC President, Council 38, Narita
(Reprinted with permission from Council 38’s Newsletter.)
 
Family Medical Leave — these three words could change your work life. The company has given Flight Attendants information on FML periodically since the Company's Family Medical Leave Policy was implemented in early 1994. Unfortunately the Company often inundates us with so much reading material that often we miss the really important information.

The Family and Medical Leave Act of 1993 provided for twelve weeks of unpaid leave for employees who worked 1250 hours in a twelve-month period. Because Flight Attendants do not work enough hours for the FMLA to apply, the company implemented their own policy for Flight Attendants. FML allows Flight Attendants to take time off for the serious health condition of a spouse, child or parent, or for their own serious health condition.

FML is covered in the Contract under Section 23M. This can be found on page 158. The contract doesn't go into the specifics of the company's FML policy so if you require more information than what we are providing in this article please ask the company for a Family Medical Leave packet. A Flight Attendant must have received pay for at least 470 hours during the previous 12 months to apply for FML. Vacation and paid sick leave hours count towards the 470 hours. A Flight Attendant must obtain an FML packet and fill out an application. If the leave is for a family member, the packet is sent to your supervisor who will approve or disapprove the request. If the request is for you, the packet should be sent to United Medical who will make the decision.

Health conditions covered by FML include illnesses, injuries, impairments or physical or mental conditions that involve at least one of the following: pregnancy or prenatal care,
chronic serious health conditions continuing over an extended period of time such as asthma or diabetes, permanent or long term conditions for which treatment may not be effective such as Alzheimer's, terminal cancer or AIDS, absences due to multiple treatments for restorative surgery or for a condition which would likely result in a period of incapacity of more than three days if not treated such as chemotherapy or radiation treatments or physical therapy, as well as any health condition lasting more than three consecutive days?

FML is unpaid leave if you are required to care for a family member. If the FML is for your care, you use any sick leave balance or the current year vacation can be used concurrently with the FML. FML can also be taken all at once or intermittently (trip by trip). Please plan accordingly.

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Maternity Sick Leave
The question that most frequently arises is, “how do I get paid?” There are two pay options available to Flight Attendants on Maternity Sick Leave:

1. To receive maximum monthly flight time (85 hours) — unless you are scheduled for vacation in that month, notify domicile payroll; you do not need to submit a bid, or 
2. To receive sick leave pay for projection of monthly flight time (this is known as a paper award) if you bid by computer, complete the bid screen as normal; an asterisk appears by your name which indicates this is to be a paper award.

If you bid by bid card: submit a card with the words “Maternity Sick Pay” at the top of the card. If you do not bid at all, an open line at your seniority will be assigned to you and you will receive the pay projection for that line.

You may remain on sick leave status until one of the following happens:

1. Your sick leave hours are exhausted, or
2. 43 days have passed following childbirth, or
3. You elect to be placed on Medical Maternity Leave of Absence.

Normal company benefits apply while using maternity sick leave.

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The following is re-printed with permission.  Ellon's expertise and wisdom in this important subject is of concern to most members.  We find that it is deserving to be reprinted and published in our Flamingo Flyer On-Line! Web site:

Retiring?
By Ellon Jarvis, Chairperson
UAL MEC Insurance & Retirement Committee

January 1, 1999, United Airlines started charging some retired Flight Attendants for a portion of their pre-Medicare medical coverage. Subsequent to this time, all pre-Medicare coverage has been 100% paid by United for both the retired Flight Attendants and dependants.

The ability for United to charge the co-payment has been in the Flight Attendant contract since the 1987-1996 agreement.  It was carried over with no change into the current contract.  No co-payment was to be levied until a certain "trigger" had been reached.  United notified AFA in late 1998 that the trigger had been reached and they intended to implement the contractual language in January 1999.

The language in Section 33 A.1.(l),(2), and (3) of the Flight Attendant contract states that if the monthly cost of the blended pre-Medicare Retiree Medical Plan and the Flight Attendant Medical Plan increases more than 5% over the cost of the plan on December 3, 1991 (the base rate), the retiree will pay a portion of the total cost of the plan for the retiree and eligible dependents based on the retiree's length of service at retirement.   The base rate that was established in 1991 is $154.89.  The trigger would be activated if the costs for the coverage reached $162.63. Each succeeding year's costs are compared to the base rate.  The rate was derived by blending the active and retired Flight Attendant Medical Plan costs together, yielding the highest possible base rate.   If we had used only the retirees costs, the figure would have been too low.   In 1991, we had very few retirees to generate a cost figure.

The pilots and the IAM have similar language in their contract.  United imposed the co-payment on their salaried and (at the time) non-union worker.  As of today, only the pilots do not have a co-payment.  Their 1991 base rate was much higher that the Flight Attendants as they had many more retirees to base the calculation on.  Because their rate is higher, their trigger has not been reached.

The AFA/UAL Retiree Medical Board meets with United annually to review the costs and calculations that are compared against the base rate.  We met with the company in November to dispute United's calculations justifying the co-payment for 1999.  AFA had some serious concerns over the timeliness and quality of the data used for the calculations.  United chose to go ahead and institute the charge, regardless of our objections, which they were free to do.

We will be meeting again in March to investigate the issue further. Accordingly, AFA has instructed their actuarial firm, William M. Mercer, to so some recalculations based on other criteria.   We also told them to review all United's figures.

What does this mean to you, as an active Flight Attendant?  Nothing, because in compliance with the Flight Attendant contract, United must pay 100% of the Traditional Plan's premiums for you and you dependants, It will certainly affect you upon retirement.   The co-payments are I place as long as the trigger continues to be met, or until you are eligible for Medicare, usually age 65.  The same applies to your dependants.

The amount of your contribution is determined by your years of service at
retirement based on the following schedule:

Flight Attendant Monthly Cost

Length of Service	Individual	Family
30 years and over	$ 10.00	$ 20.00
25 - 29 years	$ 12.00	$ 30.00
20 - 24 years	$ 16.00	$ 40.00
15 - 19 years	$ 20.00	$ 50.00
10 - 14 years	$ 30.00	$ 65.00

The initial stating rate may not increase more than 20% during the F/As retirement and if the cost should drop at any time to below the trigger, the company will again assume all premium costs. Only those F/As who retired after August 3, 1992 are subject to the co-payment.

Flight Attendants who came to work for United in connection with United's 1986 Pacific Division or the 1991 London route acquisition will have their years of service at Pan Am counted as years of service for the co-payment schedule.

As you see, those who stay the longest are subject to the smallest co-payment.  If you have 29 years of service and are contemplating retiring, you might consider staying until you reach 30 years of service.

One may view United as being "penny wise and pound foolish" for implementing the co-payment.  Although it is within their contractual right to do so, we see is as actually costing the Corporation money.  For example:

A single Flight Attendant retires with 29 years of service pay $168.05 annually (including the 20% increase):

        • Assume the Flight Attendant is 50 years old.
        • Assume s/he is eligible for Medicare at age 65.

This Flight Attendant will have a co-payment total of $2520.75 for the entire 15 years until Medicare.  If the Flight Attendant stayed until reaching 30 years of service, not only is the co-payment less, s/he has earned a salary of between$25,000 -$45,000, for that one additional year of work.  Even considering pension payments for this Flight Attendant, it appears the Company is in the red.  Worse for United's bottom line is, if this Flight Attendant decides not to retire until much later or not at all!

AFA believes implementing the co-payment will actually cost United a fortune in the long term.  A much wiser decision is to do away with the co-payments altogether, and encourage senior workers to retire, not stay on.  This article is to provide you with one more tool when making your retirement decision.

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