Medical Coverage for Active Employees – April 18 – From Jetnet

Our healthcare costs are unsustainable – higher than our direct competitors pay, and far and above the average of what other businesses pay. A recent survey by the Kaiser Family Foundation reported that employees paid about 27 percent towards their healthcare costs, in addition to whatever out-of-pocket costs required.

The company is seeking to make the changes necessary to hold down costs while continuing to offer competitive healthcare plans. American proposes establishing a universal benefits solution for our people with a uniform employee cost share, which will help bring our healthcare costs in line with industry averages. American’s successful restructuring, and its very survival, requires us to re-think every aspect of our business, and that includes our healthcare plans.

Amended Plan

American presented an amended active medical proposal to each of the unions on March 15. The amended proposal adjusts employee contributions among the three options and changes some of the plan designs and the out-of-pocket expenses, while still meeting the company’s savings target in this area.

As part of the amended active medical design, American has changed the approach to active medical contributions. Now, employees enrolling in the active medical plan with families will pay a higher cost share than employees enrolling in the plan for employee coverage. This allows American to maintain the lower cost share for employees who choose employee-only coverage.

Summary of Changes

As part of its plan to modernize American’s healthcare system, the company proposes:

Three Medical Options – Employees would be offered three medical options to choose from:

1. Standard Option
2. Core Option – Health Savings Account-compatible option
   • Standard and Core Options – Employees enrolled in the Standard and Core Option medical options contribute an aggregate 21 percent of total projected 2012 healthcare expenses for these medical options. These contributions will increase with inflation. The healthcare expenses calculation for the Standard and Core options would include associated medical, prescription and administrative expenses. The Value medical option inflation will be calculated separately.
3. Value Option – A medical option with lower out-of-pocket costs, offered at higher monthly contributions
   • Value Option – Employees enrolled in the Value medical option contribute an aggregate 27 percent of Value option total expenses, and the inflation for this option will be calculated separately. The healthcare expenses calculation for the Value option would include associated medical, prescription and administrative expenses.

All Options

• Preventative Care – The company would pay for 100 percent of preventative care in all healthcare options.
• New Hires – New employees eligible for healthcare coverage will default to the Core option, which is the Health Savings Account-compatible medical option, for Employee Only coverage on their eligibility date, should another option or level not be elected during their initial enrollment.
• Wellness Program – All employees enrolled in the medical options will have the ability to earn incentives for participating in the Healthmatters wellness program, provided they meet the criteria established by American and provided American continues offering incentives in any plan year.
• Part Time Employee Healthcare for ARP, TWU and Reduced Work Schedule Employees – Today, a number of other airlines offer different contribution options for Part Time employees. In order to be aligned with the industry, American is proposing offering a different active medical contribution structure for Part Time employees:
  • Part Time Traditional ARP and Reduced Work Schedule employees are eligible to select any of the three options we intend to offer (Standard, Value or Core).
  • Part Time and Reduced Work Schedule employees will pay the same contribution rate as a Full Time employee, regardless of how many people they are covering, if they select the Core option.
  • If a Part Time or Reduced Work Schedule employee is only covering themselves, they will pay the same rate as Full Time employees for all three options.
  • If a Part Time or Reduced Work Schedule employee is covering dependents and selects the Standard or Value option, they will pay double the rate of a Full Time employee for that option.
  • Please note, eligibility is based on employment status, not on actual hours worked.
• Full Time and Part Time Home-Based Reservations Reps and Level 84 Premium Services Employees
  • Full Time and Part Time HBR and Level 84 employees will only be eligible for the Core option.
  • These employees will pay the same contribution rate as a Full Time traditional employee, regardless of their status.

This is not intended to be the plan document, but rather a summary of the proposed changes. You will receive a copy of the final summary plan description of the benefits once this process is completed.