Added 7/6/2012 Q. What does it mean that American Airlines has made a proposal to the Retiree Committee?
By making a proposal to the Retiree Committee, American Airlines has commenced the process to negotiate about changes in retiree medical and life insurance benefits for retirees.
Added 7/6/2012 Q. Why is American Airlines making a proposal to the Retiree Committee at this time?
American believes it is important to work quickly to restructure its costs and begin implementing changes so we can successfully emerge from the restructuring process and move to a place of growth and profitability. In order to get there, we must re-think every aspect of our business, including our retiree benefit costs.
Added 7/6/2012 Q. What is the 1114 process? How long will it take?
In the event the company and Retiree Committee are not able to agree upon changes, and to the extent otherwise required by law, American may file an application with the Court under Section 1114 of the U.S. Bankruptcy Code asking for a hearing to decide whether proposed modifications to retiree medical and life insurance benefits are necessary for reorganization and fair and equitable. The Court’s final ruling must be made within 90 days of the start of the hearing on this application. At any such hearing, both parties – American Airlines and the Retiree Committee – will have an opportunity to present their respective cases and arguments to the Court.
Added 7/6/2012 Q. How do American’s proposed changes compare to the industry?
Continental, Delta, United and US Airways have eliminated or significantly modified their retiree medical plans, and most low-cost carriers don’t offer these benefits.
American’s proposal is designed to align the company’s costs with those of its competitors, while still providing access to retiree medical benefits.
Added 7/6/2012 Q. Who is on the Retiree Committee?
The Retiree Committee was appointed by the U.S. Trustee and approved by Judge Sean Lane. There are five members in total Laura Glading (APFA) for retired flight attendants, Robert Gless (TWU) for retired TWU members, Jim Sovich is the Retiree Committee representative for retired pilots, and Chuck Marlett and Rita Kepple represent non-union retirees.
Added 7/6/2012 Q. I am a TWA retiree. How would the proposal to the Retiree Committee affect me?
The proposed modifications to retiree medical and life insurance benefits are the same for TWA retirees as for American Airlines retirees.
Added 7/6/2012 Q. What does this mean for current employees?
Company-provided medical and life insurance benefits for active employees are being addressed separately; they are not addressed in the company’s proposal to the Retiree Committee.
Added 7/6/2012 Q. I’m currently an active employee, but I’m considering retiring soon. Which process will apply to my retiree benefits?
The company’s proposed changes to retiree medical and life insurance benefits for retired employees are the same as the proposed changes to retiree medical and life insurance for active employees. Whether an employee would be covered under the proposal for active employees or the proposal for retirees depends upon the employee’s particular facts, the outcome of negotiations with respect to active employees and the Retiree Committee, and orders entered by the Court, if any.
Added 7/6/2012 Q. Are American Eagle retirees covered by the proposal to the Retiree Committee?
No. American’s proposal to the Retiree Committee applies only to U.S.-based American Airlines and TWA retirees. American Eagle does not offer retiree medical benefits to its retirees.
Added 7/6/2012 Q. How does American’s proposal to the Retiree Committee compare to its 1113 proposal for active employees when they retire?
The proposal to the Retiree Committee and the 1113 proposal for retiree coverage for active employees mirror each other. Retirees under age 65 would be offered access to a company-sponsored retiree medical option. However, the retiree would pay the full cost of the medical coverage. The current cost for a retiree enrolled in the Retiree Standard Medical Plan is $462 per participant per month.
American Airlines would no longer sponsor a post-65 medical option. However, retirees age 65 and over would be offered access to Medicare supplement plans through a third-party administrator, to the extent available. These plans would be “guaranteed-issue,” which means any retiree would be eligible, regardless of the age he or she enters or any pre-existing health conditions.
The company would also refund the balance, if any, in their prefunding account to those retirees who prefunded their retiree medical coverage while they were active employees.
In addition, the company would discontinue company paid retiree life insurance. Retirees would have the opportunity to convert their life insurance to a personal policy with MetLife in which the retiree pays the full cost of continuing the life insurance coverage.
Added 7/6/2012 Q. I resigned under the 50 to 55 rule and do not yet qualify for retiree medical benefits. When I do reach age 55, what retiree medical benefits will be available for me?
The proposal to the Retiree Committee would not affect benefits for individuals who are not retired and receiving payments for coverage. But the company may make changes to its benefit plans during the Chapter 11 case that could affect the availability of coverage when you retire.
Added 7/6/2012 Q. Does the proposal to the Retiree Committee affect the Supplemental Medical Plan (SMP)?
Previously, in 2011, the company announced its intention to discontinue the SMP in 2014 once the health care exchanges mandated under the Affordable Care Act open. Until then, American will offer the voluntary Supplemental Medical Plan to retirees and their spouses who continue to purchase the company’s pre-age 65 retiree medical coverage. Under the proposal, however, the SMP coverage would not be available if the retiree did not purchase the company’s pre-age 65 retiree medical coverage. Also under the proposal, retirees age 65 and above would be unable to purchase the SMP because they would no longer be covered under a company-sponsored retiree medical plan.
Added 7/6/2012 Q. I am a retiree age 65 and my spouse is under the age of 65. Under the proposal to the Retiree Committee, would we still have American Airlines retiree medical coverage?
Under the proposal, because you are age 65 and eligible for Medicare, you would have access to purchase a Medicare supplement plan – guaranteed issue – from a third party. You also could purchase American’s pre-age 65 retiree medical plan for your spouse.
Added 7/6/2012 Q. I am a retiree under the age of 65 and my spouse is age 66. Under the proposal to the Retiree Committee, could we both be covered under American’s pre-65 plan?
Under the proposal, you would be able to purchase the company’s pre-65 plan for yourself but your spouse could not be covered under AA’s plan because s/he is over age 65 and eligible for Medicare. Your spouse could purchase a Medicare Supplement plan – guaranteed issue – from a third party.
Added 7/6/2012 Q. My spouse and I have been in the Retiree Standard Option. I have exhausted the $300,000 lifetime maximum. Under the proposal to the Retiree Committee, would I be I eligible to purchase the Retiree Standard option?
Under the proposal, because you have already exhausted the lifetime maximum, you would remain ineligible for further coverage under our retiree medical plan.
Added 7/6/2012 Q. Will I be offered COBRA coverage if I’m in the over 65 plan today?
Whether you will be offered COBRA coverage will depend upon your particular facts, the outcome of negotiations with the Retiree Committee, and orders entered by the Court, if any.
Added 7/6/2012 Q. Under the proposal to the Retiree Committee, would TWA retirees be offered access to purchase their current TWA retiree medical plan?
The proposal is the same for TWA and American retirees. View chart comparing American’s retiree medical options.
Added 7/6/2012 Q. What is the “complaint” or lawsuit that the company filed?
The company has asked the Bankruptcy Court to rule that the company has the right to unilaterally modify retiree medical and life insurance benefits.
Added 7/6/2012 Q. Why did American file a complaint if it plans to negotiate with the Retiree Committee?
American believes its retirees should be represented and have a voice in the Chapter 11 process, as other stakeholders do. While we believe the company has the right to modify retiree health benefits on its own, it intends to negotiate in good faith with the Court-appointed Retiree Committee over its proposed changes, and is hopeful that it will reach an agreement with the Retiree Committee. Meanwhile, the process that began by the filing of the complaint will establish the legal rights of the company and the retirees, and will aid in the negotiations and clarify next steps if the negotiations do not succeed.
Added 5/31/2012 Q. Will the Chapter 11 filing affect retiree travel privileges? If I choose to retire now, prior to the final restructuring plan implementation, will the Company end my retiree flight privileges?
The Chapter 11 filing will not by itself affect the Company’s policies regarding retiree travel. However, all items will be reviewed as part of the reorganization. Any changes will be announced through our normal communications channels.
Added 5/31/2012 Q. Can I retire after I receive my severance pay?
Yes, if you are eligible for retirement, you may retire at any time. You should advise your manager that you wish to retire and contact HR Services to initiate the retirement process. You may contact HR Services at 1-800-447-2000, 8 a.m. – 5 p.m. Central time, Monday – Friday, to speak with an HR Services retirement representative. You can call at your convenience and no appointment is necessary.
Added 3/07/2012 Q. I’m an American Airlines retiree. How does AA’s announcement that it is freezing its defined benefit pension plans for active employees affect me?
There is no change to pension benefits for existing retirees, whether you are currently receiving your pension benefits or you deferred payment to a later date. The plans will not be turned over to the PBGC and you will still receive the same pension payments from American as you did before the bankruptcy. Any changes to other retiree benefits will be addressed through a separate process in the bankruptcy proceedings that will come at a later date.
Q: I have been prefunding for Retiree Medical. Can this prefunding account be used to pay AA’s creditors?
Money collected for Retiree Medical prefunding is held in a trust, which is separate from the Company’s funds. This trust is protected under federal law against the claims of American’s creditors. American Airlines cannot use any of these assets to meet its obligations or to pay its debts.
Q: If retiree medical goes away under restructuring, would prefunding be refunded to Flight Attendants and TWU-represent employees?
It may become necessary to change benefit programs for all employee groups, including retirees, to help the Company achieve a more competitive cost structure. It is too early to tell what may happen in this area. In the past when we have transitioned retiree medical coverage for other workgroups to a post funded plan, we have refunded employees’ prefunding contributions with interest.
Q: Is there currently any change to my retiree medical benefits?
No. You can and should use your benefits and file your claims as you normally would.
Q: Will the Chapter 11 filing affect retiree travel privileges?
The Chapter 11 filing will not by itself affect the Company’s policies regarding retiree travel. However, all items will be reviewed as part of the reorganization. Any changes will be announced through our normal communications channels.
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