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Q: I'm a non-pilot retiree, and Delta has me listed for a $0 claim. How come I don't have a claim for lost health benefits?
A: Some non-pilot retirees under 65 who did not leave Delta under an early retirement package were paying 100% of the premiums for their medical benefits before the changes that became effective on January 1, 2007. Since those retirees were paying 100% both before and after the recent changes, they do not have a claim for the lost value of benefits-they didn't lose any subsidy during the bankruptcy case. Your being in that group is one reason Delta would list you as having a $0 claim.
Q: The paperwork I got from Delta says that they will be withholding part of the money they will pay me for my bankruptcy claim, for withholding taxes. How come? If you get a payment from a court case, isn't it tax free?
A: If you recover for physical injury in a personal injury case, the payment is usually tax free, but other payments can be taxable. There is a specific legal precedent that says a cash payment of lost health benefit bankruptcy claims for employees is taxed as compensation income for that employee. Because of that precedent, Delta will be withholding taxes from amounts they would otherwise pay for bankruptcy claims.
Q: My income is so small every year that I don't have to pay income taxes. What do I do about Delta's withholding income taxes, since I don't even file a tax return?
A: If you are getting a significant claim and your income is so small that you do not pay income taxes, you might consider filing a tax return for 2007 to get a refund of the income taxes that Delta withheld and sent to the Internal Revenue Service. You can also send Delta a W-4 form that you are exempt from income tax withholding to reduce the amount of income tax they withhold. (They may still have to withhold FICA amounts.) A copy of a W-4 form is here. Please check this site for updated information later, because Delta has told us they will inform us about to whom at Delta you should address your W-4 form.
Q: I am over 65 and a Delta retiree, but my spouse is under 65. I got a notice from Delta that my spouse is eligible for lifetime COBRA continuation coverage at a reasonable rate (compared to what we've been paying) because of a change to benefits made effective on January 1, 2007 during the bankruptcy case. I thought COBRA continuation coverage was only for 18 months or 3 years, not for life. What's this all about?
A: Under certain circumstances, the law requires Delta to offer COBRA continuation coverage, which Delta is making available at 103% of the cost that active employees are paying for their similar benefits. Because active employees are younger on average than retirees, their premiums are less expensive, which may (depending on your situation and early retirement program) offer your spouse benefits at a lower premium. It is Delta's obligation, not ours, to notify those eligible for COBRA continuation coverage, and if your spouse is eligible, you need to consider what option is right for you. Unlike other events that trigger COBRA continuation coverage (like termination of your job) if your benefits are modified in a bankruptcy (as were some of the benefits in this bankruptcy) that may trigger eligibility for lifetime COBRA continuation coverage. You should be aware, however, that it is not for the lifetime of your spouse-it is for the lifetime of the Delta retiree (you), and when you die, your spouse becomes eligible for only 3 more years of COBRA continuation coverage.
Q: What about after that? I might die next year, and my spouse might live for many years. Does picking COBRA continuation coverage now mean that she won't have some other Delta benefit option after I die and her COBRA continuation coverage eligibility eventually expires?
A: Currently, Delta offers health benefit eligibility not just to Delta retirees and their spouses, but also to the surviving spouses of Delta retirees. It is possible (particularly if there is a merger in Delta's future) that program could some day change. But if it does not, and the program continues as it exists today, your surviving spouse would have the opportunity to enroll in Delta health benefits during the annual open enrollment period.
Q: When I looked at the benefits offered to me, COBRA continuation coverage for my spouse was more expensive than just keeping him enrolled in the current Delta Family Care Medical Plan for those under 65. How come? I thought you said COBRA continuation coverage was less expensive.
A: Different people have different situations, and we don't know (and cannot address) your personal situation. You should carefully consider your options based on the information you have and the comparative cost of the alternatives offered to you. For example, many under-65 retirees and spouses with early retirement packages like PensionPlus and ERMO may find that the subsidies under those programs make enrollment in the regular Delta Family Care Medical Plan for their under-65 spouse less expensive than electing COBRA continuation coverage for that spouse.
Q: Why are you telling us this information now? Didn't the open enrollment period already end?
A: COBRA continuation coverage elections have a different deadline from the open enrollment period, since the COBRA continuation coverage election period is set by federal law. Delta determined that for COBRA eligibility purposes the "change" giving rise to COBRA continuation coverage occurred on January 1, 2007, and that those eligible have 60 days after that date to elect COBRA continuation coverage, until March 2, 2007.
Q: Who is eligible for COBRA continuation coverage, and how was that eligibility determined?
A: It was Delta's obligation to determine who was entitled to a notice of COBRA continuation coverage eligibility. We understand that, for non-pilot retirees, Delta determined that it would send notices to those who were enrolled in Delta benefits in 2006, who (1) were 65 or older on January 1, 2007 and thus had their benefits program change, effective on that date, or (2) as of January 1, 2007 had the portion of premiums they paid for their benefits change because of the modifications negotiated in bankruptcy that became effective on that date. (For example, those who were under-65 and who retired with PensionPLUS or ERMO early retirement packages.)
Q: I am a non-pilot retiree. How was my claim for lost health benefits calculated?
A: Non-pilot retirees who did not have PensionPlus or ERMO early retirement packages, but who were receiving some subsidy from Delta that was changed, simply get an estimated claim for the amount of the reduced Delta subsidy for benefit premiums between January 1, 2007 (when the reduced Delta subsidy took effect under our term sheet with Delta approved by the bankruptcy court) and the effective date of confirmation of Delta's bankruptcy plan. (After that date, Delta could have modified the subsidy without any restrictions under bankruptcy law.) Retirees, spouses and survivors under 65 with the PensionPlus or ERMO early retirement packages, however, were previously contractually entitled to 100% medical and prescription drug premiums from Delta until they turned 65. Those individuals get a bankruptcy claim based on their increased premium cost, but only until they turn 65: $115 a month for 2007, $120 a month for 2008, and $125 a month for 2009 and every year after, until they turn 65. They also get a claim for the value of the loss of the "enhanced" medical option from January 1, 2006 through the middle of 2007. Because the bankruptcy claim is provided now, but the premium subsidies lost would be in the future, the claim amount for subsidies lost in 2008 and beyond is reduced by a 7.5% annual discount rate. And finally, because there is a small statistical chance that the affected under-65 PensionPlus or ERMO beneficiary would die before reaching 65, the claim for lost future subsidies is also reduced slightly by the statistical mortality risk from a standard actuarial table.
Q: I am a 64 year old retiree with the PensionPlus early retirement package, enrolled in Delta benefits, and I can tell you from my claim amount that I am definitely NOT getting $120 or $125 a month for 2008, 2009, 2010 and beyond. How come?
A: That's because you only get a claim for the portion of the subsidy lost until you turn 65. So in your case, unless there is something else we're not aware of, you would probably get a claim for (1) the value of the lost "Enhanced" medical option in 2006 and the first half of 2007, plus (2) $120 a month from January 1, 2007 until you turn 65.
Q: What is the document that specifies how much my claim for lost value of health benefits is supposed to be?
A: For non-pilot retirees, the Term Sheet between the Non-pilot Section 1114 Retiree Committee and Delta approved by the Bankruptcy Court specifies how retirees were to get allowed claims for the value of those lost benefits, without the need to file individual proofs of claims. Section VIII of that Term Sheet provides the details of the calculation of those claims that were to be allowed without the need to file any individual proof of claim:
VIII.
PRE-PETITION CLAIMS FOR INDIVIDUALS
Delta and the 1114 Non-Pilot Committee (and their respective advisors) shall seek to fix the individual claims described below in (VIII)(A), (B), (C), (D), (E), and (F) in the amounts provided below, and those claims shall be allowed without the need for the individuals to file proofs of claims for those amounts.
A. ERMO and PensionPLUS Retirees
1.For loss of the Enhanced Medical Option benefit effective January 1, 2006:
(a) ERMO and PensionPLUS Retirees, Spouses and Survivors enrolled in any Delta medical option on December 31, 2005 who were under age-65 during any part of 2006 will get a claim based upon the number of months and partial months during 2006 in which they were under age-65.
(b) ERMO and PensionPLUS Retirees, Spouses and Survivors enrolled in any Delta medical option on December 31, 2006 who were under age-65 during any portion of 2007 will get a claim based upon the number of months or partial months during 2007 that occur prior to the effective date of confirmation of Delta's bankruptcy plan (the "Confirmation Date") during which they were under age-65.
2.For the elimination of the waiver of the Retiree Medical Premium effective January 1, 2007:
B.Pre-1993 Retirees
For enrolled Pre-93 Retirees, Spouses and Survivors ("Pre-1993 Claim Participants") the claims would be calculated as follows: For each month or partial month from January 1, 2007 through the Confirmation Date, under age-65 Pre-1993 Claim Participants would have a claim of $80 per month and Pre-1993 Claim Participants who were age-65+ would have a claim of $155 per month, provided, however, that any Pre-1993 Claim Participant who is currently paying 100% of the cost of his or her benefits would not receive any $80 claim for months in which that Pre-1993 Claim Participant was under age-65.
C.ERME and AERO Retirees
For enrolled ERME, and AERO Retirees, Spouses and Survivors ("ERRO Claim Participants") the claims would be calculated as follows: For each month or partial month from January 1, 2007 through the Confirmation Date, under age-65 ERRO Claim Participants would have a claim of $65 per month and age-65+ ERRO Claim Participants would have a claim of $128 per month.
D.7.5 Retirees
For each month or partial month from January 1, 2007 through the Confirmation Date, under age-65 7.5 Claim Participants would have a claim of $70 per month, and age-65+ 7.5 Claim Participants would have a claim of $128 per month.
E.Post-2005 Retirees
For non-pilot Delta retirees who retired at age 65+ after December 31, 2005 and who would have been eligible for a subsidy absent Delta's change to retiree medical benefits effective January 1, 2006 that retirees on or after that date would receive no medical, prescription or dental benefits from Delta, each of those retirees and their survivors and spouses who were enrolled in Delta benefits in 2005 prior to their retirement date ("Post-2005 Claim Participants") would receive a claim calculated as follows: For each month or partial month from January 1, 2007 through the Confirmation Date during which the Post-2005 Claim Participant was at least 65, such person would have a claim of $99 per month.
F.Other Age 65+ Retirees
For other enrolled Retirees, Spouses and Survivors ("Other Claim Participants"), the claims would be calculated as follows: For each month or partial month from January 1, 2007 through the Confirmation Date during which the Other Claim Participants were at least age-65, each Other Claim Participant would have a claim of $128 per month.
G.Miscellaneous
In any month where a claim participant turns 65, that participant shall not collect both the claim for a partial month he or she was under age-65 and the claim for a partial month he or she was age-65+, but instead shall get a claim amount for the greater of those two amounts. All the claims granted in this Section (VIII) shall be allowed for voting purposes, with an estimated Confirmation Date of June 2, 2007. Any claim for a Spouse shall be paid to the Retiree for whom the Spouse was a covered dependent at the time during which the claim arose.
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