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FAQ's Regarding Settlement |
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Oct 06, 2006 at 01:33 PM |
What does the agreement with Delta
mean?
As the 1114 Committee explained before, Delta is cutting many hundreds
of millions of dollars of costs in its bankruptcy, and subsidies for
retiree medical benefits are part of those cost cuts. The bad
news about this agreement is that there are broad, across the board
cuts to subsidies for retiree medical benefits. The good news is
that we also worked out many protections from further benefit cuts,
that we will have a $2 million hardship fund to help pay premiums for
retirees, survivors and spouses in 2007 who are hit hardest by these
changes, and that we avoided much deeper cuts and other changes that
would have created even more hardship for retirees.
The agreement seems to treat under-65
non-pilot beneficiaries with different early retirement packages
differently. Why?
People with different early retirement packages are ending up in
different places in large part because they started in different
places. Before this agreement, under-65 PensionPlus and ERMO
beneficiaries paid no premiums; under-65 retirees, survivors, and
spouses of who retired before November 1993 paid 10% of the cost of
their benefits, and under-65 AERO, ERME and Leadership 7.5
beneficiaries were paying 22% of their benefit costs.
In plain English, what will under-65
retirees, spouses and survivors in different groups pay in the future?
The amounts not paid by the beneficiaries will continue to be paid by
Delta, but the amount paid by the beneficiaries will increase:
PensionPlus and ERMO beneficiaries will pay $115 a month during 2007,
$120 a month during 2008, and $125 a month during 2009. Starting
in 2011, they will pay the lower of $125 a month or 22% of the benefit
cost.
Beneficiaries of pre-November 1993 retires will pay 25% of the benefit
cost.
AERO, ERME and Leadership 7.5 beneficiaries will pay 35% of the benefit
cost.
Those under-65 who are already paying 100% of the benefit cost will
continue to pay 100% of the benefit cost, except for those who are
paying that higher percentage because of the Service Related Premium,
which is being eliminated.
Percentages don't mean much to
me. What is the actual monthly amount I will have to pay for my
medical and prescription drug benefits next year?
Although the benefit cost has not been finalized, we expect the monthly
total cost for under-65 beneficiaries in the Delta Family Care Medical
Plan for retirees, their spouses and survivors to be about $500.
PensionPlus and ERMO beneficiaries will pay $115 a month.
Pre-November 1993 beneficiaries will pay about $125 a month.
AERO, ERME, and Leadership 7.5 beneficiaries will pay about $175 a
month.
What if I can't pay these increased
premiums and will lose my health benefits as a result?
We are announcing these changes now in part so that you can prepare for
these higher costs. None of the changes become effective until
January 1, 2007. We will also be administering a hardship fund in
2007 to pay part or all of the premium costs for those who suffer
particular hardship from these cost increases. We will provide
more details about that hardship fund and the application process in
the near future.
What about benefits for those 65 and
older?
We are replacing the current benefit with a new benefit that Delta and
our Committee are working together to finalize and to roll out to
retirees, survivors, and spouses this fall. The new program would
be effective January 1, 2007. We expect that there will be a high
option with a better prescription drug benefit but higher cost, and a
low option with lower cost. Both those options would be less
expensive than continuing the current benefit for those age 65+ (with
the low option being much less expensive.) Unlike the current age
65+ benefit, which requires you to pay the Medicare deductible and then
pay the plan deductible before you can get reimbursement for medical
expenses, the new benefit bill pay many expenses not reimbursed by
Medicare. The current subsidy from Delta of 90% for beneficiaries
of pre-November 1993 retirees and 78% for many others will be replaced
by a smaller $50 a month subsidy from Delta for those who enroll in the
new benefit.
How much will I have to pay for
age-65+ benefits each month?
We are working with Delta to finalize plan selection and design, but
currently anticipate a monthly cost for medical and prescription drug
benefits of about $135 a month for the low option and $195 a month for
the high option. After deducting the $50 a month subsidy from
Delta, at those numbers, you would pay about $85 a month per person for
the low option and about $145 a month per person for the high option.
Beneficiaries would also have to pay the Medicare Part B premium, just
as they do today. That Medicare Part B premium is expected to
increase from $88.50 per month in 2006 to about $93 a month in 2007.
What protections are there in the
agreement from further changes in the subsidies from Delta?
The agreement worked out with Delta includes Delta's agreement to
continue remaining subsidies for some years, providing protections from
future cuts. In many cases these new protections did not exist
until Delta's agreement with the committee. Without this
agreement, Delta believes that the day after confirming a bankruptcy
plan in 2007, it had the right to eliminate all subsidies for those
65-and-older and to eliminate all subsidies for those under 65 except
for PensionPlus and ERMO retirees who had contractual agreements as
part of their early retirement packages. Instead, however, Delta
has agreed that the percentages paid by under-65 AERO, ERME, Leadership
7.5 and pre-November 1993 retiree participants will not increase until
2010, at the earliest, and that the subsidies for participants who are
age 65+ will be paid at least through 2011. For ERMO and
PensionPlus participants, Delta cannot change their under-65 deal
again, and their age-65+ subsidies will be paid at least through 2015.
What about after those dates?
Delta has agreed to preserve various benefits until 2010, 2012 and
2016. By then we all hope that the company will be in much better
financial health and in a position to continue the benefits voluntarily
(as it had done prior to its bankruptcy filing, even without a
contractual obligation in most cases.)
Please visit our Web site here and this FAQ again, as we expect to post a
more extensive discussion of these benefit changes soon, and we will
continue to update this information.
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