Mike Panebianco:
Today's SWAPA number is 745. That's how many pilots that have entered longterm disability since 2020. As our pilot group is considering the TA before them, we'd like to zero in on an area of our contract that holds a lot of confusion for our members and their families, and that is disability. To better understand how disability works, what is changing and what we've seen from Q&A on the Contract 2020 resource center, we have on today's show, NC member and benefits expert, Damian Jennette.
I'm Mike Panebianco, and here is my interview with Damian. Damian, appreciate you taking the time early in the morning. You guys are getting ready to go to the airport and jump on an airplane to Oakland for a road show tonight. We have had a lot of input to the come off, it's about benefits. And many of our pilots have watched the road shows, have watched the video and a few of them have basically said, "Our heads are exploding. There is a lot here."
So I want to go back and bring along some of our newer pilots or pilots who haven't paid much attention to benefits should this become our CBA. On March 22nd, I believe, is the date that all these things take effect. If I have a bad doctor's visit on that day, how is my life different? What does it look like? What does the experience look like, engaging the new benefits plan?
Damian Jennette:
Yeah, so hopefully if this gets ratified on January 22nd, then yeah, it's really the current loss-of-license plan with enhancements. So all those new enhancements takes place about 60 days after ratification. So obviously, at 60 days, which coincides with the new elimination period as well.
So if somebody has a disability event, let's say on January 23rd, then 60 days later he'll have met his elimination period. And then goes onto the current loss-of-license plan but now the new elimination period is 60 days. So it just coincides with one another. So, 60 days, that's the new elimination period to that and then 50% benefit going forward, so pretty excited about that.
Mike Panebianco:
So all three of the programs are still there, it's just the one that was probably the least useful is now the most useful. Is that about right?
Damian Jennette:
Yeah, yeah. So just remember, under the company-provided plans you have sick leave or sick TFP and you have the loss-of-license plan. And then under the new scheme, we'll call it that, will be the SWAPA STD and the SWAPA LTD, because we'll continue to offer those STD and LTD plans.
So we're still going to hug you to the ground, as we say in the disability, wrap up everything in case you have any kind of shortcomings. And maybe the sick bank, so you still have the STD to carry you over. But yeah, you'll still have all those programs together.
Mike Panebianco:
Damian, the question has been about the sick leave becoming basically your short-term disability. If data ratification, I have this event and I have 100 trips of sick leave in my bank, how does that work for me?
Damian Jennette:
Okay. So, with 100 sick trips, one of the options would be, let's say, you're going to burn 50 sick trips for those two months, so you would have enough to get you that two-months bridge. That would be one option. The other option is we'll still have the SWAPA STD program, so we're still re-engineering those terms with Met Life. But let's just say it's the current status quo which is about 1,500 a week.
So if you are still getting 1,500 a week, then you could use that sick on top of that, because there is no offset to that STD to still bridge you over to the new loss-of-license. So that's the other option. And there is actually an additional option would be if you had just, cash in the bank, and you wanted to float yourself other. That would be the other option, as well.
Mike Panebianco:
So let's take the worst-case scenario. Let's say I came back from a sick leave or a disability and I have nothing in my sick bank, and then I relapse or I fall down the jet way stairs because I haven't done jet way stairs in a while, and I'm right back out. Does that cover me the same or is there a catch in that?
Damian Jennette:
Yeah, I guess the caveat there is it depends. Under current language, if you go out for the same condition within 180 days, then you're covered. There is no elimination period. Let's say you left and you didn't slip and fall, it was a different issue. It was, I don't know, maybe an eyeball issue, you come back and then you slip and fall, as you said, maybe that would be covered under OJI, but let's just say it wasn't. In that scenario then you would have to fulfill the full elimination period.
So that's why SWAPA will continue to have that STD program under the assumption that you burned all of your sick. And you're also talking about coming back right as a TA starts up, too, so different scenarios could play out.
Mike Panebianco:
So, one of the things that we also hear about, because some people just learned what our current plans do, it's when you deplete your sick bank you get that dreaded letter. Does that still happen under the new plan?
Damian Jennette:
Right, so you're talking specifically on the medical replacement side of the house. All of that has changed. Because on the current book you have your sick bank divided by 95, plus a vacation. They come up with this Last Day Paid. And once you deplete all your sick, then you roll onto the 120 days after you had the end-of-coverage letter and it's really messy.
You would just be status quo for the first 91 days under the new TA. On day 91, everything else would be just normal for you. You wouldn't know anything as a end user. Behind the scenes though, what's happening, is you're actually transferring to the supplemental plan, supplement plan. We have that today, but under today's current book, you only have the Choice Plus plan and the Plan C. Under the new provisions you would also have the availability of the HSP, remember that's your HSA plan, and also the regular plan. So those are the four plans that you could have and the new supplement plan.
So that's why we say it's seamless transfer over, but there is no end-of-coverage letter that you get today and all of that has gone out the window. So now, like we said, as a end user, just seamless. You just roll right on those plans but you won't know that you're rolling onto those plans. But no out-of-pocket maximums, those aren't changing for you. The deductibles aren't changing for you. All of those are still enforced.
Mike Panebianco:
Okay, the other big question we get is will my travel benefits go away and will I lose my life insurance? We've seen a few of those cases over the years where pilots thought they had insurance, only to find out that since they transitioned to longterm leave and they didn't make an open enrollment they lost that life insurance. Do we lose anything under this new TA in that regard, with those benefits?
Damian Jennette:
Right, under, we'll say a current book, technically there is nothing codified right on life insurance. So that's a new piece to this too, because now we have codification of all this. But under current book, you go onto disability status, you can port your life insurance over but it's at an extremely high rate. It's really, really expensive so most people will lose their life insurance because it's so expensive.
Under this one you'll get the $800,000 of basic life and AD&D. You go on disability, that just follows you along, you'll never lose it. The other part of that, too, is the supplemental over the optional life insurance that you have. So if you had the Benefits-plus, I believe it was 10 times up to 2.95 million, I believe it is. And the regular plan is up to $250,000 of a supplemental or optional life insurance. That will also follow with you on your disability, so you won't lose that.
Those supplemental plans, though, you still have to pay your premiums. So that's a little caveat there. But the $800,000 life insurance, that will follow with you, ssso that was a very big change in this TA.
Mike Panebianco:
Was there any statement-of-health required with the $800,000 or do you get to roll into that if you have a pre-existing condition?
Damian Jennette:
Great question. So, yeah, no statement-of-health for the $800,000. That was a big turning point, we believe. Now of course, the supplemental plan, just like any supplemental, you'll still have to do the statement-of-health for those, especially if you change up on it. But you don't have that same thing on the basic life because it's guaranteed to you for the $800,000, no statement-of-health.
Mike Panebianco:
And you mentioned there is an accidental-death-and-dismemberment policy that mirrors that. But I want to say there were a couple pilots that asked about exclusions to the AD&D, $800,000, as well.
Damian Jennette:
Yes. So there is an exclusion on the AD&D. It's specifically if you operate small aircraft, so if you own your own small airplane and also military flying. So I guess I need to put a little caveat in here as well. So when we talk about $800,000 of life, remember it's $800,000 of life and it's $800,000 of AD&D. So if you do die in an unfortunate event, you technically have two policies of $800,000.
So with that said, if you're in a small aircraft and things the turn for the worse and you do, unfortunately, die in that one, then your family, your estate, will only get the $800,000 just for the life insurance piece. So they wouldn't get the AD&D, just $800,000 in life. If it's any other circumstance, maybe just driving to work and you get into an auto accident, then you technically have two policies of $800,000.
Mike Panebianco:
So those are marked changes. I think the other two that we've heard you talk about and we still get questions on, travel benefit and vacation accrual.
Damian Jennette:
All right, some of the big changes on travel, so if you're on a medical leave then now you can just travel like you normally would in non-rev travel. Some under current book, it was all sick and then you get a one-year timeframe over that. One year after you exhaust sick, then the desk test and all these other little caveats that they had. All of that is out the window under the new TA.
If you go on a medical leave, then you just travel like normal, that's you and your dependents. In the general section there is also a piece that talks about pilot travel, we specifically say, FAA-imposed medical restrictions. So that does apply to somebody on disability but that also could mean somebody on sick leave. So one of the highlights that we put in there, is a lot of people always say, "What are my benefits when I'm on a leave, specifically?"
Maybe it's not just sick or disability, and I know that's what we're just talking about here, but when you go to the very end section of the Leave of Absence, there is a section 17-O, Benefits While on Leave. Any leave type, we have addressed what medical coverage you have, what life insurance you have, but also what travel. So you need to go back to the end of the tables. There is the two pages of tables and it talks about travel in that, specifically. So that's some of the big changes there.
Mike Panebianco:
And that really does take care of one of the biggest problems that we had. We had pilots trying to non-rev to get to their cancer treatments. I remember guys trying to get into Houston to go the cancer center there. And they weren't able to actually get on a flight. And it was absolutely infuriating, the hassle that would go through your chief pilot, "Can you please get me on this flight? I need to go get tested, get my chemo," or whatever.
Damian Jennette:
Yep. And the membership that was part of the SAP process, they told us about that. But also, we had plenty of emails from guys in that very specific scenario. And when that happens more than three times it's a trend. So we definitely were keeping track of that during the negotiations. That became a high-priority item, obviously.
Mike Panebianco:
Damian, other than the medical benefits and other benefits that we're maintaining, how does retirement look if you go out on loss-of-license, longterm disability, under the new contract?
Damian Jennette:
Yeah, so that was obviously a real big change on this retirement piece. Let's say you go on a disability event, and I'll use simple math here. Your MBE, your monthly-based earnings, remember that's your 12-month look back when you go on disability, let's say $30,000 a month is your MBE. So under the new construct, your loss-of-license benefit is 50% of that.
So if you have a $30,000 MBE, your loss-of-license benefit will be $15,000 a month. The big change here for retirement, the 17% NEC that you'll receive while you're on disability will be on that $30,000. So some of the other airlines, you would only get the 17% on the $15,000 benefit. But under this new TA, the $30,000 that we just talked about, if you had 17% you'd get $5,100 a month or that would be $61,200 a year.
You'll still have the availability, if you want to defer part of that benefit that you're receiving to put into your 401k, you'll have that availability. So you could reach that $69,000 limit for the 2024 IRS limitation that you've probably heard on the road shows. You can still put in your own money to reach that limit. Additionally, with a market-based cash balance plan, you'll also get 1% every month on that as well. So that's $300 in this example that we're talking about. $300 a month, so he'll receive $3,600 into the market-based cash balance plan.
Mike Panebianco:
One of the other things that pilots complained most about in the SAP process was not accruing vacation while they were out on longterm leave. How did we fix that?
Damian Jennette:
That was a real big change. Because of the elimination period now being a fixed 60 days, because you know the other airlines, you still have to exhaust sick, did provide this opportunity for, we call it a income-replacement top-up benefit. So if you're receiving your loss-of-license, you can use your sick on top. Well how does that all integrate together? Part of that, too, is you need sick for vacation accrual. So the big change we had, it's under 14-B-6. So that 14 is vacation specific. You just need to use one sick TFP a month in order to have a credited service for vacation accrual purposes. So if you had a really large bank, you could continue to receive that one TFP a month. You'll still get that additional vacation benefit.
So most people, not everybody, we do have some people that have very longterm disabilities, that's kind of the nature of the beast. But the mass majority of your disability events, let's call it between a year to two years, so this provides that opportunity to still have that vacation when you come back. Like I said, though, you're going to have some people on a longterm disability event. This will allow them to capture some of that disability accrual as well. That was a very big change in this contract.
Mike Panebianco:
So, to add insult to injury, and obviously when you deal with insurance companies, you have to deal with the fine print of the plan summaries, which sometimes include offsets. And I think one of the favorite things pilots get to do is interact with the government via social security. Talk about social security offset, does that still exist? And what other offsets are our pilots going to have to deal with in the new TA?
Damian Jennette:
Yeah. So we completely eliminated the social security offset. And so that was the really, really big driver in SAP. Anybody that's been on disability, especially longterm and has started receiving social security offset, that was a big change, because most people don't realize. Let's say on your current book your benefit was 60% up to the $11,500. So let's say you were at $11,500, if you got approved for social security, let's just assume it was a $2,000 benefit that you got from social security each month. So that means that your loss-of-license would be reduced down to $9,500 because it's a $2,000 offset. The government does have the COLA increases on it, so every time there was an increase on the COLA side it would reduce your loss-of-license even more.
So it's beneficial to the company, but it's your money. That's something we always push back on the company is, "That's my money, I want it now." So with this offset being removed, if you do go on a disability and you start receiving social security, it would just stack on top of. So that's really in the pilot's favor.
And so the other favorable item, at least in my opinion, would be that we have no work offsets. So a lot of people don't realize that at Delta, it's a very similar program to ours, it's 50% uncapped, but there, if you do any other work, so if you're a farmer, if you have any kind of other W2s, then actually your benefit is reduced at Delta. Where here, you have no other offsets. There is no work offset. So if you do anything else to have additional income, for the loss-of-license it will have no offset whatsoever.
Mike Panebianco:
Damian, if I'm looking at 50% of my earnings on disability, you mentioned this earlier but I don't think everybody has totally grasped what it is, but what's this Top Up program, so I can use my sick leave? How does that work?
Damian Jennette:
Yeah, up to 100% of your MBE. So remember, we talked about that MBE. Just using the same example was to look at that $30,000-a-month MBE we talked about before. Because that's a very realistic scenario. Because under the new pay rates, a 12-year captain, $30,000 is about a captain making 95 TFP a month-ish. Because it's $317.25 for a 12-year captain. So if they got on disability, $30,000 is the MBE. They'll receive $15,000 because it's 50% of the MBE as the new benefit. So that's your baseline level.
So on top of that, if you have sick you can use up to, in this example just doing quick math, that would be about 47.3 TFP. Because he's getting $15,000 in his loss-of-license. 47.3 x $317.25 is about 47.3 TFP. Or, I'm sorry, it's $15,000. So he has now brought himself up to that $30,000 MBE that we talked about. So that's a big, big piece on the income replacement. Really nobody else has any kind of mechanism like that.
So if you had a full 1600 sick trips in your bank, which is rare, I get it, but if you did, and you are on disability, you would have to cover your first two months. Let's call it at 100% just on the assumption you're doing 100 TFP a month. And you would cover yourself for the first two months, and then you would cover yourself for the next year and a half of a full MBE if that's what you wanted to replace your income to. Now, remember, traditionally, disability plans look at about 65% of your net. So your net paycheck, some plans bring you up to about 60 to 65%, that's what you're targeting for.
So if you have your sick to bring you up, you don't have to bring yourself to 100% MBE. It's really nice to bring yourself up to 100% of what your pay was. But you could have the non-taxed loss of license. So if you're trying to gauge yourself, you may want to try to gauge it so you're producing about 60 to 65% on your sick, plus your loss-of-license, benefit, if that makes sense.
Mike Panebianco:
So even if my average, if my MBE is 45,000 a month, because I fly extra all the time, I can use my sick bank to get myself up to that 100% of MBE, it's not going to cap me?
Damian Jennette:
That's correct, yep. That's, we'll call it the only artificial cap, but you just can't go over 100% of your MBE, between the loss-of-license and the sick. But you can bring yourself down to zero if you choose, as well. So this is alluding back to what you were talking about on the vacation before. So let's say you had loss-of-license and let's say SWAPA was able to re-engineer a new LTD plan so that it provided a 10% benefit. So you had the 50% of your LOL benefit. Let's say you had a 10% on top of that LTD. Then you could burn your sick at, let's call it at whatever that equivalent value would be in percentages, maybe 10 TFP a month.
So if you're burning 10 TFP a month, you have the SWAPA LTD, maybe it's a new re-engineered plan, you had the LOL at 50%, then you can still get the vacation-accrual piece as well, that we talked about before. So I know it sounds like there is all kinds of moving pieces and there are, on disability. There is no one, clean system. But I'm looking forward to what the new SWAPA LTD program and the STD program are going to look like. But like we said before, we have to ratify this before we can fully go into new contracts with Met Life or whomever it is.
Mike Panebianco:
Damian, one of the things that I've seen on social media a couple of times, and I've had a couple of messages to us asking this question. Are we leaving people out with the new benefits plans. And I know that the benefits can't cover everyone equally. They don't cover anyone equally because we're all in a different situation. But do the benefits of the new disability and benefits plans, does that go throughout the membership?
Damian Jennette:
Yes. We tried as an association to grab onto as many people as we can. So one of the big drivers in this was the mental side of the house. Because for the longest time, unfortunately the pilots really didn't have good mental coverage. Meaning if you go out because of a mental issue, then you were limited to 18 months. And that was a big, big driver in this is, try to go as far as you can.
Get somebody on the claim for the longest duration as possible. That was one of the things that we set out and obviously we achieved. You can go all the way to the FAA retirement age. And that is a really, really huge deal. Most people don't realize how big of a deal that is. I think the other airlines out there, are the max. Really, longest one is 60 months, I believe it is. So to be able to go the FAA retirement age, that's a big deal. We had, unfortunately, a rather high suicide rate. My expectation is for that to come down knowing that you can go all the way to age 65 now and you and your family are covered, and you don't have to go through that drama anymore.
The other piece to that is also the HIMS. If you're in HIMS, now you don't have that limitation of coverage. The current book is 18 months, even if you were in HIMS you only had it for 18 months. Now, if you're in HIMS it will go no maximum. If you're not in HIMS, though, there is 24 months. So we did lengthen that up. So there is so many different areas that we've tried to grasp, to bring as many pilots as we could and take care of.
Are there going to be one-offs? We were trying our hardest to make sure there weren't one-offs. But I can't ever say that we can capture 100% of it. I don't think any plan ever could. But our motivation and drive was to capture as many as we could, the 99%. So, with that said, the cutoff, if you will, is the amendable date. Because it was the new contract, we made sure that anybody from 09/01 of '20 going forward, had some kind of benefit. We did identify about 31 individuals that lost their loss-of-license benefits between 09/01 of '20 and date of ratification.
So those individuals, they did lose their loss-of-license benefit, but they're still on the LTD program. They're still receiving LTD benefits. What we were able to do for those individuals was to make sure that they were added into the retirement piece. Anybody from 09/01 of '20, going forward, though, will be in the medical side of the house. So they'll be in the new sub-med plans we were talking about. And also those that are currently being serviced by the SWAPA VEBA, those SWAPA VEBA individuals will role over into the new sub-med plan.
Additionally on top of that, you'll not have to pay that $15 a month to the VEBA premium that everybody has to pay. So we definitely tried to capture everybody we could from that 09/01 of '20 going forward in some piece that we could, from income replacement, retirement replacement and everybody on the medical replacement. But we tried to capture as much as we possibly could, yes.
Mike Panebianco:
We'd like to thank Damian for stepping away from his road show presentations to talk with us about benefits today. Many of us never think about the possibility of losing our medical certificates or becoming ill until it happens. Knowing what our benefits are is an important part of providing security for our families.
We'll be having more discussions on disability and benefits in the coming months should the TA become our CBA. If you have another topic you'd like us to tackle on the podcast, drop us a line at [email protected]. Finally, today's bonus number is one. That's how many sick trips you'll need to burn each month to maintain your vacation accrual on disability.