RPOS QUESTIONS

 

Disclaimer: 

 

Introducing the Retiree Point-of-Service Plan (RPOS Plan) option.  The Retiree Medical Plan (the Plan) currently offers retirees one medical option.  However, with the introduction of a new voluntary retiree medical option, the Plan will now consist of two options: the Retiree Standard Medical Plan, which is the current medical option, and the new RPOS Plan.

 

The answers in this document are intended as summary information for enrollment purposes only.  This information is neither as comprehensive nor as detailed as plan documents.  In the event of any conflict between this material and the terms and conditions of any particular welfare, benefit plan or policy, such plan or policy will govern.  At a later date, retirees will receive an updated and restated summary plan description for retiree benefits, which will include the terms and provisions of the Retiree Standard Medical Plan and the RPOS Plan.

 

The questions were left as stated; however, please note that where questions reference POS, the actual plan is the Retiree Point-of-Service (RPOS) Plan.

 

 

  1. “Why is a retiree that has exhausted his medical maximum not eligible?”

 

In accordance with current provisions, once the medical maximum is exhausted, the retiree (or dependent) is no longer eligible for the Retiree Medical Plan (neither the Retiree Standard Medical Plan nor the Retiree Point-of-Service Plan).

 

  1. “Is the 5 digit zip code being used for eligibility?”

 

Yes.  As with the Point-of-Service Plan for active employees, UnitedHealthCare’s standard access requirements based on the five-digit home zip code are used to determine the retiree’s eligibility for the RPOS Medical Plan. Retiree’s living outside the UnitedHealthCare (UHC) access area are not eligible for the RPOS Plan.

 

  1. “If you choose to opt out of the RPOS during open enrollment, what will the monthly cost of the Standard Medical Plan?”

 

Enrollment in the RPOS Plan is entirely voluntary, so if a retiree chooses not to elect this option for 2004, the retiree will remain eligible to receive coverage under the Retiree Standard Medical Plan.  A retiree that elects the RPOS Plan and later elects to return to the Retiree Standard Medical Plan will pay the applicable contribution rate.  The monthly contribution rate for 2004 is $78 per person/per month.  The monthly contribution is evaluated annually and exact pricing for coverage will be set each fall for the following calendar year.

 

  1. “If you return to the Retire Standard Medical Plan what will be the applicable monthly contribution. Can this contribution increase over time? Is there a cap on the increases?”

 

As stated above, the contribution is evaluated annually.  For example, the exact pricing for 2005 coverage won’t be set until the fall, and will be available during October Benefit Enrollment.  The contribution can increase over time, and while there is no cap on the increases,  we continue to work to keep the plan affordable. 

 

  1. “Why is AA going to have the mail order prescription drug program for the RPOS going to go through UHC?”

 

After careful evaluation of the UHC program and the current Medco Health program, we feel that administering the mail order drug program for the RPOS plan through UHC has significant benefits to the retiree.   Plan coverage will remain the same and both retirees and American will benefit from the simplicity of fully integrated drug programs. 

 

Some of these benefits include:

·        access to both mail order and retail drug benefit programs via a single web site

·        one toll free number for medical and all pharmacy needs

·        one ID card for medical and pharmacy

·        fully integrated care – improved identification and management of complex, chronic conditions and outreach programs for key medical conditions such as cardiovascular, diabetes, and respiratory illnesses

·         simplified processing of eligibility and administration

 

  1. “When a retiree dies, what will the medical maximum for the spouse be decreased to? When the spouse meets 65 will coverage end?”

 

The medical maximum benefit for the surviving spouse of a deceased retiree is a new $50,000, which is how it works today, whether they have the Retiree Standard Medical Plan or the RPOS Plan coverage. 

 

As it does today, if the surviving spouse is under age 65 at the time the retiree dies, coverage for the spouse continues until the spouse reaches age 65, becomes eligible for Medicare, or remarries, whichever comes first.  At that time, coverage ends.

 

Likewise, if the surviving spouse is age 65 or over at the time the retiree dies, coverage for the spouse continues for six months following the retiree’s death, even if the spouse is covered by Medicare or becomes eligible for Medicare during the six-month period.  When coverage ends, the surviving spouse may be able to elect continuation coverage under COBRA, unless they are eligible for Medicare.

 

  1. “When a retiree relocates and moves to an area that does not have the RPOS Plan, how will he be notified?”

 

When a retiree makes an address update on Jetnet or through Employee Services, they will receive a notification in the mail automatically, if the address update results in the retiree being ineligible for their current plan.

 

8.   “When a retiree reaches age 65, what will the contribution be to retain the $50,000?”

 

For 2004, the cost is $50 per person/per month.  The contribution is evaluated annually and is subject to change at the beginning of each calendar year. The contribution can increase over time, and while there is no cap on the increases, every effort is made to keep cost affordable.

 

9.      “If a retiree chooses not to pay for this coverage, will this effect his supplemental medical?”

 

If the retiree chooses to voluntarily opt out of the Retiree Medical Plan (RPOS or Retiree Standard Medical Plan), Supplemental Medical coverage would be discontinued.   If the retiree, who remains active in the Retiree Medical Plan, exhausts the medical maximum, Supplemental Medical becomes the primary coverage, just as it does today.

 

  1. “As long as the retiree is paying for supplemental medical, is this amount on top of the $1 million?”

 

Yes.  If the retiree is covered in the RPOS Plan, has supplemental medical coverage and exhausts the $1 million medical maximum benefit, Supplemental Medical becomes the primary coverage.

 

  1. “If any changes are made to this plan, when will the new changes take effect?”

 

Generally, any plan changes are announced during October Benefit Enrollment with an effective date of January 1, the following year. American Airlines retains the discretion to amend, modify or terminate the plan, at such time as American determines is necessary, subject to any applicable collective bargaining agreements.

 

  1. “If the plan is discontinued, will the retiree still have the option of the standard plan? What would the cost of the plan be?”

 

If the RPOS Plan is discontinued and other retiree medical plan options exist, you will be able to choose a benefit option at the applicable premium cost.  

 

  1. “If a retiree has the RPOS Plan and turns age 65, will the company notify the retiree of the change?”

 

When you turn age 65 and are no longer eligible for the RPOS Plan, you will be automatically transferred to the Retiree Standard Medical Plan for over age 65.  There will be no direct notification; however, this information is detailed in the plan guide, which will be sent to you at a later date. 

 

  1. “Will there be a separate group within UHC that the retirees will contact?”

 

Yes.  There is a special 800 number for questions and assistance regarding the RPOS Plan.  The number is 800-599-4716.

 

  1. “When you reach age 65, will the plan be the same as the contractual plan?”

 

American has agreed to provide certain retiree benefits to specific workgroups.  Currently, those benefits are provided under the Retiree Medical Plan, which only consists of the Retiree Standard Medical Plan.  The voluntary RPOS Plan will offer eligible retirees a second option.

 

  1. “If the retiree has started using his Supplemental Medical is he eligible for this plan?”

 

No. In accordance with current provisions, once the medical maximum is exhausted, the retiree (or dependent) is no longer eligible for the Retiree Medical Plan (neither the Retiree Standard Medical Plan nor the RPOS Plan).

 

 

  1. “If you miss a payment to Ceridian will you lose coverage? Is there a grace period for payments?”

 

Retirees are invoiced monthly by Ceridian, our billing administrator.   Invoices are mailed from Ceridian on the 19th of the month prior to the month of coverage, and allow for a 30-day grace period to make payment. 

 

If payment is not postmarked by the end of the 30-day grace period, eligibility for the Retiree Medical Plan would be dropped and coverage will be discontinued.

 

For example, retirees who elect the RPOS Plan option for 2004 will receive the first invoice shortly after June 19th for the month of July.  The invoice will have a due date of July 1, 2004 and the retiree then has 30 days (in this case, until July 31th) to make the payment.  If Ceridian does not receive payment by the due date (July 1 in this example), the retiree will receive a reminder for July on the invoice for August indicating they have until the 31th to make payment or they will lose coverage. The August payment remains due by August 1, 2004, subject to the same grace period.

 

  1. “Do you have to update your address through Ceridian or will this be updated automatically by AMR?”

 

When you update your address on Jetnet, it will automatically be forwarded to Ceridian on the next weekly eligibility update. 

 

  1. “Is the new POS Medical Plan available to a spouse under age 65, if the retiree is 65 years of age or older?”

 

No.  If the retiree is not eligible for the RPOS Plan , the spouse is not eligible.

 

  1. “Must both age eligible individuals (retiree and spouse) join the new POS Medical Plan together, or may one of them elect to remain with the current Prefunded Retiree Medical Plan?”

 

Retiree Medical Plan election is tied to the plan selected by the retiree since the spouse is carried as a dependent, not as a separate participant.

 

  1. “If an eligible retiree and spouse elect to take part in the new POS Medical Plan and later decide to leave it and return to the Prefunded Retiree Medical Plan with its  $300,000 maximum medical coverage, will they be able to do so?”

 

If you elect the RPOS Plan and later decide to return to the Retiree Standard Medical Plan, you will be able to do so as long as you have not exceeded the medical maximum benefit of either plan option you want to elect.  However, if your previous Retiree Standard Medical Plan coverage was prefunded coverage, you have waived this prefunded coverage in order to receive the RPOS Plan.  You will now be required to pay the applicable ongoing monthly contributions when you return to the Retiree Standard Medical Plan coverage. 

 

  1. “Are there any ramifications for voluntarily leaving the new POS Medical Plan?”

 

We would be happy to discuss this question with you further, but without specific details, we are not clear what information you are seeking.

 

  1. “If the eligible retiree and spouse are enrolled in the new POS Medical Plan and the retiree reaches age 65 and becomes Medicare eligible, does the new POS Medical Plan with its $1,000,000 maximum medical coverage revert to the Prefunded Retiree Medical Plan with its $50,000 maximum medical coverage?”

 

When the retiree turns age 65, regardless of the Retiree Medical Plan option they selected previously, the retiree and their spouse, if applicable, will move to the Retiree Standard Medical Plan retroactively, as of the first day of the month that the retiree reaches age 65.  The medical maximum benefit will be reduced to $50,000.  If the previous Retiree Standard Medical Plan coverage was prefunded coverage, the retiree will be required to pay the applicable ongoing monthly contributions to continue coverage.

 

  1. “If the eligible retiree and spouse are enrolled in the new POS Medical Plan, what happens to the spouse's medical coverage if the retiree dies?”

 

The surviving spouse continues in the RPOS Plan until age 65 or has the option to move to the Retiree Standard Medical Plan at annual enrollment, at the applicable monthly premium. 

 

See answer to question 6 for the medical maximum benefit and what happens if the spouse reaches age 65.

 

  1. “In the situation described in the question above, is the surviving spouse still eligible to retain the Supplemental Medical Plan coverage?”

 

Yes, as long as they are enrolled in the Retiree Medical Plan and make Supplemental Medical payments to age 65.

 

  1. “Are the new POS Medical Plan co-payment rates permanently fixed, or are they subject to increase periodically?”

 

Just as in the active employee Point-of-Service Plan, the costs and the provisions of the RPOS Plan are subject to change.  However, we continue to work to keep the plan affordable.

 

  1. “How does the Supplemental Medical Plan interface with the new POS Medical Plan?”

 

Same as it does with the Retiree Standard Medical Plan.

 

  1. “Does participation in (or voluntarily leaving) the new POS Medical Plan in any way jeopardize a retiree or surviving spouse’s ability to continue the Supplemental Medical Plan coverage?”

 

If the retiree chooses to voluntarily leave the Retiree Medical Plan (RPOS or Retiree Standard Medical Plan), Supplemental Medical coverage would be discontinued.  If the retiree, who remains active in the Retiree Medical Plan, exhausts the medical maximum benefit and has remained current in their Supplemental Medical contributions, then Supplemental Medical Plan becomes the primary coverage.

 

  1. “Does participation in the new POS Medical Plan have any affect on a retiree's Prefunded Retiree Health Care coverage?”

 

Yes.  Once a retiree elects the RPOS Plan, they will be issued a refund of any remaining employee contributions in their prefunding account (including any positive or negative investment experience).  This makes the retiree ineligible for the prefunded Retiree Standard Medical Plan.  However, the retiree can still choose to participate in the Retiree Standard Medical Plan, as long as they meet the eligibility requirements and pay the applicable monthly contributions.

 

  1. “Does participation in the new POS Medical Plan have any affect on the retiree's legal rights under the Prefunding Trust Agreement (Memorandum of Understanding Between American Airlines, Inc. and Transport Workers Union of America AFL-CIO, April 02, 1992)?” 

 

The new retiree medical option will not impact the existing Prefunding Trust Agreement (the “Agreement”) for participants who remain under the Prefunding Program.  To the extent that you are no longer a participant in the Prefunding Program, the Agreement does not cover the benefits that you would be eligible to receive under the Retiree Medical Plan.  However, any employee contributions that you made to the Prefunding Trust remain protected under the terms and conditions of the Agreement. You will be eligible to receive a refund of your employee contributions, once you meet the specific requirements* under the Retiree Medical Plan.  Any employer matching contributions to the Prefunding Trust will continue to be used to pay the medical expenses of the current participants in the Prefunding Program. 

 

* Specific requirements include:

 

·        As an active employee, you die; or separate from AMR Corporation subsidiaries

Or

·        As a retiring employee or retiree, you select a retiree medical coverage requiring ongoing monthly contributions from you in order to obtain/maintain coverage and you still have unused (not yet drawn down) employee prefunding contributions in your account; or

·        You die and still have unused (not yet drawn down) employee prefunding contributions in your account; or

·        You terminate coverage under the Retiree Medical Plan in favor of other coverage outside of AMR Corp and still have unused (not yet drawn down) prefunding contributions in your account.