Originally Posted by
FangsF15
Maybe you'll convince me otherwise, but here are some thoughts...
For one, it's free to me (or pre-negotiated, however you want to think of it).
For two, as I understand them, it generally comes with better terms. [At DL, disability [i]pays 50% of the highest 12 consecutive months in the last 36, with no offsets unless you exceed the 'original' 100% threshold (which is super unlikely/rare), and includes Profit Sharing and potential "retro" pay in the calculation. And, it continues to whatever the FAA mandated retirement is - so age 67 is already baked in (if it happens).] I had a buddy who had a huge year with the last contract's Retro pay and the following year's Profit Sharing being in the same 12 months. He actually got a pay raise on disability from what he had been making, lol. Not that it's typical, but still...
For (maybe) three, and I say this not actually knowing what other companies do... Being contractual and 'in house' at DL, we don't have an outside company* materially getting in the middle of it do deny or reduce benefits. Like how UHC makes health care a nightmare as a third party. *Harvey Watt does administer DL's disability program, but having used it twice, my experience was very simple and easy with them. They basically just validate your sickness, and send a 'thumbs up' back to the company - that's it.
For four, and I can't believe I'm saying this, but I trust DL to pay up more than I trust XYZ mutual to pay up. Or said another way, I trust XYZ less...
ALPA also has some optional disability insurances, which I do pay separately for, and came in very handy when I had a major event. But that's beyond the scope, I think?
Why do you think outside policy is better? Genuinely curious.
All those benefits can be negotiated with a company provided yet third party administered LTD plan. To me one big benefit is that "XYZ Mutual" is guaranteed to an extent, in-house plans aren't. Insurance companies can't wipe out existing claims in bankruptcy, airlines can. Obviously this isn't as black and white as that, but "LTD payouts" can be renegotiated in an airline Ch11.
Legacy LTDs are very good but that's a function of their CBA, not who administers the plan or holds the policy.
These companies don't fight the clear "can't hold first class medical" disabilities at least in my experience. These claims are small for them and they are mostly reinsured anyway. As long as their loss rate is acceptable (and they know how to price these policies), they don't really seem to care.
The way it works for us is if you lose your medical, they pay 60% of your last W2 up to a cap of $10k a month until FAA retirement age. This payout is tax free assuming you impute your income for the benefit, we can also choose not to for a completely free LTD coverage, but then (as required by law) that payout is taxable.
This cap is obviously low, but is subject to negotiations. We got this plan outside Sec6.
Another (slight) concern is the moral hazard from the company's side. One example would be that United pilot who is suing for wrongful termination over a dispute about LTD. That hazard generally doesn't apply to TPA's.
I bet many Spirit pilots are happy their plan wasn't self insured. That scenario obviously is very unlikely with legacy airlines.