Tokyo

I signed up for it also, and am having second thoughts. Here is one guy's take on it:

Insurance

MelT

Can you live on 50% of what you are making now? That is the question. Can you afford the monthly premiums to make it so you can have 67% (after the wait) instead?

busdriver12 you would be paying $466 a month ($5600/year) for an annual benefit of $59,500 (tax free) after being out for a year. You have another wage earner who also makes good money, so you can self insure and invest that $466 a month to build your own safety net.

Others, particularly those who don't have another high income earner, may be better off buying the MEC policy, even with the higher premiums, to cover their living expenses in the event they go out on LTD.

If you only have 6 years to go, you would spend about $28,000 in premiums (5 years worth, wouldn't make sense to keep it the last year), which would easily be recouped in the first year in the event you lost your medical. Remember, you can lose your medical for all kinds of reasons even though you are in "good health". Plus, the benefit goes to age 65, even though you might otherwise retire earlier.

I've been out a while, drawing on the MEC plan and I've benefited almost 5 times what I paid in premiums the previous 10+ years. Could I survive without that money? Absolutely. But it sure helps to maintain my family's quality of life and will be more important when the company plan drops to 50%. I'm obviously very glad that I purchased the MEC insurance. If the premiums had been these new higher rates, my benefit would have only been about twice what I paid in. I would still consider that a win.

I guess I'm part of the reason the premiums are going up, but I will continue to buy it when I get back to work. I'd trade the benefit checks for my health and job any day, but thats the way life goes sometimes.

I would encourage every pilot at FedEx to take a hard look at the MEC plan and figure out what works best for you. Its kind of like being in an accident or being the victim of a crime, nobody thinks it will happen to them. The MEC plan sure comes in handy when it does happen to you.

Busdrivr

Question. Is the benefit reduced after you reach age 60?

busdriver12

Very thoughtful analysis, MelT. I hope you recover and get back to work soon.

I was wondering about what you said, when the company plan drops to 50%. When does that happen? I thought it stayed at 60%.

Thanks for the info!

DLax85

"Double" Yikes...and a hmmm

From the hard copy mailer you should have received this week if you're enrolled in the plan:

"The total premiums paid for the plan year ending 12/31/2015 were $3,204,250

Benefits paid to participants and beneficiaries were $3,402, 266

Administrative expenses and taxes were $531,906"

Thus, it appears the plan ran a premium to benefits deficit of ($198,016), which is 6.18% of total premiums.

And, an overall premium to benefits + expenses + taxes deficit of ($729,922), which is 22.78% of total premiums

Admittedly, I have not studied previous annual reports and rate increases, but the "doubling" on any rate is always eye opening

In the interest of transparency I would have appreciated the breakdown between "expenses" and "taxes" in the $531,906

Those two amounts combined represent 72.87% of the overall deficit

Hmmmm

busdriver12

I am curious as to what kind of taxes the plan pays. I am also curious if there was a large increase in usage this year, compared to other years, while the addition of so many new pilots paying premiums still didn't cover it.

pinseeker

With the rate increase, next year they will collect a little over $7.4M. That is $4.2M more than this year, yet the total deficit was only $729K. Take away the deficit from the $4.2M increase and you are left with $3.4M surplus. Are they saying that the payout is going to come close to doubling what they paid last year.

How much profit did they make in years past?

One year they run a deficit so they raise rates 131%.

If they only pay out $1M next year will rates drop below the 2016 rates?

MelT

Pretty sure it does not.

MelT

On the company plan you get 2 years at 60%. Then you transition to the company supplemental plan, which is 50% and goes to age 65.

MelT

It would appear that Aetna is trying to drive folks to the 2 year wait plan. Premiums are cheaper but you have to wait 2 years to collect.

That would mean your income by year (after going on LTD) would be 60% (all company plan) in year 1, 60% (all company plan) in year 2, and 67% in year 3 and beyond (50% from company plan and 17% from MEC plan).

That may be the actual protection level the plan is trying to provide, or at least encourage.