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R & I

RUPA Retirement & Insurance Report

Your officers asked me to become the RUPA R&I guru, and I might have made a big mistake in agreeing to do it. Hopefully, once we get the initial articles done, as well as the new tab we’ll set up on the RUPA.org website, the workload will decrease. We’ll post the following short articles there.  My new RUPA email address is rupari@rupa.org

Bob Engelman

REQUIRED MINIMUM DISTRIBUTIONS, aka RMDs

Our Worthy Grand Chief, a term from my fraternity days, meaning our esteemed President, John Gorczyca, asked me to write something about this since many of our members are reaching this age. So here goes.

This is from the IRS.gov website:

“Required Minimum Distributions (RMDs) generally are minimum amounts that a retirement plan account owner must withdraw annually starting with the year that he or she reaches 70 ½ years of age or, if later, the year in which he or she retires. However, if the retirement plan account is an IRA or the account owner is a 5% owner of the business sponsoring the retirement plan, the RMDs must begin once the account holder is age

70 ½, regardless of whether he or she is retired.

Retirement plan participants and IRA owners, including owners of SEP IRAs and SIMPLE IRAs, are responsible for taking the correct amount of RMDs on time every year from their accounts, and they face stiff penalties for failure to take RMDs.

When a retirement plan account owner or IRA owner dies before RMDs have begun, different RMD rules apply to the beneficiary of the account or IRA. Generally, the entire amount of the owner’s benefit must be distributed to the beneficiary who is an individual either (1) within 5 years of the owner’s death, or (2) over the life of the beneficiary starting no later than one year following the owner’s death. See Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs), for complete details on when beneficiaries must start receiving RMDs.”

However, you may qualify for an exception from taking RMDs from your current employer-sponsored retirement account, such as a 401(k), 403(b), or small-business account, if:

  • 1. You’re still working
  • 2. You do NOT own more than 5% of the business you work for
  • 3. You have an employer-sponsored retirement account with the business you work for

If you meet all the criteria above, you may delay taking an RMD from the account until April 1 of the year after you retire. Keep in mind that this does not apply to IRAs or other accounts you may hold with companies you no longer work for.

There has been a recent change to the age, and the following refers to legislation:

“The Secure Act increases the age after which you must begin taking RMDs from 70 1/2 to 72. But this favorable development only applies to folks who reach 70 1/2 after 2019. So, if you turned 70 1/2 in 2019 or earlier, you’re unaffected.

In a little plainer English, “If someone turned 70 1/2 on Jan 1, 2020, they are not required to take a required minimum distribution until age 72. If someone turned 70 1/2 on Dec 31, 2019, they would be required to take an RMD and would be required in subsequent years.”

MEDICARE PART D PREMIUM

IRMAA.  No, not your old girlfriend, but an income-based adjustment to your Medicare premiums.  I was contacted by several of our members asking if I knew anything about us being charged for Medicare Part D.  I didn’t, so I did some digging, and then I was contacted by more members.  It doesn’t apply to everyone.

This is one of the enotes I got:

“I just got off the phone with UAL Employee Benefits.  Here’s what I know now:  The new Retiree “Medicare Advantage” works thru Medicare Part B AND D.  Which means for all of us who use the UAL “Medicare Advantage;” the Retiree Post-Medicare Insurance, are ALL automatically enrolled in Medicare’s PART D!  So for those of us who fall into the “TWO YEAR LOOK-BACK”  “problem”  will be socked with the cost of PART D Premium PLUS the IRMMA (Medicare speak for “you are a high income earner which we here at Medicare hate you people, so we are gonna bleed your rich asses till it hurts.”)

Then I got this from member Pete Friedman’s wife, Marcia, who was in the benefits business for many years and has been a fantastic resource for us:

“IRMAA applies based on income and I’m surprised UAL was not advised to remind retirees of this when they decided to move us to SilverScript.  The income threshold is $174K for married filing jointly and $87K for single folks.  Seems to me UAL decided it wasn’t their problem if their retiree was doing well with income.  It will likely impact more folks that hit 70.5 and have to start taking Minimum Distributions from any other retirement plans they may have.  It wouldn’t matter if they were enrolled with the UAL plan or opted out and picked another Part D provider, they would still get hit with the IRMAA surcharge.  Reported income for 2018 determines your premium [for 2020].  It’s on the Medicare.gov website and financial planners (if you use one) should be talking about this with their clients.”

Here’s a link to the Medicare site explaining it in detail:

I highly recommend that you use this link and read the details on the Medicare site.   https://www.medicare.gov/drug-coverage-part-d/costs-for-medicare-drug-coverage/monthly-premium-for-drug-plans.

Because of the two-year lookback, most all of us would have been hit with a large Part B premium increase, since our income two years before our retirement was still high. BUT, Social Security Form SSA-44, allows for a waiver of the premium increases because of a LIFE EVENT, which in our case was “work stoppage,” i.e. retirement. You then put in an estimate of your next year’s income, and if it falls below the specified thresholds, you get the waiver. If you’ll still have a large income, you won’t get the waiver. You must submit this form every year. In my case, since I don’t work, once the two-year lookback no longer included my UAL salary, I didn’t have to submit it anymore.

Getting back to the Part D premium.  From two different sources I’ve been told that Aetna did not tell United about this. It seems to me that Aetna and United should work out a plan so none of us get smacked with the additional premium. We didn’t under the old Aetna/Caremark plan, so why should we now? I was also referred to the large booklet, titled “Evidence of Coverage,” that SilverScript mailed to us. Most of this is spelled out on pages 12-13, although it fails to mention the Form SSA-44.  I wish I’d waded through that extra-large booklet before I started hearing about this Part D premium.

We’ll still use the www.caremark.com website, but you’ll have to call SilverScript at (844) 819-3074 to set up new log in credentials since it’s a new account. Once that’s done and you log in, you’ll see all your previous information, including your prescriptions, right there as before.

Regarding copays and max out of pocket costs for the year, they’re a little confusing, with several “tiers” of drugs involved, as well as brand names versus generics. Take a good look at the SilverScript booklet and their website, and if you have questions about your specific situation, you can always call them.

The following may not apply to a lot of you, but for those who it does, this could mean a lot of money.  A lot.

GVUL INSURANCE SMOKER/NON-SMOKER ISSUE

Below is from an MEC R&I Committee update on an issue with MetLife insurance premiums. It may not affect many, but for those who are affected, it could be a lot of money. There has been a class action lawsuit filed, so if you are one of those affected, after reading below and finding you have been overcharged on your premium because they changed your status to “smoker,” first try to get a refund from MetLife. If you are turned down, please let me know at rupari@rupa.org and I can put you in touch with the plaintiffs in this case.

From the ALPA R&I Committee

“We have heard from a few pilots who are signed up for MetLife GVUL Insurance and are being incorrectly charged life insurance rates based on being a smoker, which carries a larger monthly premium.

This most likely impacts L-UAL pilots who had a GUL or Term Policy back in 2000. When the life insurance transitioned to GVUL pilots had to inform MetLife that they are non-smokers to get the lower rates. If pilots did not take that step, then they were defaulted into paying smoker rates this entire time.

We recommend calling MetLife at the number below to verify your status.

To confirm if you have smoker or non-smoker rates you may contact MetLife at

800-756-0124 Monday through Friday 7:00 a.m. to 7:00 p.m. CT.”

Last, and certainly not least, is the following link to the www.ALPA.org website, and directly to the 2019 MEC R&I Committee Retirement Seminar synopsis.  It’s extremely lengthy, about 287 pages, so we’re not going to publish it here, and probably not on the RUPA.org website either.  Even the link is long!

https://www.alpa.org/ual/-/media/UAL/Files/eLibraries/Communications/committees/retirement-and-insurance/retirement-seminar-presentation.pdf

You’ll probably have to sign on to the ALPA website, so if you no longer know your log on info, you’ll have to contact ALPA Membership at Membership@alpa.org, Toll-free, 888-FLY-ALPA (888-359-2572), or 703-689-2270, then press “3” when you reach the automated menu, and you will be transferred to one of the Membership Services representatives.  OR, send me an enote at rupari@rupa.org and I can send you the PDF via email.