9.28.24 – Contract Implementation Update #2- Planning to Retire? RHRA Explained

Saturday, September 28, 2024

Contract Implementation Update #2
Planning to Retire?
Retiree Health Reimbursement Account (RHRA) Explained

CBA Section 26.G incorporates a new option to convert your existing sick bank to a Retiree Health Reimbursement Account (RHRA) upon retirement. The RHRA may be used to reimburse a retiree’s and/or a retiree’s eligible dependent’s medical expenses at the retiree’s hourly wage at retirement. The company will credit an RHRA with the retiree’s unused sick leave hours (at half pay).

Eligibility to Receive the RHRA Upon Retirement

To be eligible for the RHRA, a Flight Attendant must meet the retirement criteria of the 65-point plan and give the company at least 4 (four) months’ advance notice of intent to retire. This RHRA option will be implemented on October 1, 2024.

APFA has secured a one-time exception for Flight Attendants wishing to retire before February 1, 2025. If you plan to retire before February 1, 2025, you may do so without providing the contractually required 4-month advance notice.

However, if you’re planning to retire on or after February 1, 2025, you must give four months’ notice. Please note: 

• If you plan to retire on February 1, 2025, you must submit your RHRA paperwork by October 1, 2024.
• If you plan to retire anytime after February 1, 2025, you must submit your RHRA paperwork four (4) months in advance of your retirement date.

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Frequently Asked Questions- RHRA

Q1: I want to retire, but I also want to make sure I receive my Retro Pay. How do I do that?

To ensure that you receive your retro pay, you must remain on the American Airlines System Seniority list through the day of the Retro Payout, which is November 8, 2024.

Q2. What is the 65-point plan to which you refer above?

American Airlines uses standard and simplified criteria based on a 65-Point Plan. Simply put, you must have at least 10 years of company service for eligibility and your total years of company service combined with your age must equal 65 or more when you retire. Eligibility may be confirmed by calling Retiree Services at (844) 543-5747 or reaching out to your Crew Manager.

Q3: If I retire and take advantage of the RHRA, how will my sick time be converted to an RHRA?

American Airlines will credit to a notional RHRA account and credit the value of the eligible retiree’s accumulated unused sick leave hours at the time of retirement. The payout amount will be the remaining sick hours paid at half the hourly wage at retirement.

Example: 

I have 804:30 sick hours in my bank at retirement. $82.24 is my hourly wage at retirement.

I can convert the 804:30 (sick bank) X $41.12 (1/2 my hourly wage) = $33,081.04 deposited into my RHRA account (pre-tax).

Q4: For what may I use my RHRA account?

The RHRA account credits may be used for qualified retiree medical expenses for any qualified retiree medical plan. The RHRA account credits may only be used to reimburse the retiree for unreimbursed, substantiated, qualified medical expenses of the retiree and/or eligible dependents up to the retiree’s RHRA account credit balance.

Q5: Did APFA maintain the option to be paid out at $8.65 per hour of sick leave upon retirement?

Flight Attendants will still have the option to be paid $8.65 per hour of sick leave upon retirement instead of crediting an RHRA. The payout is subject to taxes in accordance with IRS regulations.

Example:

I have 804:30 sick hours in my bank at retirement.

I can cash out the 804:30 (sick bank) X $8.65 (cash out rate) = $6,958.93cashout at retirement (taxed in accordance with IRS regulations).

Q6: When I retire, can I split my sick bank between an RHRA and the option to be paid out?

No. The RHRA option is chosen when giving four (4) months’ notice (currently waived for those retiring prior to February 1, 2025) and the cash out option is exercised when less than four (4) months’ notice is given.