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What to do if Your Company Files for Bankruptcy and Reneges on Your Health Care Coverage

(8/23/12)- The flight attendants at American Airlines voted in favor of accepting the company's final offer by 59.5% to 40.5%. The Association of Professional Flight Attendants said that 92.8% of the eligible 13,544 members took part in the balloting.

The approval by the flight attendants means that the company will not apply to the bankruptcy judge to void the terms of the contract between the company and this union, as opposed to the motion it has made to void the terms of the contract with the pilots' union that we discuss below.

AMR said that it needs to save $1.06 billion a year in overall labor costs, and about $842 million from its unions.

(8/20/12)- U.S. Bankruptcy Court Judge Sean Lane for the Southern District of New York ruled that AMR had overreached in two of its requests for the jurist to abrogate the terms of its contract with the pilots' union. Please see our item dated 8/13/12 below.

The requests he denied were to remove all restrictions on both furloughing pilots and outsourcing flying through code share agreements with other airline.

AMR General Counsel Gary Kennedy said the company would re-file its motion to abrogate the pilots' contract, since that request was not denied in Judge Lane's ruling

(8/15/12)- The latest news is that the union representing the American Airlines pilots rejected the last contract offer from the company by a 61% to 39% vote.

The rejection by the Allied Pilots Association means that U.S. Bankruptcy Court Judge Sean Lane, who is overseeing the reorganization, must rule on the company's motion to rescind the pilots' current labor contract. The head of the union announced his resignation because of his disappointment by his union members over the rejection of the last contract offer by the company.

Judge Lane's decision has far reaching implications for the many other labor contract agreements for companies that are presently in the bankruptcy courts.

(2/6/12)- Unfortunately a problem being faced by more and more employees is the fact that when a company that you work for files for bankruptcy and also rejects the health care coverage that it had promised its employees, you are then faced with a big financial problem.

Even though the Pension Benefits Guaranty Corporation (PBGC) then assumes coverage for your pension benefit, it has limits as to the amount it pay each pensioner. Thus you may then be entitled to a much lower pension than what you had been getting, or maybe even what you had expected to receive.

Your financial difficulties may be compounded by the fact that you are not old enough to be eligible for Medicare. Yes, even though the company that you had worked for promised, in writing, that they would continue to cover your health care expenses, the courts have not required them to do so.

Fortunately there is something that is available to people in this situation. The Health Care Tax Credit, or HCTC, a federally funded program administered by the Internal Revenue Service.

In order for you to be eligible for this program, the company you work for has to have filed for bankruptcy, the PBGC has taken over the pension benefits of the bankrupt company, and the company has to have disowned health insurance coverage for its employees. You also must be 55 to 64 years of age and enrolled in a qualified health plan (and are paying more than 50% of the premium).

This program will pay for comprehensive major medical coverage, including prescription drugs and dental and vision care, if they had been included in your failed company's health care coverage plan.

If you fall within the purview of this program you have the option of either sending 27.5% of your monthly premium to the HCTC, which then sends the full payment to your insurer, or you can pay your insurer directly the full premium each month and then claim a credit on your federal income tax return for 72.5% of the premium.

Congress voted to expand this program in 2009 to include HCTC coverage to include benefits sponsored by Voluntary Employee Benefit Association (VEBA)

FOR AN INFORMATIVE AND PERSONAL ARTICLE ON PRACTICAL SUGGESTIONS WHEN SELECTING A NURSING HOME SEE OUR ARTICLE "How to Select a Nursing Home"

by Allan Rubin
updated August 23, 2012

http://www.therubins.com

To e-mail: hrubin12@nyc.rr.com or rubin@brainlink.com

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