Retirement Pre-Fund

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Looks like my pre-funding expense nearly doubled in cost.

What's up with that??
What contract are you covered under. The APFA CBA limits the monthly prefunding rate increase to more than $1 from year to year.
From Article 41(Group Insurance Contributions) of the TWU-AA Agreement:

(m) Prefunding Retiree Health Care
All employees, who are on the Company's active payroll, on a union leave of absence, on a family leave of absence, or on a military leave of absence and who are at least age 30 with a minimum of one year of service with the Company, will be offered the opportunity to begin prefunding his retiree health care plan at the contribution amount for the age at which he begins participation in accordance with the Age Based Rates Table in Article 41(m)(5). Additionally, that amount is subject to the escalator described in Article 41(m)(5). Incumbent employees on active payroll on 12/31/89, who enrolled when first eligible, will pay the incumbent rates in accordance with the Table in Article 41(m)(5). No entry fee will be assessed to the employee, if he chooses to participate when first eligible. An eligible employee will be automatically enrolled in the Plan and payroll deductions will commence as of the first pay period following his date of eligibility, unless the employee comp letes and returns a form, prescribed by the Company and countersigned by his supervisor, to waive participation. Married employees must obtain spousal consent to waive participation.

(5) Age Based Rates Table
Monthly plan contribution rates for employees referred to in Article 41(m) will be in the table below. Also refer to the annual escalator formula in Article 41(n)(3). The contributions below were effective as of January 01, 2001, based on the Escalator formula in the April 02, 1992, Trust Agreement.

Incumbent employees on active payroll as of 12/31/89,
who enrolled when first eligible

$ 12.96

Age Employee Begins Prefunding /Monthly Employee/EmployerContribution

30 $ 15.54
31 $ 16.97
32 $ 18.66
33 $ 20.41
34 $ 22.13
35 $ 24.60
36 $ 27.06
37 $ 29.78
38 $ 32.90
39 $ 36.20
40 $ 40.40
41 $ 44.81
42 $ 49.59
43 $ 54.57
44 $ 60.17
45 $ 66.33
46 $ 77.81
47 $ 86.59
48 $ 96.84
49 & older $ 110.56

n (5) Contributions made by participating employees and by American Airlines are subject to an annual Escalator formula. American Airlines will calculate the impact of the annual Escalator on contributions, subject to review by the TWU in accordance with the provisions of Article 41(n)(6) below, by comparing the percentage increase in the cost of medical benefits for covered retirees during the year ending June 30 immediately preceding the effective date of the Escalator to the cost of medical benefits for covered retirees in the year ending the previous June 30. Such percentage increase is divided equally between the participating employee and American Airlines in order that each pays 50%. The resulting percentage increase will be applied to the amount of the then current Employee and Employer monthly contribution. However, in no event will the participating employee’s or American Airlines' contributions increase from one year to the next by more than the amounts stipulated in the Escalator Cap Table below.

Employees affected. Maximum Monthly Increase
over Prior Year

Incumbent employees on active payroll 12/31/89 who enrolled
when first eligible


Others – based on age when
prefunding begins

30-34 $1.50
35-39 $2.50
40-45 $3.50
46-48 $5.00
49 or older $5.50

(6) The increase in contributions as calculated by American Airlines is subject to review by the TWU, provided the TWU's request for review is received within thirty (30) calendar days of notification. While no individual's claims history will be available for review, data in the aggregate, upon which the Escalator calculation was
based, will be made available by American Airlines to the TWU on request. The TWU may contest the Escalator calculation within sixty (60) calendar days of receipt of the data. If the TWU contests this calculation, an independent accounting firm, as agreed to by both parties, will be retained to verify the amount. In the event that the independent accounting firm determines that contributions should change by a different amount, any increase or decrease will be retroactive to the first of the year to which the new Escalator calculation applies. Any decrease in the contribution will be credited to the Employees’ future monthly contributions within sixty (60) calendar days, barring unforeseen circumstances. Any increase or decrease will be applied to the Participants' contributions and Employer’s contributions in accordance with Article 41(n)(5).
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