WHAT HAPPENS IF I LOSE MY MEDICAL AT DELTA AIR LINES

[00:01:22] Well folks, welcome to another episode of the Pilot’s Portfolio. Glad you are here. In this episode, we are talking about all things disability for Delta Airlines. A few episodes ago, we released the disability episode related to American Airlines. Today we’re covering Delta and, in a few episodes we’ll do Southwest followed up by United. So glad you are here. If you’re a Delta pilot wanting to learn more about your disability episodes stay around if you are not, yet at a major airline and, you are listening to all of these episodes just trying to get a better understanding of what you could expect when you get, to your major. we’re glad to have you. Or, if you just wanna get smart about, your contract or 1 to 1 contract, loss of medical in general. This is the place to do it now, my name is Timothy P. Pope. I’m a certified financial planner specializing in the planning needs of the professional pilots and, recording this before we jump into the disability part just a few days ago, the Air India crash happened. It’s a Boeing 7-87 way too early to tell and to understand what happened. But, I think that, typically we don’t expect 7-87’s to go down. And I think that, you know, that catches all of our attentions, makes us think about what we do every time we get into the flight deck.
And what it means that we’re, just the risk. And I think 1-21 flying certainly, which is us US certainly the safest stuff out there. But still, I think it makes everybody just pause and think and certainly our thoughts. Are with all the passengers, everybody, the families that are impacted, right, of that Air India crash there.
[00:03:10]It probably also makes you think just about your own estate planning, to be honest with you. 2025 has been a challenging year you know, we started out with the DCA and then there’s been some others notable, incidents as well. So I think, you know, just all of us as pilots, it probably makes us think about our estate plan and making sure that everything is where it needs to be. So, certainly thoughts and condolences to all of those that are impacted in the Air India crash.
[00:03:40]Now let’s talk about loss of medical. Loss of medical can happen at any time because. really you’re insuring against your income against your health, right? Because, you guys fly, you’ve got the first class medical you know, it’s subject to sometimes the judgment of the FAA and some just your health, right? You, don’t know what your genes could produce. But also sometimes you get into just little accidents, the small things that can take you out of flying sometimes for six months, sometimes for a couple of years, and so let’s talk about what happens if you’re flying at Delta and you lose your medical. The first thing we wanna know is what is the definition of disability under the contract and, it’s your inability to perform your privileges of your first class medical. So, essentially that is an own occupation definition of disability, which is going to be your most favorable definition that you can have as it relates to disability policies,so we got a good definition there. The next thing we wanna know is how will Delta calculate the disability benefit and the way it works is, as your contract says, you will receive 50% of the final average earnings. And, your final average earnings is defined as your highest consecutive 12 months in your last 36 months of active pay,so, if you listen to the American Airlines disability, that there’s a little difference there for American, it is your highest 12 out of your last 60 months. But, here you’ve got a 36 month window here and we’re looking for your highest 12 consecutive months.
[00:05:18]So we’re gonna take that, we’re gonna average that out, and you’re gonna get 50% of that number for your loss of medical benefit here now it is important to note, that your benefits are taxable so, the Delta contract does not allow you to choose, whether you want to pay tax on imputed income for this benefit, thereby making your loss of medical benefit non-taxable. And so, if you go on disability claim at Delta, you can expect to pay taxes out of your disability payments. Now, what if you are on property for less than a year and
you go out on disability? That happens. That happened to one of our clients. Well, the contract says that your final average earnings is going to be 83.3 hours per month. Okay? At your pay so, that kind of covers whether you’re there for less than a year or there for more than a year, what you can expect to receive get your 50%, but that’s not it. There are some offsets, and again, this is different than American and some other carriers that will come up in future episodes, but there are some offsets to your income. So at Delta, if you are receiving disability pay, there is an earned income offset. And what this means is if you receive employment income outside of Delta in the first 36 months. Of being on disability benefits. If that employment income exceeds what your disability payment was calculated to be, then Delta is going to reduce your disability payment. [00:06:58]Okay. So the way I’m reading that though is you can earn up to what your disability calculation is without receiving a reduction in benefits. And the other thing is if you. Get into a position where you lose your medical for more than 36 months After that then you can earn as much as you want and you’d still receive your 50% of your final average earnings there. So that’s something to think about is that there is the earn income offset from these benefits. The other offset is workers’ comp if you get hurt on the job and you’re eligible to receive workers’ comp, then your disability payment is going to be offset by the amount that you’ve received from workman’s comp.When you read the contract, it specifically says, it’ll be reduced regardless of if you forfeited the benefits because you did not apply for them. So, if you get hurt on the job and you’re eligible for workers’ comp, make sure you apply for the benefits because the way it reads is that your disability payments would be offset even if you’re not receiving them so, make sure you apply if that’s appropriate for you. And, then the other offset is state disability income benefits so this applies to you guys that are based in California, New York, or Washington. If your state is going to give you disability income, then your benefit that you receive from Delta will also be reduced there.
[00:08:27]And then there’s retirement benefits. I mean, if you’re receiving income from the PBGC, so this kind of relates to,if you were at a former airline that, went bankrupt or merged and you have PBGC payments coming to you, then your disability payment would be reduced. So that’s certainly for folks that are newer or you’ve only been at Delta in its current iteration, that’s really not going to apply, to you. Now, one thing, let’s talk about the timing of the disability payments. So you go on sick leave and then, once you are, sick leave of absence, your temporary disability payments are gonna kick in and those can last up to 26 weeks.
[00:09:10]And then if you’ve not returned to flying status after that 26 week period, your long-term disability payments are gonna kick in as well. Now Delta will continue to make contributions to your cash balance plan and, they’re gonna make contributions at 100% of your pre-disability income. So it’s not gonna be, right now it’s 2025 you guys are getting 17% of your income going to your cash balance plan. It’s not gonna be 17% on 50% of your final average earnings. It’s going to be 17% of what you were earning right before, you went on disability there so that’s, good ’cause Delta’s gonna continue to make those contributions, to your cash balance plan, but also the pilot is able to make contributions directly to their 401k from their disability pay so, if you’re in a financial situation to where you don’t need all of your disability pay, or maybe there’s a portion of a period of time where you’re receiving, the contractual disability, the DPMA and any of the other coverages that we’ll talk about in today’s podcast, if you’re receiving all of those and you say, hey, well, you know, maybe I’m gonna continue to contribute to my 401k and, then when my disability income changes, or, circumstances, maybe I’ll change that. Right? So,just know that you are still able to make contributions to your 401k directly from your disability payments if you so choose.
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[00:11:34] You heard me mention DPMA what does that mean? DPMA is Delta Pilots Mutual Aid. Okay? It is separate and distinct from your contractual benefits.it’s also separate and distinct from any ALPA benefits that you, you may have, access toSo, the way it works is your DPMA once you reach, uh, your sick leave of absence and your sick bank is exhausted and any en enhanced disability payments are exhausted, then the DPMA is gonna kick in, and the benefit that you could expect to receive is gonna be 25% of your final average earningsso your final average earnings, your DPMA is gonna use the same exact calculation as Delta is going to use, which is your highest 12 consecutive months out of the previous 36 months of active status. And then they’re gonna pay you 25% of that. Unlike the disability payments that you receive under the contract, the DPMA is not going to be taxable for youso that 25% is going to be tax free, and then how long does it last? Whereas the contractual, disability payments will go out to, FAA retirement age. Your DPMA on a single event, is good for 365 days, or you have a career total of 730 days.You can use the DPMA multiple times throughout your career just the total number of benefit days that are calculated there cannot exceed 730.
[00:13:09]The other thing with the DPMA is it does have a $35,000 survivor benefit. So let’s say that you pass away your survivor, your beneficiary could expect a $35,000 payout, to them.When we think about how your benefits start
to stack up, you’re gonna have your sick bank and then, any enhanced disability payments. And then once those are exhausted, you’ve got your DPMA. Typically, your DPMA probably is gonna overlap with your temporary disability and maybe even your long-term disability as well. So you’ve got your 50%. On temporary disability and long-term disability. And then on top of that, you get your 25% from your DPMA so that’s gonna be 75% gross. Of course, your temporary disability, your long-term disability are going to be taxable to you so, you’re gonna receive some number less than 50% after taxes are taken out. And then your DPMA is gonna be after tax, so that 25% benefit, you’ll receive 100% of that with no offsets there.
[00:14:04]Then we get into ALPA disability insurance that you guys have access to, and there’s actually three different programs under this, and they’re designed for three different purposes. So let’s, talk through ’em Your base disability program then you’ve got your plus disability and, then you’ve got your lump sum as well the ALPA base, disability program, so this is designed for you to receive monthly income you can receive up to $6,000 per month, and you can purchase this in $600 increments. Now every insurance has some kind of elimination period, which is a waiting period, right? So, you pay your premiums and then if you have an event, you go on claim, you’ve gotta wait some amount of time before you can receive benefits. So the waiting period here for the ALPA disability insurance. The base program is 12 months. All right, so if we think about how your benefits run, you’ve got your sick bank, your extended or enhanced disability payments, and then your temporary disability and, then your DPMA. So, that is probably gonna get you through your first 12 months at or around, you know, 75% of your pre-disability income. And, then once you’ve waited that 12 months, if you’ve not returned to active status, then you’ve got your ALPA insurance, which, this is voluntary, so you, you guys gotta seek this out, you gotta pay for it at ALPA will provide it at a certain amount, you know, in years one and years two.
[00:15:31]But after that, you’re on the hook to pay this you got that 12 months and the output kicks in. It’s designed to last for 48 months. Okay. And that’s the maximum. When you look at the policy, you’ll see it starts to reduce at age 57. I don’t know why it starts to reduce at age 57.It seems like it would start to reduce at age 61 to bring you up to 65. But that’s not the case. It starts to reduce at 57 and actually it’ll go out to 65 and six months.There so, you get this up to $6,000 benefit there. The definition for this one is own occupation and, that’s important because as we already talked about, there’s a lot of jobs that you can hold if you’re not able to fly. And so, if the reason that you lost your first class medical is not, really debilitating to your ability to earn income and you say, well, goodness, maybe I don’t want to just sit around the house so, you can have even within the first 36 months here, when thisALPA one kicks in, you can have what
you’re getting from the contract. So 50% of your final average earnings, you can get, this output disability up to $6,000 a month. And then you can go out and work and, you remember that offset only kicks in if your employment income exceeds what your calculated disability payment is going to be.
[00:16:47]So it is possible for you to string together up to a hundred percent of your pre-filing income depending on what kind of job you can grab and some of these other benefits here.This base program also has, a survivor benefit. So you wait the 12 months, you’re eligible for benefits here, and let’s say unfortunately you pass away, this policy will pay out six times, whatever your monthly benefit was going to be. So let’s say, max it out at $6,000, it would pay out $36,000 to whoever your beneficiary’s going to be. It’s also going to, have a waiver of premium. So you go on disability, you’re waiting for your 12 months to pass by. As long as you’ve been continuously disabled for 90 days, you can qualify to have your premiums waived so, let’s talk about this. So if in the past you guys have heard me talk about some insurances. Get more expensive the older you get. This is one of those. Okay, so, you know, I just looked at a 45-year-old, let’s say they maxed out. They wanted, they needed $6,000 a month, for this ALPA insurance that cost ’em about $60 a month, actually $59 and 47 cents.But you know. $60 a month and then when they turn 46, that costs ’em about $65 a month. Okay? And it, and it would go so on and so forth. So really, take a look at it you know, buy what you need, figure out what your financial circumstance is, what fits in your plan. And then don’t be over-insured. Don’t be underinsured, right?
[00:18:19]So that is the base plan.Let’s go to the plus plan ‘Cause this is completely different than the base, the ALPA monthly disability insurance plus, are the key differences you’ve gotta do base in order to qualify for plus. Okay? And here’s why, ’cause the coverage on plus is 50% of what you would’ve received in the base plan. And the maximum benefit now is $3,000 instead of 6,000. So when you think about it, there is a waiting period of five years in order for the plus to kick in. So this really comes into play if you are just you’re, seriously injured kind of thing. It looks like you might not be returning to the flight deck. So your DPMA, your ALPA insurance base plan is gonna get you through the first five years, and of course, you’ve got your temporary disability and your long-term disability working in the background. Let’s say you’ve waited five years, you still haven’t returned back to flying. Well, if you have this plus plan, it’ll kick in and it’ll be 50% of your base benefit that you are receiving.
[00:19:20]So instead of your base just going away after the 48 months, it’ll reduce down to 50% with the plus plan. And the base plan was only good for 48
months. The plus plan, the benefit duration there is it’ll actually take you out to age 65. It’ll take you out to FAA retirement age. But here’s the thing, definition of disability on this one is any gainful occupation. Okay? So it’s not just your own occupation. It’s not, Hey, I can’t exercise the privileges of my first class medical. It is any gainful occupation. And so the way they define that is they say, hey, if you’re unable to earn more than 60% of your pre disability earnings at any gainful occupation for which you are reasonably qualified then you’ll qualify for this benefit and it’ll pay out. So again, this comes in, if you’re seriously injured and it looks like you’re, you may not be returning to the flight deck. I think the data will show. I’d love to have like somebody from RNI so, retirement and insurance on the podcast to talk about data, because I think the data is just because, the work that you guys do is so dependent on your first class medical.
[00:20:31]The data is there that says like, probability is high that pilots will go out on disability, but I don’t know what the probability is that you go out and stay out. Right? And you never return to flying even if you’re out for a while. I’d love to hear the data on that. And that would influence and help us make decisions on hey, should we sign up for plus plan or not? Now the plus plan, just like the base plan, also has a survivor benefit. So it’s gonna be six times your monthly benefit, if you’re entitled to receive it. So, hey, here, we can max out at $3,000 a month. And this one, so let’s, say you’re receiving a benefit and unfortunately you pass away, your beneficiary would receive, six times of whatever you are receiving,per month. So 3000 times six, $18,000. We have the same waiver of premium here, like we talked about on the plus plan. So 90 continuous days you can apply to have your premium waived and you will not have to pay the premium. For as long as you’re disabled whenever you return to active flight status, then you would have to pay it. But again, this one, because of the five year waiting period, It may be a challenge, right?
[00:21:38]Be thinking about returning to flying after that. I suppose, I’m not gonna say it can’t happen, but just challenging. Alright, let’s talk about the premiums. How much does this kind of thing cost? So I looked at the rates for a 45-year-old that needed to max this out at $3,000 a month of benefit, it would be $146 a month. You can see that that is different than our $60 a month. And the reason is the benefit duration, right? So the insurance company has priced this to say, hey, we might have to take you out to age 65, versus in the base plan, they are pricing it to say, hey we’d only have to pay for up to 48 months, right? So you could see the difference in premium there, and then also in the same case this will get increasingly more expensive as you age. So, you know, I think for those that are interested, like, hey, I wonder what my portfolio would need to be to generate my own $3,000 a month in perpetuity, I think a $900,000 portfolio at 4% could reasonably generate $3,000 a month. There we’d have to, we’d have to
factor in some taxes versus this one would be tax free. So maybe a little bit more than $900,000. But, so, you know, you can think about, Hey, do I need it? Could I self-insure? Or maybe I do need this.
[00:23:00]Let’s talk about the last option that we have. With Alpa, it’s the lump sum insurance benefit. and this one’s designed. To do exactly what the name said is provide a lump sum, so up to $150,000. You could pay for it in $25,000 increments. You go on disability, you’ve gotta wait for 12 months, and then if you’re still on not return to active flight status, then this will pay out you know, up to $150,000. Now that, here’s the definition, it’s own occupation. We like that it’s fairly narrow. Hey, I can’t exercise the privileges of my first class medical. I’ve been out of the flight deck for 12 months. Boom, it’s gonna pay me out, whatever, up to $150,000. You know, whatever I choose, the premiums here. So a 45-year-old who maxed this out their monthly payment is gonna be $41.75 cents, call it 42 bucks a month. So you could think about use cases, Hey, maybe you, you know, just a big mortgage or bought a house with a, with a high mortgage on it, and you’re like, man, I really need to stay flying.
[00:24:02]And if, if something happens to me. I’d love to have some additional cash to, pay down the mortgage. Right. so you could, that and other use cases, maybe you’re thinking about, kids college, maybe you got behind on the eight ball you feel and, maybe the 5 29’s are a little lighter than you, you’d like and you’re like, wow, if I went out on disability while they’re going to school and I didn’t wanna pay for it. I’d want to be able to have options when you can think about the lump sum disability and these things are, you know, you can turn them on. You can turn them off. So, they’re flexible in that way. So, you know I wanted to cover all of this so we can understand, hey, I’m flying at Delta. What happens if I lose my medical? you’ve got your sick bank, you’ve got any extended disability payments, you’ve got DPMA. You have temporary disability, you’ve got long-term disability, and then you have all these options through ALPA. Now, here’s what I’m not saying, like I’m not saying to go out and buy all of the coverage, and max everything out.
[00:24:59]What I am saying is understand your specific financial needs and how these disability insurances can fit with your financial plan, and then buy that. And then from there, as your circumstances change, then you want to tweak the coverages to your disability insurance as well. So that is, what happens if you lose your medical at Delta. Guys stay healthy out there, make great decisions. Thanks for joining this episode of Pilot’s Portfolio. Let me know what questions you guys have. Stay tuned. We have Southwest and United coming up next.