Last week, Congress convened formal budget negotiations to outline a spending plan for the remainder of the 2014 fiscal year. As this process moves forward, many options to reduce spending and increase revenues remain under consideration by lawmakers. One of several options that has raised concerns for ALPA in the past is to achieve federal savings by increasing the Medicare eligibility age from 65 to 67. ALPA originally expressed its concerns to Congress and the President about the impact of such a policy change on pilots in December of last year. Interestingly, a new report from the Congressional Budget Office recently found that raising the Medicare eligibility age from 65 to 67 would yield much less federal savings than previously estimated.
The new estimate states that raising the eligibility age would result in a net savings of $19 billion from 2016 – 2023. This is a much lower estimate than the $113 billion in savings over ten years estimated by CBO in a 2012 report.
A critical concern for pilots is that federal law mandates that a commercial pilot retire no later than the age of 65. Therefore increasing the Medicare eligibility age beyond age 65 will cause a health care coverage gap and unfair economic harm to commercial pilots. Our recent experience shows that employers are not, in any way, “jumping in” to cover pre-Medicare (or post-Medicare) retiree health care coverage gaps upon separation of employment. In fact, the trend in this area has been for employers to increasingly “walk away” from providing any post-employment health care protection. Simply increasing the Medicare eligibility age could cost a retired pilot tens of thousands of dollars in premiums for the period from his federally mandated retirement at age 65 until he becomes eligible for Medicare, even assuming adequate coverage could be found.