Pilot Benefits

Union Benefits Analysis for Pilots

Maximize What You're Already Paying For

Union dues can cost thousands per year. Learn how to maximize the benefits you're paying for and integrate them into your overall financial strategy.

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$108K

ALPA LTD Annual Cap (Taxable)

22%

Actual Protection at $400K Income

12 Months

Recommended Emergency Fund

20-30%

ALPA Group Rate Savings vs Individual

Quick Answer

ALPA LTD is valuable but capped at $108K/year (taxable) - at $400K income, actual protection is only 22% after taxes
Union dues ($1,000-$3,000+/year) provide access to group insurance rates, legal services, and career protections worth far more
Every generation of pilots has faced furloughs - build 12-month emergency fund as your primary furlough protection
Layer ALPA benefits with personal coverage: ALPA LTD (base) + Loss of License (medical denial) + Section 7702 (critical illness + cash value)
Seniority is your most valuable career asset - understand merger protections, scope clauses, and how they affect your financial trajectory

The Opportunity

Why This Matters for Pilots

ALPA Long-Term Disability (LTD)

ALPA provides group LTD coverage typically paying 60% of income up to $9,000-$12,000/month. However, if premiums are employer-paid, benefits are fully taxable. At $400K income with $108K capped benefit, actual protection is only ~22% after taxes.

Loss of License Insurance Access

ALPA offers group Loss of License insurance at discounted rates. Covers FAA medical denial even without critical illness. Typical coverage: 50-70% of income, 6-month waiting period, 4-year duration. Layer with Section 7702 for complete protection.

Seniority Protection Benefits

Your seniority number is your most valuable career asset. ALPA negotiates merger protections, scope clauses, and flow agreements. Understanding these provisions is essential for career and financial planning - your seniority determines income trajectory.

Furlough Protection Programs

ALPA contracts include furlough pay provisions, recall rights, and preferential hiring agreements. But financial preparation is essential - build 12-month emergency fund minimum. Industry volatility (9/11, 2008, COVID) proves furloughs happen.

Implementation

Proven Strategies

Maximize ALPA Group Insurance Benefits

Enroll in all available ALPA insurance programs during open enrollment. Loss of License insurance through ALPA is typically cheaper than individual policies. Review coverage limits annually as your income grows. Consider supplemental coverage for gaps in group plans.

Best for: All ALPA members who want to maximize the value of their union dues and access group rates.

Example:

ALPA LOL at $5,000/year vs individual policy at $8,000/year. Save $3,000/year while building protection. Layer with Section 7702 living benefits for comprehensive coverage.

Furlough-Proof Emergency Fund

Build a 12-month emergency fund as your primary furlough protection. Industry history proves furloughs happen: post-9/11, 2008 recession, COVID-19. Your emergency fund is your financial runway during career disruptions.

Best for: All pilots, especially those at airlines with historical furlough patterns or those early in their careers.

Example:

$350K income = $175K emergency fund target (6 months minimum, 12 months ideal). High-yield savings or money market. This is NOT an investment - it is insurance against industry volatility.

Supplement Group Benefits with Section 7702

ALPA LTD has caps ($108K/year) and taxation issues. Section 7702 living benefits provide tax-free protection without waiting periods. Build cash value for additional furlough protection accessible via tax-free loans.

Best for: High-income pilots ($300K+) who need protection beyond ALPA caps and want tax-free benefits.

Example:

ALPA LTD pays $108K taxable = $75K after tax. Add $1.5M Section 7702: Critical illness = $750K-$1.5M lump sum, tax-free. Cash value accessible during furlough for supplemental income.

Avoid These Pitfalls

Common Mistakes

Assuming ALPA Benefits Are Enough

ALPA LTD is capped at $108K/year (taxable), with "any occupation" definition after 2 years. At $400K income, actual protection is only 22% after taxes. You need supplemental coverage to close the gap.

No Emergency Fund for Furlough

Every generation of pilots has faced furloughs: 1980s, post-9/11, 2008, COVID. Without 12-month emergency fund, you burn through retirement savings during furlough. This is predictable - prepare for it.

Ignoring Union Dues as Investment

ALPA dues ($1,000-$3,000+/year) provide access to group insurance rates, legal services, and career protections worth far more than the cost. Review all available benefits and maximize utilization.

Questions

Common Questions

Here are the most common questions we receive about this topic.

Ask Your Question

Union dues are no longer tax deductible for most employees since the Tax Cuts and Jobs Act of 2017. However, the benefits you receive (group insurance rates, legal services, career protections) far exceed the cost of dues. View dues as an investment in career protection, not a deductible expense.

Enroll in maximum available coverage, but understand the limitations: typically capped at $9,000-$12,000/month, taxable if employer-paid, and definition shifts to "any occupation" after 2 years. Supplement with personal disability, Loss of License, and Section 7702 living benefits.

Most ALPA insurance coverage ends when you are no longer an active employee. Some policies offer conversion options to individual coverage at higher rates. This is why personal emergency funds and Section 7702 cash value are critical - they remain accessible regardless of employment status.

Compare both options. ALPA group rates are typically 20-30% lower than individual policies. However, individual policies may offer better coverage terms and portability. Many pilots layer both: ALPA LOL for base coverage + Section 7702 living benefits for critical illness protection.

Merger seniority integration can dramatically change your income trajectory. A favorable integration accelerates your path to captain; unfavorable integration delays it by years. Build financial flexibility to weather uncertainty during merger negotiations. Do not assume best-case outcomes.

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