=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SFGate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/c/a/2007/01/28/BUGGRNP1MN= 1.DTL --------------------------------------------------------------------- Sunday, January 28, 2007 (SF Chronicle) Frequent flier miles get shorter Kathleen Pender Airline customers need to work harder to make sure their frequent- flier miles don't fly out the window. This month, United Airlines became the latest carrier to slash the shelf life of miles in inactive accounts. At the end of this year, United miles will disappear from accounts that have been inactive for 18 months, down from 36 months today. "We will check our customer's Mileage Plus account on Dec. 31, 2007 to s= ee if they had any activity in the past 18 months, since July 1, 2006. If there is no activity, either earning or using miles, then any mileage in the account would expire," says Robin Urbanski, a spokesman for United. In other words, "If your (last) activity was in the first half of 2006, you lose" everything in the account. Mileage Plus members can activate their accounts by purchasing a ticket = on United or one of its partner airlines, or by cashing in miles for a free ticket. They can keep their miles if they buy products or services from United's travel and retail partners, transfer miles to another Mileage Plus member (which costs $35 plus 1 cent per mile) or donate miles to charity. "You can get a magazine subscription for 500 miles, that will keep your account active," Urbanski says. United is doing this because "our liability for unused frequent- flier miles is extremely high, and we need to lower that liability," Urbanski says. "This change will also help our most loyal customers use their miles for award seats more easily, because they are competing with fewer people for award seats." It seems like people who aren't earning or using miles aren't putting up= a lot of competition for free seats, but I'll take Urbanski at his word. United is also making this move "to keep in line with our competitors," Urbanski says. Beginning Wednesday, US Airways customers must show activity in their accounts within 18 consecutive months or lose their Dividend Miles, down from a current window of three years. The new policy is not retroactive, says spokesman Morgan Durran. If your last activity was two years ago, your miles will not automatically expire on Jan. 31, but you will need to have activity in the next 18 months or lose them. US Airways customers can keep their accounts active for as little as 99 cents by downloading a song from iTunes through the Dividend Miles Web page at www .usairways.com. They can also keep their accounts active by flying or redeeming miles on US Airways and partner airlines or making other purchases with miles. If their accounts do expire, customers can reactivate them by paying $50 plus 1 cent per mile. Delta also clamped down on inactive accounts. As of Jan. 1, Delta customers have to earn, redeem or donate miles once every two years instead of once every three years, spokeswoman Katie Connell says. On Dec. 31, Delta looked at every frequent-flier account and if there had been no activity in the previous two years, the SkyMiles were taken away. Continental Airlines doesn't technically cancel miles, but if there is no account activity in a customer's OnePass account for 18 months, the membership could be canceled. There has been no recent change in this policy. American Airlines still allows accounts to remain dormant for three years before yanking miles. "We're watching closely what the other airlines have done but we've made no announcement," spokesman Tim Wagner says. Northwest Airlines has a similar policy with its WorldPerks program. "If no mileage is earned or redeemed from any source within a three-year period, the account is subject to termination, including forfeiture of all accrued mileage," says Northwest spokesman Roman Blahoski. "United kind of makes everyone take a look at things, but I have not hea= rd of any plans to change the policy," Blahoski adds. Southwest Airlines runs its Rapid Rewards program a little differently. Instead of getting miles, passengers get one credit for each one-way flight. A round-trip flight earns two credits. It takes 16 credits to get a free trip. Each individual credit expires 24 months after it is earned. Southwest lengthened the life of a credit to 24 months from 12 months a year and a half ago, says Ryan Green, Southwest's senior manager for customer loyalty. Credits earned by using Southwest's Rapid Rewards credit card also expire 24 months after they are earned. Travel author Ed Perkins says that if you're not buying plane tickets and don't have a credit card linked to your frequent flier account, "There is usually a fairly cheap way you can add or use a few miles. The main thing is to not let it get away from you." Bush's health care plan: I got some interesting feedback on Tuesday's column about President's Bush's health care proposal. To recap: Today, employees who receive health insurance at work pay no income or payroll tax on that benefit. On the other hand, people who buy their own health insurance must use after-tax dollars, although there are certain tax deductions available. Self-employed people, for example, can deduct up to 100 percent of their premiums. Bush says the existing tax system unfairly penalizes those who must buy their own coverage. He says it also "unwisely encourages workers to choose overly expensive, gold-plated plans," which drives up the cost of health care. Bush wants to make employee health care a taxable benefit, then create a standard tax deduction for everyone who buys health care, whether they get it at work or on their own. Starting in 2009, when the plan would take effect, the deduction would be $7,500 for people with individual policies and $15,000 for people with family coverage. People who choose less-expensive coverage would get a tax deduction for the difference. Those who choose more expensive coverage would pay tax on the difference. That doesn't sit well with some small-business people such as Larry Orma= n, who writes: "I run a small nonprofit and read your column on the proposed Bush health insurance plan. Yours (and other articles) seem to miss a key point -- employer-paid insurance costs are highly variable depending on the age of the employee. Younger employees here cost us about $2,500 per year for standard Kaiser coverage. But my coverage (I'm 58) costs $6,000 per year -- not because it is a more-expensive form of coverage (it's the same as everyone else's here), but just because I'm older. Any plan that caps all employees based on a dollar limit is going to play havoc with the real world of age-based insurance costs." What Orman says is true for small employers in California and many other states. If a California employer has between two and 50 workers, a state law allows insurers to charge a different price for each worker, depending on which of nine age brackets he or she falls into. The employer can pay all of the employees' health insurance premiums (as Orman does) or require employees to pay part of their premiums. The employee contribution can vary by age or other factors, or could be the same for all employees. The only requirement is that the employer contribute for each employee an amount equal to half the premium of the youngest employee, says James Larreta-Moylan, small-business line manager with Kaiser Permanente. He says other states have similar laws for small businesses. "In a large group, we do the same sort of age assessment, but blend it f= or the employer," Larreta-Moylan says. Kaiser will generally charge one price for everyone getting the same lev= el of coverage. Likewise, the employer generally will require employees to contribute the same dollar amount for the same level of coverage, regardless of age. White House spokesman Alex Conant says, "The president's plan seeks to level the playing field, so the tax code will treat everyone with health insurance the same way." Yet it seems like it could create new inequities. At small firms, an older worker would get a smaller net tax deduction th= an a younger worker getting the same level of coverage. The older worker could even wind up owing tax on his health insurance. Conant says that's fair because the older worker is getting a more- expensive policy, even if it doesn't look more valuable to the employee. OK, but at a large firm, with single-premium pricing, an older and young= er worker would get the same net tax deduction. Conant says, "Once we level the playing field, we expect insurance companies to tailor policies that will take advantage of the level field." Net Worth runs Tuesdays, Thursdays and Sundays. E-mail Kathleen Pender at kpender@xxxxxxxxxxxxxxxx --------------------------------------------------= -------------------- Copyright 2007 SF Chronicle