Misapprehensions about player retirement benefits are rife—both among the general public and among players and former players themselves. This appendix briefly summarizes the benefits provided by the NFL, with special emphasis on limitations and qualifications for eligibility. We also note some controversial and contentious issues in this realm.
Some financial context is necessary to place retirement benefits into proper perspective. The following synopsis, taken from the NFL Player Care study, outlines the general financial picture for players who are “vested”—that is, who have spent a minimum of three to five years in the NFL, depending on the era in which they played, and are thus eligible for the benefits package.1
Vested retirees have substantially higher incomes than men of similar ages in the general population. Younger NFL alumni report median total incomes of $85,000 (2008) and older alumni report a median of $93,400 (2008). As points of reference, the median total income for all U.S. men aged 30–49 was $55,000 and for all men 50 or older was $48,169. When NFL alumni are compared with U.S. men with some college experience (not necessarily four-year degrees), the income gaps are cut nearly in half. Still another picture emerges when we look at those at the lower end of the income ladder. Younger alumni report incomes below the poverty level at the same rate as the general population. These numbers are even more noteworthy when NFL veterans are compared with men of comparable education. NFL alumni are twice as likely to report income that is below the poverty level—8.4 percent versus 4.1 percent in the general population. Remember, these figures are based on alumni who had roughly average careers; they don’t include players with careers of three years or less.
In terms of income sources, 49.2 percent of older alumni reported that they had annual incomes from earnings (median: $70,000), while 65.5 percent of younger players had earnings income (median: $65,000). Other sources of “labor” income include bonuses or commissions, professional practices, endorsements, and business. About a third of former players have some sort of business income. Surprisingly only around ten percent of NFL alumni make money from endorsements, and those amounts are relatively small (the median is less than $10,000). The study does not indicate how many players have no income at all, nor does it report data on players’ current total wealth.
While the current NFL benefits package is extensive, if not comprehensive, this hasn’t always been the case. Alumni from earlier eras received only a small fraction of what’s presently available. NFLCommunications.com and other NFL sources specify the following benefits.2
Severance Pay
Under the severance pay plan, a released player with two or more credited seasons in the NFL receives termination pay of $12,500 per credited season. A season is “credited” if the player is on (1) the active roster, (2) the inactive list, (3) injured reserve, or (4) the physically unable to perform list for at least three regular season or postseason games. A nine-year veteran such as George Koonce, for example, would be due $112,500 upon filing for retirement.
Bert Bell/Pete Rozelle Retirement Plan
The retirement plan provides both pension and disability benefits. Under the latest CBA, to be eligible (i.e., vested), a player must be credited with being an active player for (1) five credited seasons if he played before 1973, or (2) four credited seasons if any of his seasons were after 1973, or (3) three credited seasons if any of them was after 1992. At the age of 55, vested players receive monthly pensions based on years in service, not based on earnings in the league. The amounts differ according to the credited seasons played. Alumni are given $250 per month for each year played before 1982, $255 per season for 1982–1992, $265 per season for 1993–1994, $315 per season for 1995–1996, $365 per season for 1997, and $470 per season for years since 1998. For example, George Koonce started his nine-year career in 1992. His monthly pension payment would be calculated as follows: (1992) $255 + (1993) $265 + (1994) $265 + (1995) $315 + (1996) $315 + (1997) $365 + (1998) ($470) + (1999) $470 + (2000) $470 = $3,190 monthly payment for life ($38,280 annually at age 55). In comparison, the occasional player such as Brett Favre, a recently retired veteran of 20 years, will pull down nearly $100,000 annually when he reaches age 55. Players may elect to receive pension checks as early as age 45, but the monthly payments are substantially reduced. If players elect to defer payments until age 65, the monthly checks are substantially larger.
Second Career Plan (401[k] Savings Plan)
Rookie players may contribute to the 401(k) plan, but only players with at least two credited seasons get matching contributions. A player with at least two credited seasons in the league can contribute up to a maximum of $10,000 in pretax dollars per year and receive a matching team contribution of $2 for each $1 the player contributes.
Player Annuity Program
This program provides tax-deferred earnings on contributions made by NFL teams. NFL contributions are $5,000 for each of a player’s second and third credited seasons, $55,000 for his fourth credited season, and $65,000 for each credited season thereafter.
Health Insurance
The NFL provides continued health care coverage to vested players and their families for five years after leaving the league. Medical insurance covers 100 percent of all in-network medical costs for a player and his dependents. The annual deductible for medical insurance is $400 per player and $800 per family with a lifetime maximum benefit of up to $2.5 million. Dental insurance covers 100 percent of all preventive dental care along with 85 percent of general services and 50 percent of major services. The annual deductible for dental coverage is $50 and there is an annual maximum benefit of $2,000. Players who never vested are without NFL health insurance.
“88 Plan”
This plan provides retired players with as much as $88,000 per year for individual care, up to $50,000 for home custodial care in addition to costs pertaining to certain physician services, durable medical equipment and prescription medications resulting from dementia, Alzheimer’s disease, and amyotrophic lateral sclerosis (ALS).
Neurological Care Program
Provides neurological specialists to evaluate and treat possible neurological conditions among retired players. Eligible players who cannot afford treatment may apply to the NFL Player Care Foundation for grants to cover some or all of the costs of treatment.
Joint Replacement Plan
Assists former players in need of knee, hip, or shoulder replacements. If a player is not covered by insurance and does not have the means to pay for this surgery, he may qualify for financial assistance from the NFL Player Care Foundation. In that case, he will not bear any of the costs associated with the surgery. In addition, most normal complications arising from surgery are covered in full, up to a maximum of $250,000.
Life Insurance
NFL rookies receive coverage of $150,000 at no cost while the annual coverage increases by $30,000 per year for veterans up to a maximum coverage of $300,000, while playing.
This program provides assistance to current and former players who wish to continue their education. An eligible active player will be reimbursed up to $15,000 per year for qualified education expenses (e.g., tuition, books, and fees). An eligible retired player will be reimbursed up to $45,000 for qualified education expenses that are incurred within three years of his last NFL game.
Life Improvement Plan
This program is designed to assist vested former NFL players with various health and quality-of-life concerns. NFL and NFLPA web sites reveal a plethora of programs and opportunities for players and alumni, including education and training workshops, internships, and information concerning virtually all things relating to life after football.3
For all intents and purposes, NFL retirement benefits extend only to players with longer than average careers. This leaves a vast number of ex-players without benefits of any sort, and those who played before the free agent era and more recent CBAs have been especially short-changed. Prior to 1977, vested ex-players received about $100 per month per season played.4 Players from the 1940s and 1950s got even less. Sometimes half-heartedly over the years, the NFL and NFLPA have addressed the situation, with the most recent and generous move to establish a $620 million “Legacy Fund” as part of the 2011 CBA. The fund is primarily designed to better the financial circumstances of older retired players, and includes the following major adjustments to the pension plan:5
Under the terms of the Legacy Fund, for example, a ten-year veteran player who retired in the 1960s, and who had been receiving a $200 monthly pension, will receive $1,840 a month. A ten-year veteran who retired in the 1970s will see his monthly check increase from $165 to $1,810.6 Despite these substantial increases, old-time players with a limited number of credited years will hardly be on easy street financially.