How do you protect your greatest asset: your ability to earn?

What is your greatest asset?  Your ability to earn.  It takes an intelligent, highly motivated, and committed individual to invest over a decade in education and training, combined with a mortgage-sized student loan debt to become a physician.

The investment made by a doctor in becoming an attending is unrivaled by any other profession.

Most physicians perform procedures, interventions, and surgeries using fine motor skills.  It takes very little to compromise that skill set. It might be a tremor in the hand, where you can no longer perform procedures or surgeries. Or, it may be chronic arthritis in the right ankle, where you can no longer stand and perform interventions or attend to your patients. Any such disability can put an end to your career.

A true own-occupation disability insurance policy can protect you against such uncertainty. For example, a surgeon who develops a tremor in their hand can no longer perform surgery but can still do pre-operation, post-operation consults, teach medicine, do research, or work as a clinician while still collecting benefits. An own-occupation disability policy ensures that the income and lifestyle expected will be protected in case of an accident or illness.

What are the shortcomings of my employer’s group disability policy?

1. Taxability. Group long-term disability is often paid by for by the employer, who is deducting the premium as a business expense.  This makes the benefit paid to the employee taxable. For a typical policy that covers 60% of your salary, the actual income replacement would be significantly lower with taxes deducted.

2. Group maximums. Group long-term disability has a monthly maximum of typically $5,000 to $10,000 per month.  What good is $5,000 to $10,000 taxable benefit when you are earning $25,000 to $40,000 a month?

3 Covered earnings. What earnings are covered by group disability?  Physician’s income can come from salary, bonus, incentives, 1099, etc. Common group long-term disability covers salary only.  If you earn $150,000 in salary and $250,000 in bonus incentives, tied to RVU’s and procedures, then there would be a huge shortfall at the point of claim.  Private policies look at total compensation, not just your salary or compensation tied to one employer.

4. Ownership and portability. Group long-term disability is a certificate issued to an employee with no rights of ownership; unlike a private policy, which is a guaranteed renewable non-cancellable contract between you and the insurance company.  Your group long-term disability is tied to your employment and not portable, thus, leaving you uninsured when you leave that job.  The group long-term disability plan coverage or cost can be modified or even be canceled by the employer or insurance carrier.

5. Offsets and restrictions. The majority of group policies offer a 24-month own-occupation period, which means if you can rehab in a new occupation, the insurance company will require you to do so.  Any new earned income, social security, benefits, settlement proceeds, or judgment awards will offset your group long-term disability benefit payouts.

Can I get disability insurance if I’m not perfectly healthy?

The first step in this process is to engage an independent broker who specializes in disability insurance.  An independent broker will have the skillset, experience, and relationships with insurance companies to be able to shop your coverage and negotiate the best outcome for you.  This process may involve having you evaluated by several insurance companies.  For example, if you had a history of back injury or disc disease, most companies tend to give you a full spine exclusion, but an experienced broker can advocate on your behalf and get the insurance company to exclude the specific area of your spine, i.e., lumbar spine but get them to cover your cervical and thoracic spine.

Even if your policy is issued at onset with an exclusion or modification, you can file an appeal in two or more years (as long as the exclusion is not permanent).  If you can demonstrate significant improvement in your condition, if your medical problem has been eliminated, or enough time has gone by that an insurance company is convinced that the medical problem will not recur, the carriers can/may remove the exclusion.

What types of claims are there?

There are two types of claims.  ERISA based policies vs. non-ERISA policies. ERISA disability plans lead to claims being denied far more often. Depending on the type of policy you have, the legal remediation process can be very different. Typically, ERISA claims are adjudicated in federal courts with a judge vs. non-ERISA claims, which can get jury trials.  ERISA only allows back benefits (no pain and suffering) and usually don’t pay your court costs also.  In most fully underwritten policies, at point of claim, they will request full financial documentation, i.e. tax returns, W-2s, pay stubs, and employment contracts.  They also look at your CPT billing codes, 12 months rolling, to determine if your specialty own occupation is supported by your attending physicians and specialists’ records.  Mainly, a majority of the delays that occur are in securing all detailed medical records and transcripts, as you are relying on your doctor’s office (and a third party like copying services) to get all the records.  The more thorough the documentation you provide, the quicker your claim will be approved.

What mistakes do doctors make when buying disability insurance?

1. Buying a plan through an agent. Agents are subsidized and incentivized by insurance companies.  In return, agents are obligated to sell products for that insurance company, irrespective of the client’s best interest.  An independent broker serves their clients’ best interests, not the insurance companies’.

2. Focusing too much on cost. Many physicians shopping for coverage focus too much on low cost, instead of attaining comprehensive coverage. Removing the own-occupation rider or the partial/residual disability rider is not worth the cheaper premium, because the conditions to file a claim are so much more limited that they end up paying for coverage they will never qualify for.

3. Waiting too long to apply. Don’t wait until you graduate residency/fellowship to apply in order to save money. Many individual disability carriers offer deep discounts for residents and fellows. These discounts often lock in for any increases in the future.  In addition, residents and fellows are offered coverage without a physical exam or blood testing.  As an attending physician, often a small policy will require blood, urine, and paramedical exam.

4. Waiting until something happens to buy a plan. Policies are issued based on medical underwriting.  Once you are issued a policy, it cannot be taken away or repriced, even if your health changes.  If you wait to buy a policy after you are symptomatic, chances are you will likely end up with one or more exclusions, along with modifications of benefits.

Bob Bhayani is managing partner,

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