Today, I would like to focus on what I believe to be the most important part of any physician disability policy: how is total disability defined?
To put it simply, what would need to happen in order for you to receive (and continue receiving) benefits under your disability policy, and what are the terms and conditions that must be met in order for you to get paid? This is where things can get tricky.
Medical Association Disability Policies
Under most medical association plans, a typical definition of total physician disability may read:
“We will consider you totally disabled if an injury or sickness prevents you from performing the substantial and material duties of your occupation. Your occupation is what you were doing at the time a disability beings. After benefits have been paid to you for 60 months, we will consider you totally disabled IF you cannot perform any reasonable occupation based on your education, training, or experience.”
This is where the underwriting carrier of a medical association plan can “manipulate” your income benefits. If they feel, in their medical opinion (which conveniently comes from an employee of the insurance company) that you can indeed perform a “reasonable” occupation based on your education, training, or experience, then you are no longer considered “totally” disabled – they may still pay you “partial” benefits based on a very complicated formula. The biggest issue with this type of policy is that it takes away the decision from you.
Private Physician Disability Insurance
Make sure the choice to work or to work in another occupation is yours!
A private physician disability insurance (i.e. individual physician disability insurance) definition of total disability differs dramatically from a Medical Association carrier’s definition. Assuming you have wisely purchased an Own Occupation definition of disability policy, the carrier does not have the flexibility that a medical association carrier does.
The private carrier cannot come back to you either during the first 60 months of benefits OR afterwards and assume you can go work in a “reasonable” occupation. It is your own choice to work in another occupation, or to not work. If you choose to work in another occupation, you will not be penalized or have your benefits reduced — again, assuming you have the own occupation definition of disability.
Let’s consider the scenario where a surgeon, let’s call him John, develops a disability- a motor neuron disease in his dominant hand. Depending on the severity of the disease, this can render John incapable of performing his skillful duties as a surgeon indefinitely. However, the medical association’s insurance provider could consider John fully capable of doing something else in an occupation within the medical field, based on John’s background, experience, education and training.
In other words, when the 60 months of disability expire, John may no longer be eligible for full disability benefits. This is very problematic, especially if John cannot find the work that the insurance carrier expects him to be able to perform.
A private disability insurance provider, on the other hand, can put the choice of whether or not you begin a new career in your own hands. In this example, IF John CHOSE to work in any other capacity, medically related or otherwise, then that is his right to do so, and the carrier cannot penalize him or reduce his benefits just because he chooses to work or not. Furthermore, whatever he decides, he can still receive his full regular monthly benefit through the life of his policy, no if’s and’s or but’s.
Probability and Disability Policies
To the insurance carriers, it’s just a numbers game.
It is important to remember that insurance carriers are not benevolent. To them it’s a numbers game. For instance, consider the same surgeon, except now he specializes in micro discectomy surgeries. John now wears a 20-pound scope (needed for surgeries) on his head and his neck is bent at an angle 9 hours a day. While it doesn’t seem like much at first, in the long run it will have drastic wear and tear on his neck, upper and lower back, potentially leading to a bulging or herniated disc. This type of injury accounts for over 20% of disability insurance claims. Conveniently (inconveniently for you), medical association plans typically have a 2-year max benefit on musculoskeletal issues…a numbers game. You wouldn’t get car insurance policy that excluded accidents with teenagers, but a car insurance provider might require this if you lived by a high school.
When you are choosing your physician disability policy ask yourself this:
“If I had my medical gift and skill set taken from me through an injury or disease, would I want to control how much I get paid monthly, or would I want the insurance carrier to dictate that to me?”
It is as simple as that.