Full Guide to Own Occupation Disability

Of all the topics they don’t cover in medical school, managing your own insurance policies is the one most likely to haunt you later on.

It’s an innocent oversight we see time and time again.

New physicians, still on cloud nine and ready to plunge into their careers, agree to their employer’s default group insurance plan without hesitation.

They put that monthly insurance premium on auto-pay and forget about it.

…until the unexpected happens.

A disability keeps a lifelong physician away from the exam room, and their employer’s disability policy makes claiming benefits nearly impossible.

Own-occupation disability is quickly becoming a more affordable, practical, and worthwhile option for physicians across every specialty.

But is it the right choice for you?

Here’s our full guide to own-occupation disability:


Own-Occupation Definition

Own-occupation disability insurance, sometimes referred to as “true own-occupation insurance,” isn’t typically offered through your employer but instead sourced from an independent insurance carrier.

These policies will protect your earnings if you suffer an injury or illness that interferes with your ability to perform the material duties in your medical specialty.

Generally, these disability policies are more reliable and without the gaps that leave you exposed in standard employer-provided policies.

Own-occupation disability insurance:

Isn’t dependent on employment

These policies will “follow” you throughout your career and offer consistent coverage, regardless of your current hospital or medical group.

May allow you to pursue alternative careers as you recover

While your disability prevents you from performing your regular job duties, you may still receive benefits while working another job (i.e., teaching at a medical school, doing research, administration or consulting). However, this only applies if your policy uses the true own-occupation definition.

Is better tailored toward your specialty

Unlike traditional group disability insurance plans, which are one-size-fits-all for the entire organization, your own-occupation policy will offer wider coverage for the duties required in your specialty.

Related reading: Disability Insurance Terms


How Do Insurers Define “Disability”?

Doctor using tablet computer

Own-occupation insurance will protect you when a disability keeps you out of the operating room or physicians’ office for the time being.

Yet, that raises an important question:

What fits the definition of disability?

Insurance providers are particular about the language they use in their policies to avoid untied loose ends and legal vulnerabilities.

So with an own-occupation policy, the benefits depend on your ability to perform your “own occupation.”

Your disability could be either “partial” or “total.” The benefits you’re entitled to could depend on your specialty.

What Is Partial Disability?

A partial disability is one that prevents you from doing some tasks related to your job.

In other words, an emergency physician with a back injury may be unable to lift patients from a gurney but is still able to create treatment plans.

What Is Total Disability?

A total disability leaves you unable to perform any material functions within your specialty.

For example, for a cardiothoracic surgeon with severe arthritis in their dominant hand, even completing paperwork could be challenging.

Partial vs. Total Disability for Own-Occupation Insurance

Fortunately, the distinction between partial and total disability creates fewer loopholes within own-occupation disability policies.

In most instances, you’re eligible to file a claim if you’re unable to perform any or all of the material duties and functions of your specialty. So you don’t have to be homebound, comatose, or unable to walk to receive benefits.

That’s the key difference between any-occupation and own-occupation policies.

Examples of Disabilities Covered By Own-Occupation Insurance

There’s no clear-cut answer for what counts as a disability, especially when comparing two different specialties.

For example, a disability or condition that could impact a psychologist may not interfere with a dermatologist, and vice versa.

So disability coverage could kick in as a result of any of the following:

  • Mental illness (i.e., PTSD, bipolar disorder, drug addiction)
  • Neurological disorders (i.e., epilepsy, multiple sclerosis, brain injury)
  • Degenerative conditions (i.e., arthritis, degenerative disc disease)
  • Physical injury (i.e., crush injuries, slipped discs, fractures)

Of course, the list above leaves plenty of what-if scenarios still undecided for particular specialties.

The “Empty Blank” of Own-Occupation Disability Insurance

For more physically demanding specialties, own-occupation disability insurance is the obvious choice.

But what about specialties like psychiatry?

Assuming you can speak and process information, isn’t a disability claim unlikely?

Here are some scenarios to consider:

  • If you have a traumatic brain injury that triggers persistent headaches, can you still see as many patients as you did before the injury?
  • Does your Crohn’s disease force you to leave mid-appointment to visit the restroom?
  • Is a newly developed hearing impairment making it difficult to hear what your patients are saying?
  • Is a cancer diagnosis causing severe mental and physical fatigue, impairing your ability to create treatment plans for patients?
  • Does a slipped disc cause such severe pain that you’re missing 25% of your shifts at the hospital?

In other words, can you provide the same level of care as you did previously? Or will continuing within your specialty put you, your co-workers, or patients at risk?


Own-Occupation vs. Other Types of Disability Insurance

A true own-occupation policy offers the most flexibility of all disability insurance policies, opening the door to additional earnings in other career paths as you continue to receive benefits.

However, it’s not the only type of policy common amongst physicians and medical professionals.

Four other types include:

Transitional Own-Occupation

A transitional own-occupation disability insurance policy will still enable you to claim benefits.

However, if you choose to pursue another paid position, the insurer will cap your monthly benefits at your previous take-home pay.

Let’s say your policy was covering $30,000 per month. If you take a job with a $10,000 monthly salary, doing so may cut your benefit amount down to $20,000.

Modified Own-Occupation (or Regular Occupation)

A modified own-occupation policy tends to be more restrictive than other disability insurance policies. So while you’ll receive benefits like a standard own-occupation policy, you need to prove that you’re totally disabled.

Many physicians turn to these policies because they offer similar benefits to true own-occupation in cases of total disability. You can receive benefits if you can no longer perform in your particular job — your regular occupation.

But if you pursue a gainful occupation elsewhere, such as hospital administration or medical writing, you would no longer be eligible for income benefits.

Any-Occupation

An any-occupation disability insurance policy leaves policyholders the most vulnerable in cases of partial disability. These policies won’t offer income benefits if you’re fit to work other jobs.

For instance, if your injury or illness doesn’t hinder a career in consulting, you could be ineligible to receive disability income.

The average any-occupation policy doesn’t consider your annual salary either, leaving many physicians to earn 50% of their previous salaries in a new position.

Employer-Provided

Employer-provided policies are the most convenient and the easiest “trap” for new physicians to fall into. Yet, their one-size-fits-all approach is hardly reliable when a disability does occur.

These disability insurance policies may:

  • be hard to qualify for initially if you already have a pre-existing disability, illness, or condition.
  • require you to switch plans repeatedly throughout your career as you transition from one employer to the next.
  • only cover 40–60% of your annual earnings (plus taxes).
  • change their wording, alter coverage, or cancel the plan.
  • not cover disabilities that’d hinder your specialty, in particular.

 


Benefits of an Own-Occupation Disability Insurance Policy

Doctor with crossed arms

Among all the available types of disability insurance, own-occupation coverage tends to be the savviest investment for physicians.

Here’s why:

It’s More Inclusive Than Any-Occupation Policies

Own-occupation disability benefits will kick in once you can no longer perform your specialty’s substantial duties.

Most plans will cover 60–80% of your income, and the average physician might dedicate 2–5% of their monthly income to insurance premiums.

In other words, an insurer will be more lenient when approving your disability claim, and you’re still entitled to a bulk of your typical income.

Young Physicians Change Employers Often

Research shows that the odds of a physician leaving their first post-residency job within five years is about 50/50. So whether it’s due to burnout, a need to relocate, or a push to earn more, young physicians change jobs quite often.

Unfortunately, not all employers offer group insurance plans, and there’s no guarantee that the plans they do offer will cover every disability in your specialty. Your own-occupation policy will remain constant and follow you.

It Guarantees Coverage When Switching Employers

The Affordable Care Act prevents health insurance companies from denying coverage to those with pre-existing conditions or disabilities.

However, not all employers are required to offer health insurance coverage, especially small hospitals and medical groups with fewer than 50 full-time employees. Own-occupation disability policies will provide coverage despite that lapse.

It’s More Predictable Than Employer-Provided Policies

When you enroll in a private disability insurance policy, both you and the insurer will sign a contract agreeing to the terms and conditions.

That leaves little dispute for:

  • when you can start receiving benefits (the waiting period).
  • the full benefit amount.
  • how long the benefits will last (the benefit period).
  • whether the insurer can suddenly cancel your coverage (this will never happen if you have a non-cancellable/guaranteed renewable policy and insurance premiums are paid on time)
  • if rates will increase after cost-of-living adjustments.

The standard group insurance policy could leave you without monthly income or coverage for months at a time, but an own-occupation policy with a traditional 90-day elimination period will not.

It Can Protect Your Income Long-Term

The greatest benefit of own-occupation disability insurance is that it offers financial protection in the case of temporary or permanent disability.

Not only can you receive benefits, but with true own-occupation insurance, you will be able to pursue alternative income elsewhere. You will not be forced to stay at home and do nothing!


How to Find the Right Own-Occupation Disability Policy

Your insurance contract may contain confusing or even misleading language that prevents you from fully understanding it.

It’s not unusual for young physicians to agree to a disability insurance policy, only to later discover that it wasn’t a “true own-occupation” policy at all.

Learn the Common Tricks and Traps

Insurance companies take advantage of those who don’t read their policies word-for-word, essentially “trapping” you in a plan that doesn’t fit your needs.

Common tricks to watch out for include:

  • Policies that switch from own-occupation to any-occupation after a set benefits period. If you aren’t able to return to your specialty within the insurance company’s timeline, you may lose your benefits entirely or be forced to find an alternative position in the meantime.
  • Improper use of the terms “own occupation.” At first glance, a policy might imply that you’re eligible for benefits once you cannot perform your own specialty’s duties. Yet, the preceding sentence may prevent disability coverage until you can’t provide all duties in your specialty.
  • Limited partial disability benefits. For degenerative disorders like Parkinson’s or osteoarthritis, you may not be able to claim your benefits until you fit the criteria for “total disability.” Until then, you might miss out on 20% or more of your income for a considerable length of time.
  • The “Coma Clause.” Insurance companies won’t affix this actual label. However, some contracts prevent you from claiming benefits unless you’re completely incapacitated.

Don’t Impulsively Choose Your Employer’s Option

Many employer-provided disability insurance policies (and even their life insurance policies) sound impressive on paper. Yet, they mirror the restrictive nature of the typical any-occupation policy.

Before agreeing to any plan, compare several policies and consider what’s important and relevant to you.

Cost is also an important factor. For own-occupation disability policies, insurance premiums also depend on other factors, like your age, health, location, and optional riders.

Learn about our Disability Insurance services to see how we can help you find the perfect policy.


Conclusion

​An own-occupation disability insurance policy offers financial protection when you can no longer perform the substantial duties of your regular occupation.

However, not all policies are the same, and physicians (especially new physicians) often fall victim to misleading terminology and incomplete coverage.

Contact Physicians Thrive today to find out what own-occupation means for your specialty.

We’ll walk you through the often complicated underwriting process and help you choose a plan tailored to your needs.

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