How Does Disability Insurance Work for Physicians?

Reports from the USA and Canada show that two to five percent of career-grade doctors become ill or disabled later in their careers.

This may be a small percentage, but it’s still a possibility for many doctors.

As a physician, your most valuable asset lies in your earning potential. However, what if your income stops due to illness or injury?

If you’re considering investing in disability insurance, this guide covers how it works and helps you determine if you should get one.

What You Should Know About Disability Insurance

Disability insurance is an insurance product that provides income if you can no longer work due to illness or disability.

You can use this monthly benefit to cover your living expenses, such as rent, utilities, mortgage payments, student loans, personal loans, childcare, and more.

Types of Disability Policies

Explore the three types of disability policies you can get and see which suits your needs and budget.

Short-Term Disability Insurance

Short-term disability coverage provides income if you incur temporary disability or illness for a short period. The typical benefit period lasts three to six months or more, depending on the policy.

Short-term policies aim to replace 60 to 80 percent of your income and usually provide benefits an average of two weeks after the date of disability.

Most employers provide this type of insurance as part of their employee benefits package or as a voluntary benefit.

Consider this if your employer offers it and if you have no budget yet to pay for the monthly premium of a long-term policy.

Long-Term Disability Insurance

Similarly, long-term disability policies cover a portion of your income after incurring severe or permanent injury, disability, or illness to help you maintain your standard of living.

Its differences with short-term policies include:

• A longer benefit period (e.g. the entire duration of your disability or until you reach retirement age)
• Doesn’t cover pre-existing conditions

Consider getting a long-term policy if you have a high chance of incurring disability in your workplace or lifestyle, and if you can afford the high premium.

Social Security Disability Insurance

The government offers disability insurance benefits to certain people who have a medical condition or disability that lasts at least one year or more. The amount you receive from the SSA depends on how long you worked and your earnings.

You’re eligible to apply if:

• You worked jobs under Social Security.
• You have a condition that meets the SSA’s definition of disability.

Disability Insurance Features

An insurance company provides the following basic features for short- and long-term disability policies. Understanding each term can help you choose the right policy for you.

• Insurance Premium: It’s the amount you (or your employer) pay for the policy, based on your type and length of coverage, health, benefit amount, and other factors.
• Benefit: It’s the amount you receive monthly. You may receive 60 to 80 percent of your monthly income.
• Benefit Period: It refers to how long you can receive benefits.
• Waiting Period: It’s the gap between becoming injured or disabled and receiving your benefits. Some also call it an elimination period.

What Counts as a Disability?

Companies define disability insurance policies differently. Check out these types of disability insurance plans for doctors to help you understand the scope or coverage of a plan before committing to one.

• Own-Occupation: An own-occupation definition of disability provides monthly disability benefits if you can no longer work within your medical specialty. You must be currently working in your field to claim this benefit.
• Specialty-Specific Own-Occupation: In this plan, you’re considered disabled if you can no longer practice your medical specialty but can work in other fields, like in urgent care or at a clinic.
• Transitional Own-Occupation: With this plan, you’ll receive benefits if you can’t work in your specialty, but benefits may be reduced if income from your new profession exceeds what you earned previously.
• Modified Own-Occupation: Your provider provides full disability benefits if you can no longer work in your original role and an alternative medical job.
• Any Occupation: You receive benefits if you can no longer work in any job and field.

You should also check the conditions covered by the plan. Some disability or illness examples that short-term disability insurance covers include:

• Severe illness that impacts your ability to function at work, such as stroke, heart attack, and cancer
• Accidental injuries that can make you immobile, like head traumas, broken bones, and musculoskeletal issues
• Recovery from a complicated or uncomplicated pregnancy and childbirth
• Recovery from surgery and rehabilitation
• Mental health conditions, like depression, stress, or anxiety

Meanwhile, long-term disability insurance covers the following disabilities, illnesses, and conditions:

• Severe back injury due to accident
• Extended recovery periods following major surgeries
• Injury resulting in chronic pain or loss of limb
• Intensive inpatient or outpatient treatment for a mental health condition
• Severely reduced or impaired motor function
• A condition that makes it difficult to work full-time

How Disability Insurance Works for Physicians

Getting insurance for disability prevents possible lost income in the future. If you want to invest in this type of insurance, here’s a step-by-step guide on how it works, from submitting your application to claiming your benefits.

1. Apply for a Disability Insurance

You can apply for a disability policy in different ways. These include:

• Through Your Employer: Your hospital or clinic may already have a disability group plan, where they pay all or a portion of the premium. If it’s not part of your employee benefits package, you can tell your employer you want to get one, if they offer this plan.
  
  Note that you will no longer be covered if you leave your employer since the insurance is tied to the company.
• Through an Agent or Provider: Look for agents or companies that offer custom disability plans for doctors. You can search online or ask colleagues for referrals.Be ready to provide your medical history and other legal information for your application.You can get short-term or long-term individual disability insurance if you’re self-employed or you prefer a separate policy aside from your employer’s insurance plan. Also, consider getting a private disability policy if your employer doesn’t offer disability insurance or the coverage isn’t enough for you.
• Through the SSA: You can apply through the SSA online through their website or their toll-free number: 1-800-772-1213.
  
  You should apply for Social Security Disability Insurance as soon as you become disabled since they have a five-month waiting period before receiving benefit payments. Ensure you are eligible for this plan by checking the SSA’s definition of disability.

While it helps to research options beforehand, make sure to thoroughly discuss coverage details with your employer, agent, or the relevant government agency before making a decision.

Also, ask for quotes from multiple agents or carriers before committing.

2. Pay the Monthly Premium

Disability insurance costs vary depending on age, gender, occupation, practice location, benefit length, benefit amount, and additional riders. However, policyholders typically pay between one to three percent of their annual salary.

If you’re a physician earning an average salary of $350,000, you will pay between $290 and $900 monthly.

Note that the cost is higher for those with existing medical conditions, abnormalities in their bloodwork and medical examination, and poor lifestyles like excessive smoking and drinking.

The premium also increases for high-risk specialties, such as those performing surgery or interventional procedures.

3. Gather Documents and File a Disability Insurance Claim

In the unfortunate event that you become disabled, you need to file a disability insurance claim within the specified period in your plan, which is usually 20 to 30 days after your diagnosis or injury.

Before filing, gather copies of medical records and documents from your doctor, such as:

• Medical history
• Test results
• Lab reports
• MRI or X-ray reports
• Physician notes from appointments to the diagnosis
• Statement letter from doctor to verify your diagnosis and inability to work

Review your plan, and see the requirements your provider needs to file the claim successfully. File your claim immediately, regardless of your elimination period, to ensure timely processing and avoid risking claim denial.

After collecting requirements and documents, contact your agent or visit your provider’s online portal to file a claim. You must file various forms to complete your application.

When your claim is accepted, you will receive monthly benefits according to the terms specified in your policy. Long-term policy periods include 2, 5, or 10 years or until the age of 65 or 67.

If you believe your provider denies your claim unfairly, you must file an appeal immediately and seek help from your attorney or financial advisor.

Frequently Asked Questions

Is Disability Insurance Tax Deductible?

In most cases, individual policies are not taxable since they’re often paid with post-tax dollars and pay out tax-free dollars. However, you may deduct the insurance premium on your tax return if you’re a self-employed doctor. Consider consulting a financial tax expert to be sure.

Are Disability Insurance Discounts Available for Doctors?

Some providers offer disability insurance discounts for doctors, such as student, resident, or fellow discounts, unisex discounts, multi-life institution discounts, association discounts, and Guaranteed Standard Issue (GSI) discounts.

Is Disability Insurance a Good Investment for Physicians?

There are many reasons doctors need disability benefits, such as protecting their future income. Generally, a disability insurance plan is a good investment if:

• You don’t have enough savings or emergency funds if you can’t work temporarily
• You have dependents who rely on you financially
• You’re likely experiencing illness, injury, or disability in your occupation
• You qualify for federal, state, or local-mandated disability or medical assistance programs

Ultimately, know your purpose to ensure this will be a good investment for you and your loved ones.

Plan Your Future with Physicians Thrive

Doctors have complex needs, so finding the right disability insurance plan can be challenging. Consider working with a financial firm like Physicians Thrive to plan and secure your future.

Physicians Thrive offers financial services catered to doctors’ needs, from managing student loans and handling their personal finances to investing in properties and preparing for retirement.

If you want to know how to build and protect your wealth, connect with Physicians Thrive Experts today!