What Doctors and Dentists Need to Know About Disability Insurance

If I am a Doctor or Dentist should I be concerned about acquiring disability insurance?

Author: Attorney Lonnie Roach

Everyone needs to consider how a debilitating injury or illness would impact their income and their family. One in three physicians will experience a disability at some point in their life and there is a 40% chance the disability will last seven years or more.

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If a doctor becomes partially disabled and is still able to work but needs to work shorter hours, there are policies that cover a partial loss of income.

A doctor or dentist spends years building a practice and has invested time and money into their education and careers.

Their income depends on the number of patients they see and it may take years to rebuild their practice after a long absence. Patients find other doctors and referral sources send new patients to other providers.

Short-term and long-term disability insurance purchased privately or through a group provides some income protection, but choosing insurance can be complicated and confusing.

What should a doctor or dentist be aware of when purchasing a disability insurance policy?

First, doctors need to pay attention to how the insurance policy defines “disability:”

•    An “own occupation” policy states that a doctor is considered totally disabled if they are unable to perform the “material and substantial duties of your occupation.” Under this definition, a doctor who can no longer perform their job, can work in another profession and still receive full disability benefits. Some policies are very specific, defining own occupation as a particular medical specialty, such as anesthesiologist or orthopedic surgeon.
•   Modified “own-occupation” or “loss of income” policies define disability in a similar manner, but if a doctor transitions to a different specialty or medically related job, they will receive reduced benefits or no benefits.
•   An “any occupation” policy considers a doctor disabled only if they are unable to work at all, based on their education, training and work experience.

In the event a doctor becomes partially disabled, and he or she is still able to work but needs to work shorter hours, there are disability insurance policies with riders that guarantee some benefits to cover a partial loss of income.

Most insurance companies consider a doctor partially disabled when their income decreases by 15-20%.

If you have been denied disability don’t give up! Contact a Disability lawyer at 512-454-4000 for a free consultation and get the benefits you deserve.

Disability insurance benefits may or may not be taxable.

If insurance premiums are paid for with after tax dollars, benefits are not taxable. If the policy was paid for by the employer, or purchased through an employer with pre-tax dollars, benefits are taxable. In some cases, an employer will allow premiums to be taxed as ordinary income, but an employee must request a form to elect taxation of group premiums. Physicians who purchase their own disability insurance should not deduct the premiums as a business expense and pay the premiums with after-tax dollars.

As doctors build their practices, income usually increases during the first five years.

Young doctors should consider a Future Purchase Option (FPO) when reviewing disability policies. Insurance companies base benefits on current income. An FPO allows doctors to apply for additional coverage as their income increases. Insurance companies will annually send offers to increase coverage. These notices should not be ignored as the offers may expire after a certain number of notices.

Group disability insurance policies are generally cheaper and easier to obtain, but offer limited income protection for doctors.

There is no cost of living adjustment and benefits will be reduced by Social Security Disability Income benefits or benefits paid under another insurance policy. Claims for disability are evaluated based on a liberal definition of disability during the first two years of an illness or injury, but switches to “any occupation” after that. Additionally, the insurance coverage usually terminates if a physician leaves the employer and it may be difficult to purchase disability insurance if an individual has suffered an injury or illness that makes them uninsurable. Some physicians choose to supplement group disability insurance by purchasing disability insurance privately as well.

Whether you have insurance through an employer or have purchased it yourself, if you have to file a claim, disability insurance companies will use several tactics to avoid approving total disability benefits.

The company might delay approving the disability claim by repeatedly requesting information or approve residual or partial disability benefits only. The insurer may deny total disability because you continue to work, although in a different capacity than before you became ill or injured. You will also be expected to file for Social Security Disability Insurance which will offset any benefits you receive from your disability insurance policy.

Here are several guidelines for filing a disability claim.

•    File your claim as soon as you become disabled and do not quit your job.
•   Know your policy’s definition of “disabled” and “partially disabled.”
•   Understand the policy’s requirements and limitations. Know the definitions of full time and part time. Some medical conditions or pre-existing illnesses may be excluded.
•   Know deadlines and time limits for eligibility, including the waiting period, notice of claim, providing proof of loss, exhausting administrative remedies and filing suit.
•   Submit accurate medical and business records.
•   Document all communication with the insurer in writing.

While long-term disability insurance purchased by an individual is governed by state law, plans purchased through an employer are usually governed by ERISA (Employee Retirement Income Security Act).

ERISA disputes can be drawn out, requiring a claimant to exhaust all their administrative remedies before filing a federal lawsuit. These claims are litigated in federal court and can be a complex matter. An individual whose ERISA claim has been denied should consult an experienced ERISA attorney, like the attorneys at Bemis, Roach & Reed, before taking any further steps.

A resident of Montgomery worked in the healthcare industry before becoming disabled.

She underwent a Functional Capacity Evaluation that demonstrated that she only retained sedentary capacity for activity performed above the waist and less than sedentary capacity for activity below the waist. Additionally, she could not sit, stand, or walk for any extended period. This residual, physical capacity was below that required to perform any occupation. She had been adjudged totally disabled by the Social Security Administration and awarded SSDI and required significant narcotic pain medication due to her objectively documented condition.

Author: Attorney Lonnie Roach has been practicing law for over 29 years. He is Superlawyers rated by Thomson Reuters and is Top AV Preeminent® and Client Champion rated by Martindale Hubbell. Through his extensive litigation Mr. Roach obtained board certifications from the Texas Board of Legal Specialization. Lonnie is admitted to practice in the United States District Court - all Texas Districts and the U.S. Court of Appeals, Fifth Circuit. Highly experienced in Long Term Disability denials and appeals governed by the “ERISA” Mr. Roach is a member of the Texas Trial Lawyers Association, Austin Bar Association, and is a past the director of the Capital Area Trial Lawyers Association (Director 1999-2005) Mr. Roach and all the members of Bemis, Roach & Reed have been active participants in the Travis County Lawyer referral service.