7 Insurance Options Physicians Should Never Leave Behind

It could be Obamacare, Medicare, and Medicaid. It could be mergers and acquisitions. It could be a change in healthcare business models. But, doctors are leaving their practices in droves.

According to The New York Times Health section, “There’s little doubt that the front line of medicine, the traditional family or primary care doctor, has been under siege for years. Long hours and low pay have transformed pediatric and family practices into unattractive options for many aspiring physicians.”

Leading those problems are the complex nature and increasing cost of the insurance they must have to stay in practice.

7 insurance options physicians should never leave behind:

1. Whole or Term Life Insurance rates use your human life value as a physician. The insurance calculates your worth by multiplying the annual income after-earnings over the course of a reasonably predicted work life. For example, a 30-year old doctor might expect at least 30 more years at continued annual earnings.

Of course, this estimate is not accurate and tends to round up the value, but it is an easy way to come up with a figure.

2. Life insurance using a needs analysis measures the difference between a physician’s current financial resources and the present value of future costs.

It requires financial planning and professional input, but it results in a more accurate predictor.

3. Key-person insurance covers the lives of partners in a medical practice to fund buyouts on the death of a key partner. In a small practice, it may make more sense for partners to simply maximize insurance coverage on their own lives. But, where practices depend on the performance and reputation of one or more key partners, key-person insurance will underwrite their contribution in the event of their death.
4. Own-Occupation disability insurance defines “total disability” as “the material and substantial duties of your occupation.” The advantage to the Own-Occupation factor is the physician may seek employment in another job or different medical role.

• A “Loss of Earnings” specifically says that doctors are considered totally disabled if they are unable to perform the “material and substantial duties of their occupation, and they are not engaged in any occupation for wage or profit.” This modification of “Own Occupation” means a disabled doctor who transitions to a new job or another medical specialty will either receive no benefit or a proportionately reduced disability insurance benefit.
• “Any Occupation” considers a doctor disabled if he or she is unable to engage “in any gainful occupation that they are reasonably suited for based on education, training, work experience or other factors.” This severe restriction on benefits is usually found in group disability policies.

5. General Liability insurance is an umbrella policy that covers a medical practice for accidents that occur at the practice’s facility. A General Liability policy funds the legal costs attached to defending the medical practice business, including attorney’s fees and any settlements or judgments. General Liability will cover accidents like personal injury claims from slip and falls on the business premises, it has nothing to do with medical malpractice.
6. Medical Malpractice Insurance protects physicians when accused of malpractice. The Baylor University Medical Center Proceedings says, claims and litigation related to alleged malpractice “can require a great deal of the physician’s time and effort, can be emotionally draining, and can serve a psychological blow to the physician’s professional psyche.”

• Malpractice Occurrence coverage provides lifetime coverage for issues that occurred when the policy was in effect regardless when the claim was filed.
• Claims-Made insurance covers incidents that occurred and were reported while the doctor is insured with that carrier. The incident and the claim filing must happen while the policy is in effect.

The Journal of Ophthalmology points out, “Claims-made policies are cheaper than occurrence policies for the first several years of coverage because the potential for claims builds slowly as policy years accumulate.”

7. Doctors need Health Insurance, too. Programs fashioned for them are typical of policies available to the population at large. They can choose between HMO and PPO plans with deductibles and limits.

They do not benefit from any premium discounts, but they can cover dependents and practice employees as a group with some tax advantages despite the significant premium.

So, the costs of insurance accumulate

Still, there are providers who specialize in insurance for physicians. They point out some issues affecting the premium cost to physicians:

• Life insurance premiums are determined by life expectancy. But, disability insurance rates reflect morbidity, the likeliness of developing a chronic illness or injury. This can mean a 40 percent increase in costs for female physicians.
• Pricing reflects the type of doctor. For example, the more invasive the practice, the higher the malpractice risk. Pediatricians, family medicine, internal medicine, and psychiatry as priced lower than surgeons, anesthesiologists, and emergency medicine.

Vital benefits add to the premium rate:

• Non cancelable and guaranteed renewable language fixes and guarantees premium;
• Benefit payment periods assured to age 67;
• Own Occupation and Residual/Partial benefits to pay full or a percentage of monthly amounts if unable to perform the exact duties performed prior to a disability;
• “Specialty Specific Own Occupation” for all surgeons or interventional physicians;
• Future increase options and cost of living increase riders;
• 90-day elimination period (not 180-day) before benefits begin

And, self-insurance is no final answer

The doctors who can afford to self-insure are few and far between. Even if they have the discretionary income to fund their exposure, it may not make practical or legal sense.

Hospitals and other physicians may be reluctant to work with uninsured doctors. And, the states that cap non-economic malpractice damages may exclude physicians with inadequate coverage.

Physicians or medical practitioners must consider the value of the practice now and in its future. They must consider their vulnerability to true and fabricated claims. They must appreciate the impact of loss to their person, reputation, practice, and family.

As early as their days as interns, physicians must secure the advice and practice of the insurance and financial planning professionals who are expert in the insurance options physicians should never leave behind.