Group Disability Insurance: What Every Attending Physician Should Know
Hospitals and Larger health facilities commonly offer attending physicians a Group Disability Insurance Policy as part of their benefits package. While employer sponsored insurance is a convenient way to obtain coverage, ensuring that it adequately protects your physical and intellectual skillset acquired through years of training is critical. This article defines Group Disability Insurance Policy by identifying the quality, quantity, and advantages of a general group policy.
What Is Group Disability Insurance?
A traditional Disability Insurance policy is a form of insurance that covers the insured when experiencing, “most injuries or illnesses that prevent or limit people from working”1. When a disability is claimed, the insurance provides a monthly benefit meant to replace the lost income while out of work. A group disability policy functions in the same fashion, although only offers the attending a certificate of insurance for coverage without the opportunity to be the policyowner.
Several policy elements comprise the function of a typical disability policy. For instance, all disability policies instate a waiting period, or a set amount of time after filing a claim that the insured does not receive payments. The average waiting period is 90 days but can be adjusted in a personal policy2. Similarly, policies often provide short-term or long-term benefit lengths. Short-term policies offer income benefits for an average of three-to-six months2. Long-term policies offer benefits within a specific year range, such as 2-years, 5-years, 10-years, or until retirement2. However, attendings covered by a group disability policy most commonly have no control over these elements; the employer retains the right as the policyowner to decide how to build the coverage.
What—And Who—Does Group Disability Insurance Cover?
Most attending physicians, regardless of health, qualify for group disability policies because group policies are considered guaranteed insurance; little to no underwriting is required to qualify3.
In terms of claim coverage, group policies typically follow a stricter definition of “disability.”3 This narrows the opportunity for a claim to qualify for benefits, putting physicians at risk of being underinsured. Additionally, group policies typically do not allow additional riders such as the “Own Occupation” rider. This rider is essential for attending physicians to protect their current income, even if they can work another job that pays less.
Finally, as an employee benefit, coverage is contingent on employment with the company. If the physician were to leave their employer, or start their own practice, the coverage would simply end4.
How Much Coverage Do I Have with Group Disability Insurance?
A typical private Disability Insurance policy offers a monthly benefit similar or equal to an attending’s income after taxes. Group Disability Insurance also offers a comparable percentage of monthly income, but many instate an income cap, leaving many employees who earn above that cap underinsured. Similarly, because the group policy premiums are employer-paid, benefits are taxable. This leaves employees receiving a monthly benefit amount similar to paying taxes twice4.
What Role Can Disability Insurance Play In My Protection Plan?
Group Disability Insurance can be a simple, convenient, and inexpensive way to obtain income protection. While it may have its limitations, understanding where a policy can leave an employee under-insured can maximize their benefit when added to a personal, comprehensive protection strategy.
Author: Andrew Pelletier
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