The Benefit of the Benefit: Physician Disability Insurance 

  • /Reviewed by: Amy Rontal, MD
  • When one is young, healthy, and newly starting a new career as a physician, it can be too easy to overlook the need to plan for the future. However, obtaining long term (and in some cases, short term) disability insurance is crucial. These types of insurance cover you in the event you are temporarily or permanently disabled and unable to work.  

    Here are the top six facts to know about obtaining physician disability insurance:

    1. Should I obtain short term disability insurance?

    Short term disability insurance will cover you immediately in the event you are temporarily disabled and unable to work for a short amount of time (such as a few months). Many people, however, opt not to have this type of insurance as premiums tend to be fairly high and only cover a portion of your salary. Likewise, it is often recommended to have several months of salary saved for emergency purposes. Many people will start building their savings during the 6 months after graduating medical school (during the grace period before loan repayment is due), so saving a few thousand dollars during this time may make purchasing short term disability insurance unnecessary.

    2. Should I obtain longterm disability insurance (LTD)?

    Most people recommend obtaining long term disability insurance. This insurance will provide coverage in the event you are permanently disabled or disabled for a long period of time. Most LTD insurance policies kick in after 90 days or longer. The amount of coverage per month varies depending on current income and future specialty. In some instances, a health exam may be required to enroll or to increase the amount of coverage in a policy.

    3. What should I know about group LTD insurance?

    There are two major types of LTD insurance: group and private. Group insurance is the type often provided by a hospital. Premiums tend to be very affordable (for my program, it cost less than $10/month). However, the amount of coverage that can be provided tends to be lower. For instance, my program’s group would provide coverage up to 60% of my resident salary per month (so for most residents, this would provide less than $2,000/month). A major downside to most group LTD insurance is that the coverage may not stay with you once your current job or residency ends if you leave that institution. This means that if you obtain the group LTD insurance at the beginning of residency, years later at the end of residency, you may need to apply for a different private or group insurance plan. For most healthy people, this is not a problem. However, if you become ill or injured at all during residency, it could impact your ability to obtain new coverage once you have to leave that group plan.

    4. What should I know about private LTD insurance?

    The benefit to many private LTD insurance plans is that they can stay with you for life (or until the age at which coverage ends, around 70 or 75 for most plans) regardless of where you live or work. This means if you obtain coverage from a private plan at the beginning of residency, it can stay with you even after you leave residency, so if you become ill or injured during residency you wouldn’t need to worry about qualifying for new coverage at the end of residency. However, premiums tend to be much higher for private insurance plans. Additionally, many require health screenings before one it eligible to enroll or if one desires to increase the amount of coverage provided when already enrolled. In some instances, a health screening may be waived if the selected coverage is below a certain amount (such as $2,000 or less/month, depending on the plan).

    5. Are all types of disability covered?

    In short, no. It is important to look into what coverage will be provided for a specific plan. For instance, some group plans will only provide benefits in the event that you are totally disabled and unable to work in any type of career — medicine or not. So, for instance, if you are a surgeon and can no longer operate but can still work as a medical school professor, then you might not be considered disabled and would not receive benefits. Whereas other types of insurances, such as some private insurances, may cover you if you are unable to work in your specific field of medicine at all (such as surgery), even if you can work in another field (such as teaching) or even if you can still work in a different field of medicine (such as changing specialities from surgery to psychiatry).

    6. How can I obtain LTD insurance?

    Most residency programs will offer some sort of hospital provided or group insurance plan for you to enroll in if desired. Otherwise, there are several options for private  LTD insurance plans (such as through the AMA, Northwest Mutual, ect). Often, your hospital can also provide you with information about private LTD plans as well. There are many plans available for residents. It may be more difficult to obtain such coverage as a medical student, however, without a consistent income. In some circumstances, MD (or especially MD/PhD) students may be eligible for a lower amount of coverage.