disability insurance case design

Physicians who practice a particular specialty are still general physicians who qualify to work in multiple areas of medicine.

For example, Dr. Smith is an orthopedic surgeon in a group practice. She also spends one day each week as a staff physician in her local hospital’s Emergency Room (ER) department. Although earning far more in the surgeon role, she enjoys the variety of challenges presented in ER.

Dr. Smith’s work is billed in both locations using Current Procedural Technology (CPT) codes. These are the standard tracking numbers assigned to each task and service performed by a healthcare provider. Insurance companies use them to determine how much to pay the provider.

But in the case of a disability claim by a physician, those CPT codes can make a huge difference in their benefits.

When a Disability Occurs

Let’s say Dr. Smith suffers a significant nerve injury to one hand while out hiking. Performing surgery is expected to be out of the question for at least 12-18 months, although she will be able to handle the responsibilities of the ER job within 6-9 months.

She has Long Term Disability (LTD) coverage through the ER hospital’s group plan. She also has an individual disability insurance (IDI) policy.

If filed through the group LTD plan, benefits will be based on her occupational job title at the hospital. In other words, they will depend on her earnings as an ER staff physician and when she can return to that job.

If the claim is filed through her IDI, the carrier will pull records of her billings and the CPT codes on which they are based. Since the majority will relate to surgical procedures, benefits will be based on when she can return to performing surgery. Benefits will also be calculated on her higher earnings level as a surgeon.

Needless to say, Dr. Smith wants to file that claim under her IDI, exercising her “own occupation” as a surgeon. This will pay out the highest dollar amount for the most extended period.

And if she wants to, she will be able to resume working in ER while continuing to receive her disability benefits as a surgeon.

Yes, it’s a “double dip,” but one that’s perfectly legal and allowed under the terms of her coverage.

Lesson for Brokers

Although you still want to sell LTD to a doctor’s group, this scenario demonstrates why you also want to add IDI in a layer of executive benefits for high earners (see our blog on IRS Section 162).

Don’t overinflate the group. Keep the LTD at a base level that works for most group employees and then make the “executive” benefits rich.

In this way, you are helping high-earning physicians with intricate, complex job descriptions get the maximum return if a disability occurs.

For more information on Individual Disability Insurance and help create the right protection package for your clients, contact Disability Insurance Services at (800) 898-9641 or Request A Quote.

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