It’s safe to say that physicians don’t like risk. Evidence-based medicine strives to eliminate it. Physician practices are built to anticipate and protect against it. Despite these efforts, the business of caring for human beings is rife with risk. As a new physician, the most important thing you can do is to directly address the professional and personal exposures inherent in medical practice. Carefully selecting insurance coverage requires detailed information on options and pricing. An expert should always be consulted but we want to give you the information you need in order to ask the right questions.
Before you begin, consider how your position has changed. Professionally, you are now a full-fledged physician and that exposes you to a new level of risk. Personally, people will now believe that you are a physician who has money. People don’t care about the student debt load you carry and the general assumption has always been that physicians are wealthy. Therefore, fender benders and falls in your home may now expose you to a full-fledged liability lawsuit. Make sure you are protected.
There are no shortcuts to insurance
Various types of insurance are important and each needs to be considered separately for the specific protection they provide. They include:
- Health- coverage for you and your family
- Disability- income based coverage should you be unable to work
- Life- long term coverage
- Malpractice- mandatory for all physicians in medical practice
- Supplemental- includes catastrophic, umbrella and personal liability insurance
The majority of physicians receive health insurance benefits from their practice or hospital employer. If you are opening your own practice it may be required under the Affordable Care Act (ACA) to provide health insurance options to employees. Make sure you are well educated on the law – know the marketplace in your state, and whether or not it provides insurance options for you. If your practice employs more than 50 people the ACA requires that you provide health insurance, a requirement enforced by the IRS. The ACA and IRS websites provide details to help you determine your responsibility under the law. Insurance agencies, especially those that are mid-size or larger, have ACA experts who can help.
Regardless of how you obtain your health insurance, you will have to make decisions on:
- HMO (staunchly in-network) vs. PPO (covers approximately 70% of out of network visits)
- Coverage vs. costs- a very personal equation
- Is preventative care covered?
- Are prescriptions covered?
- Is the insurance company reputable and experienced in covering physicians?
According to the American Medical Association insurers typically provide coverage for either two-thirds of a physician’s income or the insurer’s maximum benefit amount, whichever is the lesser of the two. “This means it’s crucial to evaluate disability income protection often. As income increases, disability coverage should account for changes.” There are three types of disability insurance and the AMA provides the pros and cons of each:
Group coverage offered through an employer (73% of physicians report receiving this benefit):
- Usually the least expensive option
- Coverage doesn’t move from employer to employer
- Not custom to physicians
- Benefit amounts are limited
Coverage offered through an association or affinity group:
- Buying power of the group means good rates
- Coverage will be specific to physician needs
- Allows coverage to move from employer to employer
- Often offers higher benefit amounts that are not taxed
- Can be more difficult to purchase
- Sometimes options to add to the coverage are limited
Individual coverage offered through agents:
- Usually the most expensive
- Offers the highest benefit amounts, flexibility in additional coverage options
- Specialty-specific definitions of disability are available.
- Can move with you from employer to employer
- It is the hardest to purchase; underwriting is required
The best advice is to make sure you have it. You can change the levels of life insurance coverage as you build your career; lowest cost premiums at the outset, higher premiums as you need more protection for your practice and your family. The American Medical Association reports that 76% of physicians have life insurance through their employer. If that is not the case for you, consult an expert for your specific needs.
The American Medical Association reports that nearly all employed physicians have malpractice insurance coverage through their employer. That’s a good thing, because even though premiums seem to be dropping slightly, malpractice insurance was reported by Medical Economics Magazine as one of the Top 15 Challenges facing new doctors in 2015. (Given the state of healthcare today we would hazard a guess that did not change in 2016.)
The magazine quotes a 2014 report from risk management consultant, Aon Risk Solutions, that says, “Florida ($7,920) has the highest projected loss rates for 2015 at $7,920, while Indiana, ($800) and Minnesota ($770) have the lowest. Premium prices have been holding steady for several years. The median level of annual premiums paid by family/general practitioners in 2013 was $11,900, unchanged from the prior two years. Since 2009, median annual premiums for family/general physicians have dropped by 5.8%, and premiums for internal medicine practitioners have come down by 11.7%, driven largely by greater competition.”
Supplemental Insurance including Catastrophic, Umbrella, and Personal Liability
Once you address your own particular set of insurance needs, you will be ready to practice medicine as a protected professional. The additional insurance coverage you may want to consider includes:
- Long-term care expenses. Surveys show that many physicians worry about this type of health insurance. Coverage needs to be purchased at a level that meets your personal concern.
- Umbrella insurance will cover personal liability for mishaps in your home that hold the potential to turn acquaintances into “large financial settlement seekers”.
- Catastrophic coverage comes with low premiums and a large deductible. It is designed to protect the insured during a specified, major health event during a specific period of time.
Ensuring a Solid Start to Your Career
You have planned, studied, sacrificed and succeeded. You are now a physician ready to build a solid, long-term practice. Insurance is an important tool and solid strategy with which to protect yourself now that you finally have the opportunity to do what you love- practice medicine.