Uh Oh! Dangers in Your Disability Policy

Debra A. Shute


July 24, 2019

Unlike group policies, individual disability policies are portable, meaning that they remain intact as long as the physician continues to pay the premiums, regardless of where he or she works. This is good news for physicians in general. Yet there's a caveat: When it comes to own-occupation coverage, the physician's duties and activities must still fall under that occupation at the time a disability claim is made, warns Evan S. Schwartz, Esq, a New York-based attorney and frequent speaker on insurance claims and litigation.

"If they were insured as a surgeon, the insurer will evaluate their level of activity as a surgeon. If they are engaging in a lot of nonsurgical orthopedics, for example, and doing it at a sufficient level to make up a sufficient part of their income, they might not be a surgeon from the eyes of the insurance company," he says. The same concept applies to own-occupation coverage in any specialty.

"It's not uncommon today for insurance companies to conduct a very in-depth contestability review when they receive a claim," Schwartz adds. This includes examining a physician's Current Procedural Terminology code billing to ensure that the physician was making his or her living performing the occupation on the policy at the time it was triggered.

Can Physicians Get Disability Benefits if Partially Disabled?

Physicians should think about getting partial or residual disability coverage because it provides benefits for someone who is not totally disabled but has lost at least 20% of his or her income due to illness or injury. It may or may not be included in a group policy, and it is available for an added premium cost for individual policies.

Consider, for example, a family physician with a disc herniation causing extreme back pain. The doctor can still practice, but on a scaled-back basis, such as by working fewer days per week or hours per day. As a result, the physician sees fewer patients and generates less income.

By itself, own-occupation coverage pays nothing under that scenario, explains Keller. "Even if you're down to working a half day a week and have a 90% loss of income, own-occupation [insurance] doesn't protect loss of income. And if, for example, you're still working as a surgeon, as you were before, you get zero."

"By adding the residual benefit, the disability no longer has to be all or nothing," he adds, noting that residual benefits are generally paid proportionate to loss of income.

A frequently available add-on to residual coverage is what's known as a recovery benefit, which pays for the continued loss of income once a physician returns to work but still has to rebuild a patient panel and referral base. "If the loss of income is demonstrably linked to the physician's prior disability, the insurance companies will continue to pay for that loss of income. Even though [the physician is] no longer sick, [his or her] income still is," says Keller.

Again, because of the higher scrutiny physicians face these days during the claims process, Schwartz recommends that physicians make sure "documentation of deterioration" is included in their medical records.

"I can work a lot of magic on a long-term disability claim, but without proper medical support, I've got real problems," says Schwartz. "The records must reflect a deterioration of your condition. If you've been going to the doctor over the course of three years and complaining of more or worsening symptoms, and the doctor hasn't been recording that in the chart, it's going to be harder for you to get paid."

How Do Disability Policies Treat Behavioral Health?

If a policy does offer any coverage for mental, nervous, or substance abuse disorders, the benefit is likely to be limited to 24 months. There may be buy-up options in some cases, but for clinicians with a statistically high risk of claims related to stress and burnout—including emergency medicine physicians, anesthesiologists, certified registered nurse anesthetists, and pain physicians—limits are mandatory.

There are exceptions, however. "If you have a condition that first and foremost prevents you from doing your job, such as dementia, multiple sclerosis, or Parkinson's—and secondary to that you are depressed—that limitation is not going to be invoked," Keller says.


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