Disability Insurance: Physicians Beware of the Own Occupation


My previous article examined long-term disability insurance (LTD) and its value to the group medical practice, discussing the importance of the definition of disability and the “Own Occupation” definition.
 
Generally under the Own Occupation definition, an employee, physician or otherwise, is deemed disabled as long as he or she is unable to perform the job he or she was performing the date the disability began. Definitions vary slightly from carrier to carrier, and some word choices can make a huge difference in interpretation and practice.
 
For instance, the specific language one carrier uses says that after the expiration of the Own Occupation period, the employee is only considered disabled if she’s unable to perform the duties of an occupation for which she is “qualified or could reasonably become qualified, considering his or her education, training, experience, mental and physical abilities.”
 
Therefore, if the Own Occupation definition expires under the terms of the policy (typically in two years), there is a risk that a carrier might choose to say, “Hey, you can’t practice medicine, but we think you can certainly teach. Therefore, we no longer consider you fully disabled.” So it might make sense for a professional to choose to extend that definition from the date of disability right on through to normal retirement age.
 
However, for a line employee, it might only be necessary to have the Own Occupation definition last for two years. The typical employee who is still disabled after two years will generally be unable to return to any job and will therefore avoid the confrontation suggested above.
 
But that’s just the beginning of the linguistic games possible for an insurance company to play. You’ll recall that last time I quoted one carrier’s typical definition of disability: “… due to an Injury or Sickness the Insured Employee is unable to perform each of the Main Duties of his or her Own Occupation…” and has “…suffered a loss of income of at least 20%.”
 
There are a couple of “weasel words” in that definition that could be — and have been — used to attempt to avoid paying a claim. For example, in the definition above you’ll see the phrase, “each of the Main Duties of his or her Own Occupation.” That phrasing can be the first bump on the road to collecting a benefit.
 
Under this definition, an employee isn’t disabled unless he or she can’t do any of the main duties of the job. According to Webster, “each” means “each one” or “being one of two or more distinct” items “having a similar relation and often constituting an aggregate.”
 
For a physician with a disability that forces him or her to cut back on working 70-hour weeks, that language can present a problem. That physician can’t do one of the major duties of the job — travel or work extensively — but he or she may still be able to perform other responsibilities such as preparing treatment plans.
 
Is he or she disabled? You and I might argue yes, but the claims adjuster could argue no. After all, he or she can still perform some major duties — how can he or she totally be disabled? Their argument might make sense, but it’s rife with risk for the physician.
 
There is a way to avoid this situation. Some carriers offer a definition that inserts the word “one” in place of the word “each.” This benefits the physician because it’s much less restrictive — if you can’t do one of the major tasks of your occupation, you’re disabled. Period.
 
This avoids another linguistic loophole as well. Other carriers try to get around the “each” dilemma by saying “most;” you’re disabled if you can’t do most of your duties. But if your occupational definition (to review the definition the carrier uses, consult the US Department of Labor Dictionary of Occupational Titles) lists 10 “main duties” and you can’t do some of them, at what point are you totally disabled? Three duties? Seven?
 
The determination can seem arbitrary — one claims adjuster might say three, another seven. But by electing a “one main duty” definition, there’s no wiggle room. Can’t do one main duty? You’re disabled. Case closed. Argument over.
 
Plans with that definition are, obviously, more expensive (typically by about 10%), but for the disabled physician that cost may well be worth the price.
 
Next time, we’ll talk about what happens when you can work a little but not as much as you or your practice would like. Partial disability presents another linguistic swamp to slog through.

Part 1 | Part 3 (coming soon)
 
Jim Edholm is president and founder of BBI Benefits of Andover, Mass. BBI has been guiding Massachusetts employers to cost-effective benefit selection and design for more than a quarter century. More information is available by emailing Jim at JimEd@bbibenefits.com or calling (978) 474-4730.


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