The decision to purchase individual disability insurance should be examined carefully with cost being only one determining factor.
Having seen the effects of individuals stricken by disabilities, physicians know the importance of planning for the worst. While preparing for the possibility of being unable to perform your duties may see morbid, doing so is a smart, proactive step.
The need for benefits
In the first article, we used Dr. Physician as an example as he decides to explore the idea of purchasing disability insurance so that he is covered in case his ability to practice ceases or is greatly reduced.
Dr. Physician accepts the offered policy for own occupation and makes annual payments. A few years pass and Dr. Physician begins to experience neck and shoulder pain with numbness to the hands. Dr. Physician visits his colleague, Dr. Ortho, who obtains cervical X-rays and a MRI indicating disc degeneration and herniation, spondylosis with arthrosis, and IVF encroachment. Then, Dr. Neuro, after performing an EMG and NCV, determines cervical nerve root compression and sensory changes with positive results for carpel tunnel syndrome. Strengthening exercises, work modification, utilizing proper body mechanics while working with patients, chiropractic manipulation, physical therapy, medication for pain, acupuncture, deep tissue massage, etc., are suggested by the assorted healthcare providers.
Many, if not all of the suggestions, are followed by Dr. Physician. Unfortunately, symptoms become more pronounced and problematic, and Dr. Physician finds it increasingly difficult to practice. After consultation with the assorted providers, he decides it is time to prepare for an exit from practice and file a claim for disability.
Knowing the policy purchased was for an own occupation, the plan is to file a claim, have the elimination period begin, and receive his policy benefits thereafter. But will Dr. Physician actually receive this benefit?
Understanding the process and pitfalls
Realizing the condition is not something that is likely to get better, Dr. Physician begins the claim process, providing “Notice of Claim” to the insurer, and requesting the claim materials, which will likely include a request for an Attending Physician Support Statement, a claimant statement, an occupational description and an authorization permitting the insurer access to a myriad of types of information, including medical, financial, credit, banking, and other collateral sources of information.
Each of the claim filing materials is fraught with potential damage to a claim. It is of paramount significance to the success of a claim to have the treating physician supportive of the claim. In order to effectively secure such support, an insured should make sure that the treating physician has an appreciation for the duties of one’s occupation, as it is often that even doctors are unfamiliar with what is required to be considered disabled under various insurance policies. It is wise to provide the treating physician with an articulation of the duties of one’s occupation. In the case of Dr. Physician, it is important he provides the treating doctor with a robust understanding of the physical rigors of his occupation, so the treating physician can appreciate what the specific occupational limitations will cover.
For the claimant portion of the filing, it is important to be able to provide information concerning the occupation, as well as the physical limitations the condition is causing, and relating it to how and why Dr. Physician is impaired in the ability to continue working as a doctor. Many times, the claim forms are presented in such a way as to try to limit the ability to truly and meaningfully express what the occupation really requires. In those situations, it is often wise to create one’s own occupational description, rather than work off of the form provided.
In some instances, insurers may look to challenge a doctor’s occupation, potentially taking the position that they have a “dual” occupation — potentially as both a physician, as well as administrator, if their work duties support this analysis. Most often, this occurs where an insured has numerous offices, with associate providers working there, and where the insured is handling a myriad of administrative functions. Another instance could be where an insured also creates a wellness facility and provides other types of wellness beyond allopathic care, and the insurer takes the position that there is a “dual” occupation.
Often, it is wise to consider limiting the scope of one’s authorization, to limit the breadth of the authorization, and potentially only permit the insurer to have written contact only with the treating physicians. Otherwise, an insured like Dr. Physician could be subjected to a random call from the insurer’s doctor to Dr. Physician’s treating physicians, who might be caught off guard or be unprepared, and could provide information that might harm the success of the claim.
Careful thought must be given to each aspect of the claim filing—and materials to be provided. As another example, despite one’s income often not being part of the claim process, many insurers will seek an insured’s tax returns for several years prior to the claim filing. For what purpose? Many times, an insurer is looking to see whether the insured is ceasing practice due to choice, rather than disability, and will try to support such a position through a financial analysis.
Where an insured is seeking a claim for partial disability, or residual disability as it is often called, an insurer will be entitled to access tax returns, as it will in fact become a financial calculation for whether and how much an insured is entitled to benefits.
Careful consideration should be given to engaging a professional to assist with the filing of one’s disability insurance claim. Attorneys familiar with these issues are likely to spot issues before they become problems. After all, the insurers have professionals reviewing these claims—why shouldn’t you?
It’s all about the planning
Financial planning and working with knowledgeable fiduciary professionals (i.e. CFP, CPA, attorney, etc.) should be an integral part of your overall financial approach and needs. A thorough analysis of assets vs. liabilities (net worth and accessible liquid assets) allows for an objective decision of what pieces of the puzzle need to be addressed and in what priority.
As important as drafting a will and purchasing life insurance to protect your loved ones, preparing for retirement from early on is smart. Even a few dollars saved weekly will accumulate over time if invested judiciously. The advent of a detrimental event with potential disability and early retirement can be devastating if plans are not in place prior to any such occurrence—preparing for the unexpected is shrewd. The necessity to prematurely access retirement funds—401(k), IRA, Keogh, SIMPLE, savings, etc.—can adversely affect long-term goals and carry hefty tax consequences.
For some, being self insured may be plausible, but reality demonstrates that, for most, this is not likely. The use of insurance and sharing or transferring risk may be a prudent and practical decision to obtain necessary and desired benefits. The decision to purchase individual disability insurance should be examined carefully with cost being only one determining factor.
When a patient visits you, a comprehensive examination is performed and necessary tests obtained before a decision is made on how to best proceed with care. Your financial health is as important.
As a professional, you should expect this and more!
H. William Wolfson, DC, FICC, MS, MPAS is a financial consultant and advisor. After passing the rigorous Certified Financial Planner examination, Dr. Wolfson obtained a Master of Science in Personal Financial Planning from the College for Financial Planning. He was subsequently awarded by the College a Master Planner Advanced Studies. Dr. Wolfson is a member of the Financial Planning Association (FPA). Dr. Wolfson retired after 27 years of active practice and remains active volunteering his expertise to the continued education and success of professional colleagues and investors. Dr. Wolfson may be contacted at firstname.lastname@example.org.
Jason Newfield, Esq., is an advocate, litigator, negotiator, and practicing attorney in Garden City, NY. Jason has spent the past 13 years handling disability insurance claims on behalf of healthcare providers, especially medical physicians, doctors of chiropractic, other professionals and individuals. His firm represents clients throughout the United States. He is a founding partner of Frankel & Newfield, P.C., founded in 2004, and dedicated to protecting insured’s pursuing their disability insurance claims. He graduated from Hofstra Law School, where he was a member of the Hofstra Law Review. Jason can be reached at email@example.com or (516) 222-1600.