Coverage Evolves To Meet New Risks
By Betsy Kelley
OMIC Underwriting Manager
Digest, Summer 1999
Technological advances, demographic shifts, and socioeconomic forces over the past decade have brought about profound changes in the practice of ophthalmology and the resulting liability exposure. Through the years, OMIC has responsibly modified its coverage features and liability limits to meet these changes.
Refractive Surgery
Until 1995, virtually the only surgical option for treatment of myopia was radial keratotomy (RK). Then in 1995, the FDA approved the Summit laser for photorefractive keratectomy (PRK). Since that time, LASIK has essentially become the procedure of choice for many. Meanwhile, several other refractive surgery options have emerged, and OMIC has extended coverage to insureds who perform these procedures: RK/AK, PRK, ALK, LASIK, Intacs, Clear Lens Extractions, and Phakic Implants for refractive purposes.
In the past year, OMIC has modified at least six existing guidelines for refractive surgery and developed guidelines for Intacs. Recent policy modifications include:
The maximum degree of myopia for PRK and LASIK was increased in recognition of changes in FDA-approved guidelines.
The minimum age for PRK using the Summit laser was lowered to 18.
The required one-week interval between primary PRK and LASIK procedures may be waived for experienced surgeons who qualify, subject to special consent requirements.
The 10 surface PRK requirement was discontinued to allow physicians with limited or no prior PRK experience to qualify for LASIK coverage provided they are certified on the laser and are proctored for their first five LASIK cases.
Cosmetic Surgery
Many ophthalmologists have expanded the scope of their practice to include laser skin resurfacing, laser hair removal, and other cosmetic surgery procedures, including facelifts and liposuction. Subject to underwriting review and adherence to guidelines, coverage for such cosmetic procedures is now available to qualified ophthalmologists.
Part-time and Tail Coverage
While OMIC has always offered part-time rates to ophthalmologists who limit their practice to medical ophthalmology, recently this discount was extended to qualified insureds who perform surgery as well. Eligibility for a part-time discount is based upon the number of practice hours, scope and volume of practice, and claims history, among other things.
Recognizing that an increasing number of ophthalmologists may elect to retire at an earlier age, OMIC discontinued its age requirement for free tail coverage upon retirement and, more recently, reduced the length-insured requirement. Now, an insured who retires permanently from the practice of medicine at any age qualifies for a free tail provided he or she has been continuously insured with OMIC for at least one year (see note below). OMIC also provides a free tail upon death or disability, regardless of age or length of time insured with OMIC.
Liability Limits
Legislative changes have prompted requests for more flexible coverage options in certain states. OMIC now offers limits of $400,000 per claim/$1,200,000 aggregate to insureds who practice in Pennsylvania; $250,000/$750,000 in Indiana; and $1,500,000/$4,500,000 in Virginia. OMIC also considers, on a case-by-case basis, requests by insureds for non-traditional limits. (Note: the limits noted here applied in 1999 – limits in PA and VA have increased since this article was written)
New Entity Exposures
OMIC realized the need to develop guidelines accommodating the liability exposures associated with shared management of post-operative patients. OMIC will directly insure qualified employed optometrists as additional insureds under the physician’s policy and, in certain limited circumstances, may extend coverage to the entity and/or optometrist in cases where the optometrist owns a portion of the practice.
To remain financially viable, ophthalmic surgery centers often must allow other specialists to use their facility. Thus, OMIC has developed appropriate underwriting guidelines and rates that permit the company to insure the surgery center for its vicarious liability exposures arising from ophthalmic and non-ophthalmic procedures. At the request of an insured network, OMIC also developed a program for coverage of qualified eye banks.
Fraud and Abuse Coverage
In response to the federal government’s zealous efforts to root out health care fraud and abuse, OMIC now provides its professional liability insureds with a Medicare/Medicaid Fraud and Abuse Legal Expense Reimbursement Insurance policy free of charge. Academy members insured elsewhere for their professional liability coverage may purchase fraud and abuse coverage from OMIC for a nominal premium.
For more information or to request changes to your coverage, please contact any of OMIC’s Underwriting Department representatives at (800) 562-6642. For information regarding OMIC’s fraud and abuse coverage, please contact Kim Wittchow at ext. 653.
UPDATED (1/13/2013): OMIC’s retirement premium waiver was modified in 2003 to increase the required minimum period of continuous insurance from 1 year to 5 years for all new policies incepted on or after 6/1/2003 and for all individual insureds added to existing group policies on or after 6/1/2003.
Plan Ahead for Long-Term Care
By Michael Meyers
Mr. Meyers is a freelance writer in Charlottesville, VA. He has written extensively about the insurance industry.
[Digest, Fall 1999]
Most doctors and other professionals would never dream of going without life, auto, homeowners, and medical insurance for their families. Yet they risk the assets they’ve worked so hard to build up by overlooking another equally important personal insurance protection: long-term care insurance. They often believe that a nursing home represents a loss of independence, that it is the only form of long-term care available, and that long-term care insurance is too expensive.
Nursing homes are not the only long-term care option. More and more people are taking advantage of assisted-living facilities, senior housing with services, adult foster care, home health care, and other innovative forms of long-term care to avoid the high cost of a nursing home stay. According to the Health Care Financing Administration, the average annual cost of a nursing home stay is $47,000 and rising. Of course, the cost of alternative services can add up quickly too, and even a single year of long-term care paid for out-of-pocket can be more costly than insurance.
Changes in federal income tax incentives in 1997 allowed qualified long-term care insurance premiums to be deducted as medical expenses, in whole or in part, subject to certain limits, provided the plan meets federal guidelines. Employers who pay premiums for an employee and/or spouse can deduct them as a business expense. Solo practitioners or doctors in a partnership, including S corporations, may deduct long-term care premiums to the same extent they do health insurance premiums.
The younger a person is at the time long-term care insurance is purchased, the lower the premium. Many people wait too long to buy this coverage. Not only does this raise the premium, it increases the likelihood of developing a chronic illness that will disqualify the applicant for coverage. When evaluating the need for long-term care insurance, take into account the individual’s personal situation, retirement plans, and family relationships. Ask yourself the following questions:
How Long Should Coverage Last?
Given the statistics on lengths of nursing home stays, you probably want to shop for a long-term care policy that provides two to four years of care. More coverage may be a waste, less a big risk.
How Do I Decide on a Daily Benefit Amount?
Research the costs of nursing home care where you live, keeping in mind that it is likely you will need to pay a nursing home more than the basic rate each month because of added charges for drugs and special services. One approach is to select a daily benefit equal to the nursing home’s published rate and plan to pay out-of-pocket for extra services. You also may want to take into account your projected discretionary income and how much you will be able to afford to pay out-of-pocket.
How Much Can I Afford Out-of-Pocket?
Even with this insurance, you will have to pay some costs yourself. First, you must meet a deductible (elimination period). Then, some plans pay a fixed amount for each day you are in a nursing home, regardless of how much your nursing home care cost, while other plans pay actual charges up to a fixed amount. How a plan pays its benefits will influence how large a benefit you select, so factor this into your decision.
What Coverage Benefits Should I Look For?
The company behind the coverage.
The carrier’s financial stability and experience providing long-term care insurance are the first things to consider. You want assurance that the company will be around in ten or fifteen years if you need to apply for benefits. A.M. Best, Moody’s, or Standard & Poor’s rating systems can help you judge.
Type of coverage provided.
Look for a plan that covers skilled, intermediate, and custodial nursing home care.
Home health care.
You’ll most likely want a plan that offers home health care as an option or as one of its regular benefits in situations where nursing home care is not necessary.
Definition of a covered stay.
A good plan should cover your nursing home stay not only if you are injured or sick but also if you need continual help with two “activities of daily living” (i.e., dressing, toileting, continence, transferring, or feeding) or you need supervision because of cognitive impairments like Alzheimer’s Disease.
Choice, choice, choice.
Different people have different needs based on their income and assets, nursing home costs where they live, and how much they can or want to “self-insure.” Select a plan that gives you a choice of daily benefit options, elimination periods (deductibles), and benefit limits. That way you can build a plan to meet your individual needs.
Inflation protection.
Because you are purchasing insurance today to meet tomorrow’s costs, you probably will want inflation protection. There are two types of inflation protection available: one automatically increases your benefit level by an equal percentage each year; the other compounds the benefit increases.
Guaranteed renewable.
This means you can always renew your coverage as long as you pay your premiums on time, even if your health condition worsens. In most cases, however, the insurer will reserve the right to change premiums for all persons in a given class or state.
Waiver of premium.
This allows you to continue coverage without cost after you have been receiving benefits for a certain period of time, such as 90 days. Some plans offer a “return of premium” or nonforfeiture benefit in case you die or terminate your coverage. However, this provision can add significantly to the cost of a plan.
If you need additional help shopping for long-term care insurance, contact the National Association of Insurance Commissioners at (816) 374-7259 for a copy of the Shoppers Guide to Long-term Care.
The American Academy of Ophthalmology offers comprehensive long-term care plans to active Academy members and their spouses, parents, and grandparents. To learn more about these plans, call the Academy Insurance Center at (800) 906-7607 for a free consultation.
Hold Harmless Clauses
By Betsy Kelley
OMIC Underwriting Manager
[Digest, Spring 2000]
Contracts are a fact of life in most ophthalmic practices today. Providers sign contracts with health care plans, laser centers, finance companies, and other entities. Contracts outline each party’s responsibilities, compensation, and other terms. In many instances, contracts may include provisions that affect a provider’s professional liability exposure.
One provision frequently found in contracts is a hold harmless or indemnification clause whereby one party (usually the physician) agrees to contractually assume the liability exposure of the other party. Some indemnification clauses are quite broad, requiring that the physician hold the other party harmless for “any and all claims, suits, losses, or damages” arising from services rendered, without regard to which party was responsible for such activities or whether negligence was involved.
Other clauses are sufficiently narrow and require that the physician hold the other party harmless only for “claims, suits, losses, or damages arising solely from the physician’s negligence and not otherwise covered by insurance.” Indemnification clauses may be unilateral, meaning that only one party holds the other harmless, or they may be mutual, meaning that both parties agree to hold the other harmless for its own negligent actions.
OMIC provides limited contractual liability coverage within policy limits for indemnity and reasonable defense costs that insureds become legally obligated to pay pursuant to a hold harmless or indemnification agreement in a written contract between the insured and a hospital, health maintenance organization, preferred provider organization, or other managed care entity. This coverage is limited to indemnity and defense costs incurred solely from the performance of professional services provided by the insured and is solely for medical incidents otherwise covered under the policy. In certain circumstances, OMIC may, for an additional premium, extend contractual liability coverage by endorsement to other entities that are not engaged in the practice of medicine but may incur liability exposure as a result of their relationship with the insured.
OMIC’s policy excludes coverage for liability assumed under contract with other types of organizations if such liability would not exist in the absence of the contract. Therefore, OMIC generally recommends that indemnification clauses be removed from the contract, if possible. If the clause cannot be removed, OMIC recommends that it be replaced with a narrow, mutual hold harmless clause in which each party agrees to indemnify the other for losses arising solely from the party’s negligence.
Additional Insureds
A new trend is emerging in which organizations are no longer satisfied merely having the physician contractually agree to hold them harmless in the event of a claim. Instead, they are now adding clauses to their contracts requiring that the physician name them as an additional insured under the physician’s policy.
OMIC is generally able to name a third party as an additional insured only in situations where the entity is a management services organization (MSO) involved in administrative activities such as the purchase of equipment, billing, and other matters. Because they do not render medical services themselves, such organizations are frequently unable to purchase medical malpractice policies of their own.
With the exception of MSOs, OMIC will not name third parties, such as medical professional corporations or laser refractive centers, as additional insureds. Because these organizations render professional services themselves and are likely to be responsible to some extent for supervision and control of the physician’s activities, they are equipped to insure themselves or to purchase separate coverage for their liabilities. It is generally in the best interests of both parties to purchase their own insurance policy so separate limits apply. Otherwise, each party’s limits are reduced by any indemnity paid on behalf of the other party.
Other Provisions
Other contract provisions may specify the limits of liability that the physician must carry or may require that the physician provide evidence of insurance. Upon request, OMIC can issue a certificate of insurance to the organization, specifying the insured’s policy number, effective and expiration dates of coverage, and limits of liability. In addition, OMIC also will attempt to notify the certificate holder of any material changes in coverage, such as a change in limits or cancellation of coverage. Some contracts may require that the organization be provided with advance notice prior to cancellation or coverage changes. Although OMIC will do its best to provide ample notice to certificate holders, OMIC itself may not receive sufficient advance notice of requested changes to comply with such contract provisions. For this reason, such requirements should be removed from any contract.
As a service to its insureds, OMIC will review contract language*** as it relates to professional liability issues and provide advice regarding uninsured risks. To have OMIC review these contract provisions, contact the Risk Management Department at (800) 562-6642, ext. 603 or fax the specific clauses to (415) 771-7087.
*** NOTE: OMIC no longer reviews contract language. However, as a service available only to its insureds, OMIC will provide an analysis of indemnification agreements prepared by our Legal Counsel. Policyholders may share this analysis with their own attorney. To obtain this analysis, contact the Underwriting Department at (800) 562-6642, option 1 or via email at underwriting@omic.com, or the Risk Management Department at (800) 562-6642, option 4 or via email at riskmanagement@omic.com. 10/8/14.
Hard Times Ahead for Doctors and Carriers
By James F. Holzer, JD
Mr. Holzer is OMIC’s President & CEO.
[Digest, Winter 2001]
The U.S. economy and stock market may be showing signs of renewed vibrancy this quarter, but malpractice insurance carriers are bracing for the worst. Physicians in all specialties are seeing professional liability rates skyrocket for the first time in many years. It’s a grim reminder of when so-called malpractice crises erupted in the past, driving doctors to pay higher premiums, find replacement, and seek shelter behind defensive practice patterns.
Although ophthalmologists are not immune from current adverse developments, their loss experience is better than most other specialties and, in some cases, significantly better on average than all specialties combined. OMIC’s loss experience and financial performance continues to be more favorable than the industry as a whole. Yet claims costs and related expenses require even the most conservative carrier to periodically adjust its price. A few physician-sponsored carriers have been able to keep rate increases well under the 10% this year. OMIC, for example, will adjust its premium by 7.5% for policies issued or renewed after July 1, 2001.
The news unfortunately isn’t as good for other physicians. Double-digit rate hikes are back. Many medical malpractice carriers anticipate or have already instituted premium increases that may well exceed the expected national average of 15%. Commercial (non-provider-owned) carriers seem the hardest hit with planned increases of 50% to 100% in some states. Although the relative rate for an ophthalmologist is less than say for an OB-GYN specialist, some of these large increases may apply across the board to ophthalmologists insured by these companies. One large national carrier, which has slipped from first to fifth place as the leading provider of malpractice insurance, reportedly doubled its premiums for some ophthalmologists in Arizona, Missouri, and Texas and selectively levied a 60% increase for risks in Vermont and 75% in California. Another large national provider of physician professional liability insurance isn’t writing or renewing business at any price in Georgia, sending many of its longtime policyholders and insurance brokers scrambling to find replacement coverage.
Physician-owned or sponsored insurers seem to be faring better. Rate announcements from doctor-owned carries range from no increase to 30% with some 40% to 50% increases in so-called problems states such as West Virginia. Insurance companies there were created by medical societies and governed by physicians mushroomed in the 1970s and 80s in response to capacity and affordability problems during prior hard markets. Collectively, these companies now provide professional liability coverage to nearly two-thirds of the physicians in the U.S. Based on year-end 2000 financial statements, this physician-controlled segment of the insurance industry has generally done better than the medical malpractice industry as a whole., which includes the large commercial stock companies.
Rapidly Deteriorating Market
In a recent study, a leading research analyst for the insurance industry, Conning & Company, warned that the financial condition of the medical malpractice insurance business is rapidly deteriorating with “no margin for negative surprises.” Looking at the industry as a whole, it estimates a huge deficiency in malpractice claims reserves to the tune of a staggering $1.7 billion. This degree of adverse development clearly doesn’t happen overnight. Conning suggests the problem began as early as 1993 when the severity of incidents, accelerating claims payments, and increasing defense costs started to climb. Of particular concern as the rising incidence of claims alleging failure to diagnose and medication-related errors. Ophthalmologists should not be quick to assume that such problems don’t apply to them. A number of OMIC’s largest settlements have related less to the science and practice of ophthalmology and more to general medical problems such as failing to diagnose cancer or failing to adequately track and follow up on urgent care. Clearly, failure to follow some of the most basic risk management principles of general medical practice could have a more crippling effect on overall ophthalmic loss experience nationwide than some of the newer refractive procedures such as LASIK, which to date show only low to moderate claims severity.
What’s causing this deterioration and why does it seem to be occurring so suddenly after years of declining malpractice rates and aggressive competition? For at least the past five years, many medical malpractice carriers have had a voracious appetite for market share. This has had the effect of driving prices down even though combined and operating ratios for the industry as a whole were locked in a steady upward creep. Fortunately, physician-owned/sponsored carriers such as OMIC have been able to maintain more stable and consistent ratios during this period.
Nevertheless, during these “soft market” conditions, the financial results of carriers were propped up by good investment returns, favorable reinsurance deals, and better-than-expected loss results from prior policy years, which allowed companies to reduce their reserves and increase surplus. In the background, however, malpractice claims severity continued to grow. Defense costs kept rising, reserve takedowns on older policy years began to dry up, investment returns started to shrink, but premiums on the most part remained the same. Malpractice carriers were still locked in a battle to gain a shrinking market share. Artificially depressed rates prevailed until the damn burst at year-end 2000.
Loss Ratios Worsen
Every spring, insurance carriers file detailed financial statements showing the results of their operations through December 31 of the previous year. As analyst look at these year-end 2000 statements, a collective picture of the industry began to emerge. Their suspicions during the past 24 months are being confirmed. The approaching “hard market” has finally arrived. Loss ratios, which measure a company’s loss experience in relation to its total book of business, jumped nearly 10 points in one year to approximately 100% for all doctor-owned carriers combined. Analysts expect the numbers to be worse when large independent carriers are included in the mix. (OMIC’s loss ratio in comparison increased only 2.5% to 79.9% at year-end 2000.)
Other ratios that analyst use to measure an insurer’s operating performance also worsened during the past year. The combined ratio, which measures a company’s overall underwriting profitability before investment returns, climbed to 125% for the provider-sponsored carriers and 134% for the entire industry. However, after factoring gains on investments, carriers still showed relatively acceptable (albeit increasing) operating ratios. An operating ratio of less than 100 indicates acceptable financial health for a carrier because it is still able to show a profit from its core business. The average operating ratio for all doctor-owned carriers combined was 95.6% at year-end 2000. (OMIC reported a combined ratio of 119.3% and a favorable operating ratio of 91%.)
More Ominous Signs for Some Carriers
Unfortunately, we are now starting to see a number of long-standing carriers having difficulty even measuring up to the average. Data from financial filings for year-end 2000 indicate that between one-quarter and one-third of provider-sponsored medical malpractice carriers may show an operating ratio of greater than 100% and could report negative operating cash flow. A handful of companies may even show operating ratios in excess of 120%. A number of large independent commercial carriers also are facing significant challenges. The health care unit of one of the leading national medical liability carriers reported a year-end 2000 combined ratio of almost 130% and a fourth quarter combined ratio of nearly 160%. A large hospital association carrier reported a combined ratio last year of 200% as well as receiving two rating downgrades by A.M. Best Company in as many years.
Even if an improving U.S. economy turns Wall Street bullish again, it’s clear that it will take more than higher returns on investments to reverse the deterioration of some segments of the medical malpractice insurance industry. Insurance carriers will have to invoke a number of tough and unpopular remedies to exorcise the demons of the hard market of 2001. Here’s what ophthalmologists and doctors in all specialties can expect:
- Higher malpractice premiums for the near future. The size of increases will vary by carrier and depend on an individual company’s financial performance and overall profitability. OMIC anticipates a more modest fluctuation in its rates compared to the industry because it has historically kept rates a level sufficient to support its ability to pay claims over the long term.
- Tougher underwriting and cancellations of policies that carriers deem unprofitable. Some carriers appear to be engaged in wholesale cancellation of policies based primarily on geography, claims history, and scope of practice. Some uninsured ophthalmologists have called OMIC with stories of physicians being dropped because they were doing refractive surgery or had just one claim. OMIC plans to continue underwriting physicians in the same prudent manner it has in the past, relying on its historical success of selecting insureds who ultimately contribute to loss results that are consistently better than the industry.
- Fewer discounts and lower dividends. Cash-strapped carriers may become less generous with premium discounts to raise much needed revenue. Last year, the surplus of all companies combined fell for the first time in recent history. Shrinking surplus and smaller or nonexistent reserve takedowns could mean lower dividend payouts in the future. OMIC’s surplus did not decrease last year and was maintained as the same conservative level as the previous year. OMIC also is continuing its cooperative ventures with a dozen state and subspecialty societies and provides a special 10% premium discount for participating in cosponsored risk management programs. As in the past, dividends will be determined each year based on annual performance results.
- Claims costs will continue to increase unless controls are employed. Despite the cyclical nature of insurance markets and litigation, claims severity will continue to grow unabated unless doctors and carriers employ proven measures to stem the tide.
- Tort Reform — First and foremost, efforts to bolster state tort reform initiatives are critical to keeping claims indemnity under control. According to Jury Verdict Research, jury awards in malpractice cases jumped 7% in 1999, raising the median award to $800,000. During previous, “medical malpractice crises,” the most common factor associated with markedly improved loss experience was the existence of strong tort reform measures with an effective cap on noneconomic damages (pain and suffering).
- Risk Management — Despite the temptation to reduce costs by cutting back on operational expenses, such as risk management, carriers instead need to provide more resources for these activities. OMIC will continue to make its ophthalmic-specific risk management activities available to policyholders and members of the American Academy of Ophthalmology and anticipates extending these activities through the Internet and other means.
Why Some Carriers Can Withstand a Hard Market
Perhaps the silver lining in this hard market is that physicians and their professional liability carriers have been down this road before. What we’ve learned from previous hard markets is that such a condition is not so much a malpractice crisis as it is a cycle. Fortunately, cycles turn, but their duration can clearly be impacted by how quickly and how well we respond. Physicians who didn’t chase some of those irresistibly cheap rates in the past and stayed with a strong and reasonably priced insurer are now in a better position to ride out the hard market with their current carrier. Companies that previously engaged in predatory pricing tactics to gain market share may now have to play “catch-up” by significantly boosting rates to meet the future demands of rising claims. Others, such as OMIC and those physician-sponsored carriers that remained focused on their original mission and purpose, are likely to successfully ride out the current storm as well as provide opportunities to those doctors now forced to search for a new carrier that can better support their long-term insurance needs.
In the future, adverse market cycles might be broken if some carriers choose to learn from the past and resist the temptation to feed their egos and corporate appetite for market domination and growth at any cost.
Disability Insurance Works When You Can’t
By Geri Layne Craddock, CLU
Vice President at Seabury & Smith, Washington, DC
[Digest, Summer 2001]
Have you ever stopped to consider how you would maintain your income if you were to suffer a disabling accident or illness? Many people believe that Social Security would be enough to protect them if they could not work. In fact, Social Security contains a very narrow definition of disability under which many situations are not covered. Additionally, Social Security benefits often are considerably less than private or group insurance benefits.
Workers’ compensation insurance should not be confused with disability insurance: workers’ compensation covers only disabilities that occur on the job. Disability plans offered by employers vary considerably in coverage length and percentage of salary that is covered. Many employers do offer disability insurance, but often it’s short-term coverage-generally one to five years-and may be grossly inadequate for those who suffer a long-term disability, such as paralysis or back injury.
At first glance, the cost of disability insurance might seem high. But it is important to remember that this is basic and essential insurance protection for people who rely on their regular income. According to the U.S. Census Bureau, one in five Americans were disabled in 1997.1 The American Council of Life Insurers maintains that a 35-year-old is six times more likely to become disabled than to die before he or she reaches age 65.2 Clearly, disability insurance may be even more essential than life insurance.
If you are interested in securing disability insurance, shop around and compare plans. Remember to weigh the cost against the potential benefits you would receive if you were unable to work for two, five, or twenty years. Examine these key elements as you compare policies:
Definition of “total disability.” This could be the most critical feature of your policy. Under many policies, you must be unable to perform any job for which you are qualified. One way to protect the educational investment you’ve made in your career is with own occupation coverage. Own occupation policies pay benefits if you are unable to engage in your own occupation even if you are able to return to work at a lower paying job that is not in your field. Some policies even consider a recognized medical specialty, such as ophthalmology, to be your occupation.
Length of benefits. Ideally, you should look for long-term coverage that protects you until age 65 even if you have to opt for lower benefits to keep the premiums more affordable.
Amount of coverage. To ensure that you have incentive to return to work, most plans set limits on the percentage of income you can insure, usually 50% to 60% of your total gross annual earnings. If you have an employer-provided plan that provides only limited coverage, consider purchasing supplemental coverage from another source.
Waiting period. The elimination or waiting period is the amount of time you must be disabled before your benefits begin-the shorter the waiting period, the higher the premiums.
Taxation of benefits. Benefits may be tax-free if you pay the premiums out-of-pocket, so check with your tax advisor.
Residual benefits. After a serious disability, many people return to work on a part-time basis for part-time pay. Residual or partial benefits can allow you to receive a combination of income and disability benefits until you fully recover. Without this feature, your benefits would most likely stop as soon as you return to work.
Financial strength of the insurance company. Find out as much as you can about the insurer. High ratings from A.M. Best Company, Standard & Poor’s, Moody’s Investors Service, or Fitch Ratings are good indicators of financial strength. Each of these independent rating companies have web sites where you can access information about various insurance companies.
Portable coverage. Having your own policy outside of your employee benefits allows you to move from practice to practice without fear of losing your coverage. Association-sponsored insurance is an excellent resource for that reason.
A valuable benefit of your Academy membership is your access to its many sponsored insurance programs, which have been individually tailored to meet the specific needs of ophthalmologists.
If you would like an information kit sent to you on the Academy’s Group Disability Income Plan,3 including plan features, cost, eligibility, renewability, limitations, and exclusions, call Seabury & Smith, the Academy’s life and health insurance administrator, at (888) 424-2308.
Notes:
- Taken from www.census.gov.
- Taken from www.insure.com/health/longtermdisability.html.
- Underwritten by New York Life Insurance Company, 51 Madison Avenue, New York, NY 10010.
