What Doctors DO NOT Know About Their Own Disability Insurance
If you enrolled in a Group Disability Plan you have bought fools’ gold:
- Only covers 60% at most 80% of your earnings
- Then reduce that 60-80% by any Social security benefits you might receive, benefits will terminate at 65 years old;
- Usually limits coverage for any “mental/nervous” claims; and
- Usually governed by ERISA which preempts state law causes of action, like bad faith.
The Social Security disability program quires that an individual to be unable to a complete a regular work-week with regular. Consistency of performance will often “disable” a patient because of lack of endurance, attention concentration persistence and pace. Likewise vocational factors such as advanced age (Over 60 yod) and limited education are taken into consideration when SSA considers a disability. For example a 59 yod Italian born brick layer with limited English is held to a lesser threshold for disability than a 50 yod with 16 years of education.
Many professionals such as physicians purchase private disability insurance to because SSDI monthly benefits are caps are approximately 2,500.00 per month – an amount that cannot cover the expenses of most professionals. Moreover many of these private disability policies insures against the inability to perform the duties of one’s occupation, or even a specialty within that occupation. When premiums for individual coverage are paid with after-tax dollars, the benefits become non-taxable. Such policies often also provides “residual” and/or “recovery” benefits for partial disabilities coupled with a loss of income. It is also possible to purchase insurance to cover fixed business overhead expenses (“BOE”) in the event of disability.
In contrast to private individual disability insurance, many organizations purchase group disability insurance covering all of its members and employees. That coverage typically pays a benefit based on a percentage of salary. Group disability benefits are more likely to be taxable. Moreover, unlike individual disability insurance, group disability benefits are subject to offsets, which include Social Security disability payments (both for the insured and their dependents) and other group coverage, which may include disability insurance purchased through a medical association. Thus, instead of a supplement, such coverage may prove worthless if those payments reduce the anticipated group disability insurance benefits. Group coverage is also not necessarily focused on the insured’s occupational specialty – many policies apply a more generalized definition of disability after a two-year initial period. In addition, group coverage is more likely to have limitations that restrict the duration of benefit payments for certain specified conditions such as psychiatric disorders or other illnesses that are not subject to objective verification such as migraine headaches, fibromyalgia, and chronic fatigue syndrome. Finally, group coverage is usually subject to the Employee Retirement Income Security Act (ERISA). The applicability of ERISA limits both judicial remedies and court procedures, giving greater advantages to insurers in the event of a dispute over benefits. In short, with all the exclusions, offsets, limited judicial remedies and taxability of group disability coverage we suggest that you seek private disability coverage for true income security.
The determination of disability is extremely complex because it involves three components – a contractual or statutory definition of disability, medical findings both as to diagnosis and both exertional and non-exertional restrictions and limitations, and a vocational evaluation as to whether the established limitations preclude employment either in a particular job or generally. Although the Social Security Administration gives limited deference to treating doctor opinions, a doctor’s conclusory opinions on disability are not binding. Neither the Social Security Administration nor any insurance company will accept a doctor’s finding that the “patient is disabled” without a detailed rationale explaining that conclusion. Nor do private insurers give any deference whatsoever to treating doctor opinions. In private disability insurance claims, the “independent medical examination” is losing favor to file reviews, often without any input from the treating doctor.
Beware the myth of the functional capacity evaluation (FCE) as a means of assessing disability since none of the test protocols have been validated by rigorous scientific study. While the results of FCE testing may be useful in corroborating treating doctor opinions, it is difficult to extrapolate someone’s ability to work on a full-time sustained basis from only a few hours of testing and observation.
Since over 8 million Americans are receiving Social Security disability benefits, and many more receive disability insurance, the need to protect earnings and insure against unforeseen illness or injury is critical. Those deserving of compensation need the support of their doctors along with experienced legal representation. But even those in good health and in the prime of their careers need to constantly review the adequacy of their own disability protection.
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