Disability Insurance for Medical Residents and Fellows
Dr. Patel was in her third year of emergency medicine residency when the unthinkable happened. After a long shift in the ER she left the hospital and on her way home was rear ended while waiting to make a left turn. The impact pushed her car into opposing traffic and an oncoming vehicle struck her broadside. The impact caused a compression in her lower back that six months later still causes her excruciating pain. "Most days I'm in so much pain that I wonder how I'll be able to complete my residency, let alone get a job after graduation", said Dr. Patel in an interview with Doctor Disability. Between medical school and undergrad, she is in debt over $190,000 and because of her injury, can no longer qualify for individual disability insurance.
According to the 1994 Statistical Abstract of the United States, in the course of a year, 1 in 10 people between the ages of 25 and 64 will suffer a disability. When comparing that ratio to the odds of being victim of a house fire (1 in 122); injured in an automobile accident (1 in 160); or even of death (1 in 117), the odds of being out of work due to an injury or illness are very high. These statistics are what make disability insurance for medical residents and fellows so important.
With average salaries that are roughly a quarter that of a physician's median salary, resident physicians are treading water until their full income potential is realized. Insuring the ability to earn that future income with medical resident disability insurance is crucial, especially as a recent medical school graduate. According to the Association of American Medical Colleges (AAMC), if medical school tuition continues to increase at its current rate, the projected median indebtedness for 2013 medical school graduates will be over $180,000 for those who went to public school and just shy of $210,000 for private school attendees. While repayment of Stafford loans may be deferred in a case of economic hardship, many residents must begin to repay student loans six months after graduation. Regardless of whether these loans are deferred, an injury or illness to a medical resident with substantial debt could have debilitating long-term financial effects.
Many residency programs offer group disability insurance, but these plans can have major limitations. Group plans can be changed or canceled at any time, and most do not extend past residency. A physician under one of these plans would have to purchase disability insurance again after residency—which is still a wise decision—but would likely miss out on lower premiums that were available as a resident. In addition, by waiting, any medical conditions that emerged as a resident could make the future purchase of an individual disability insurance policy very difficult. Finally, many group plans only offer coverage for a total disability. If a resident or intern under a plan that only offers total disability coverage is partially disabled and still able to perform any type of work, the benefits may not be payable.
The simple solution to protecting future income and eliminating the risk of being unable to repay student loans is purchasing an individual disability insurance policy. Rates are based on age and health status, so it is advantageous to purchase a policy sooner rather than later. A policy purchased by a resident has the flexibility to meet changing needs of the insured after residency and offers significant financial advantages. Buying disability insurance at a younger age and while healthy will get a medical resident or intern the best policy and rate.
There are several features and terms to be aware of when looking for a good disability insurance policy. The first is an own occupation definition of disability. With own occupation coverage, if the insured becomes disabled, benefits are still payable even if he or she is able to gain employment in another profession. Group or individual plans that are not own occupation specific may only cover total disability and not pay benefits if the policyholder is partially disabled or can do other work. For example, Social Security Disability Insurance (SSDI) only covers total disability and the inability "to adjust to other work" because of medical conditions. Because the average income of a physician is notably higher than the income for most other occupations, an own occupation plan is the only way to protect a resident physician's true future earning power.
Choosing a policy that is guaranteed renewable and non-cancelable is also important. These policies cannot be canceled or altered due to change in health status or age, and can be renewed at the same premium for as long as the policyholder desires. By investing in an own occupation policy as a resident physician, the insured can protect future income while acquiring guaranteed coverage that is locked in at a lower rate.
With flexible premiums and the benefit of longer coverage at a less expensive rate, there is no reason for a resident physician or intern not to inquire about a disability insurance policy today. Even group discounts are available when three or more doctors from a residency program apply.
Doctor Disability offers the following benefits for medical residents: