Becoming a doctor is a noble and rewarding career choice.
But it comes with greater risk and responsibility than most other occupations. Not to mention more to lose when life goes wrong.
Naturally, this presents those who enter the medical field with unique insurance needs. So, what types of coverage doctors should have?
Here, we take a closer look at health insurance, life insurance, disability insurance, and medical malpractice insurance for doctors — including coverage options, pricing considerations, and questions to ask when shopping.
The majority of physicians receive health insurance benefits from their practice or hospital employer, which may involve a nationwide hospital system. Doctors can tap into a variety of plan designs, from PPOs to HMOs, depending on what your employer offers.
However, if you open your own practice, you may need to get your own insurance for yourself and your employees under the Affordable Care Act (ACA). Know your state's rules and understand the ACA laws where you live, as they vary from state to state.
As a doctor, you probably want wide options to work doctor or health care facility? Check out the variety of plan and network types, such as HMO, PPO, POS, and EPO health insurance options. Read the details of each plan and network type and decide which type works best for your family. Some plan types, like a PPO, usually allow you to use almost any doctor or health care facility. Others limit your choices or charge you more if you use providers outside that plan type’s network.
If you have loved ones who depend on your income for their month-to-month survival, you need life insurance in case you die unexpectedly during your working years.
You may want to get life insurance to protect your family's financial future, particularly if you need to cover young children in daycare, help your children save for college, pay off a mortgage, or even if you want to help your spouse pay for your funeral expenses. Life insurance helps support your family financially in your absence.
One popular product, term life insurance, pays out a death benefit if you pass away during the specified term. You can usually buy life insurance in five-year increments, starting with five years and which goes up to 35 years. Many individuals choose a 25- or 30-year term.
You pay a premium each month for life insurance. The earlier you jump on life insurance, the less you'll pay in premiums the earlier you get life insurance.
Learn More: What Does Life Insurance Cover?
If you become disabled throughout the course of your career and you work as the primary breadwinner in your family, you may face a difficult situation if you lose your income. A long-term disability insurance policy replaces the income you lose by becoming disabled. You may especially want to get long-term disability insurance if you own a small or solo practice and the practice could dissolve if you get injured to the point where you can no longer work.
Make sure your policy defines disability as your inability to continue working as a physician (own occupation) instead of as your inability to work at all (any occupation). You don't want to leave yourself open to your insurance company denying your disability claim because you could perform a different job other than as a doctor.
You want to buy disability insurance as early in your career as possible. This keeps your coverage affordable and helps you pay off debts related to student loans, personal debts, and debts related to your practice if you do become disabled and must rely on disability insurance.
Ask about a few of these disability insurance options:
- Own-occupation: Own-occupation disability insurance allows you to get disability benefits if you can’t work in your own profession.
- Partial or residual disability: Partial or residual disability insurance allows you to receive a partial benefit if you can still work but not to the degree you did before your disability.
- Future purchase option: Future purchase lets you get more coverage later in life so you don't have to go through the underwriting process again.
- Non-cancelable: You won't see your rates go up with this type.
- Automatic increase benefit: The benefit automatically goes up during the first few years of your policy.
You may also want to get a rider to accompany your disability benefits:
- Cost of living adjustment (COLA): A COLA adjusts your disability benefit based on how much the cost of living goes up.
- Student loan rider: A student loan rider covers your student loan payments when you become disabled.
- Retirement protection: This rider puts funds into a trust to cover any retirement plan you can't contribute to while disabled.
Learn More: Disability Insurance for Doctors
Malpractice insurance, also called professional liability insurance, offers coverage if you make a mistake during patient care. Malpractice insurance pays for your legal defense if a patient decides to sue you.
On average, medical malpractice insurance costs $7,500 per year, and surgeons can pay upward of $50,000 per year in annual premiums. Costs will vary depending on your specialty and area of expertise.
No federal law requires doctors to carry medical malpractice insurance, but some states require physicians to carry it. Most states do not require medical malpractice insurance and have no minimum carrying requirements.
When you get started with your practice (particularly if you're a shareholder), you want to know all your malpractice policy details. Furthermore, you want to learn all the details about your hospital or corporation coverage as well.
You can tap into two types of policies: claims-made policies and occurrence coverage.
- Claims-made insurance: Claims-made policies cover incidents reported while that carrier insures you. In other words, a claims-made policy only offers coverage if the policy in effect occurs when an incident took place and when a lawsuit is filed. Coverage must extend for a significant period of time to provide adequate protection since a lot of time can elapse between when an incident occurs and when a claim happens.
- Occurrence coverage: This type of coverage offers lifetime coverage for incidents that occur as long as the policy stays in effect, no matter when the claim gets filed. Let's say you had an occurrence policy in 2015 and a patient files a claim in 2021 for an incident that happened in 2015. The policy covers you for that claim, even if you switched insurance carriers.
Claims-made policies cost less for the first several years of coverage because claims build as you work at your practice and as years go by. In your first year, your claims-made policy may only cost 10% to 30% of what insurers call the “mature rate.” The premium climbs until it reaches that mature rate, which will vary depending on your insurance company.
Do you have the right insurance for your needs? In other words, can you identify holes in your existing coverage?
Also consider whether you need these other types of insurance for doctors: workers’ compensation, Employment Retirement Income Security Act (ERISA) (both workers' comp and ERISA are required by law), general liability, commercial property, cyber, business interruption, theft and employee misconduct, employment practices, commercial auto, and umbrella insurance.
You want to make sure your medical practice doesn't open itself to risk, and even if you work for a hospital or other organization, it's up to you to make sure you have the right coverage.
Melissa Brock is the founder of College Money Tips and a full-time freelance writer and editor. She loves helping families navigate their finances and the college search process. Check out her FREE essential timeline and checklist for the college search!
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