Prescription For Doctors

Doctors have more problems with disability income insurance claims than most other occupations, because:

 * They never read their disability policy until they have to make a claim. * Policy benefits are usually higher because they make more money.

 * They are too busy to change coverage when their situation changes.

 * Their duties as physicians are more likely to change because of specialization or increase in skills.

 * The terms of their policy are so complex that they don't truly understand them.

This medical profession problem was succinctly pointed out by T Keith Mangrum of Medical Group Insurance Services, Inc., click here, when she pointed out 10 things a doctor doesn't want to hear when making a claim, in an article in MD Preferred,click here, an online publication for physicians. While the article dealt well with the front end of the MD disability claims process, it did not deal with the back end, i.e., what does a doctor do when faced with a denial of a legitimate disability benefits claim?

As we have said many times before, disability insurance companies have a litany of "reasons" why they should not pay benefits. Some of these reasons have a foundation in law and some do not. Since the policy is the contract which governs the insurance relationship, it is the law of the claim and dictates the rights of the doctor to receive benefits and the insurance company to refuse to pay.

So, the first thing every doctor should do is READ THE DISABILITY INCOME POLICY NOW!!! Doctors, of all people, are aware that illness or injury can strike without warning, at any time of the day or night. No one is immune to catastrophe. After reading the policy, if the full meaning isn't clear, get someone who knows, like a knowledgeable lawyer, to help you understand.

Once disaster strikes, the doctor is stuck with the terms of the policy and can't change them. If the policy doesn't afford enough coverage there's nothing to be done about it. Reading and understanding the policy before the doctor has to make a claim should help take care of the front end. What about the back end - if there is a denial?

As we have pointed out here so many times, insurance companies are adept and motivated to throw roadblocks in the path of benefits seekers even when their reasons for denying a claim sometimes border on the ridiculous. Insurers do so because they know a certain percentage of claimants will give up and allow the insurer to drop what they should have paid in benefits to the company's bottom line.

The stakes in a physician's disability income insurance policy are usually high and give the insurance company more reason to contest the claim. Before a doctor gives up on such a claim it must be absolutely clear that the claim denial is legitimate .

This goes double when the claim is covered by a group policy, purchased by an employer, of which the physician has no firsthand knowledge. To have the policy explained to the doctor by a Human Resources manager who works for the employer and who has no legal understanding of arcane ERISA insurance law and the sometimes questionable tactics of insurance companies, may not be the best thing for the policyholder. So, what is the best thing?

First, read and completely understand the disability income policy. Does the protection it affords them and their family do the job? If not, they should make the desired changes before disaster strikes. And, if they ever should be so unfortunate as to have to make a claim for disability benefits, they definitely should not take an insurer's claim denial as gospel. It is in insurance company genes to almost automatically reply to a claim with a denial, hoping the claimant will "wimp" out and go away.

Doctors know medicine, but they are not experts in insurance law and claims. Don't stand alone. Get a veteran, knowledgeable disability claims lawyer to review your situation and give you an opinion on the validity of the denial.

Only then can the doctor make an intelligent diagnosis of a disability income benefits claim.

Read It So You Won't Weep

In the business of blogging, we learn to be packrats, hiding away bits of information upon which to base future writings. Many times we forget what we have and are pleasantly surprised when we happen on a tidbit which strikes our fancy.

Contemplating the difficulty of explaining the intricacies of disability insurance law, even to specially educated people such as insurance agents and financial planners, we happened upon “The Illusion of Coverage:”, a comprehensive review of the difficulties of insurance law published by The Access Project in 2007.

What we were looking to do was to point out that in today’s world, even when you are in the insurance business, you do not necessarily have your finger on each of the myriad nuances of the various types of insurance coverage because there are so many risks covered in so many ways at so many levels of cost, it seems one would need an encyclopedia just to keep up.

What got us on this topic was a discussion with a financial planner about a particular client and the need for “own occupation” disability coverage because of the nature of the client’s profession and income level. The planner was quick to say that the client had
“own occupation” coverage in his disability income policy.

But, when we asked him, “What kind?” he was at a loss for words.

We then proceeded to list for him the possible limitations and conditions which insurance companies try to place on these policies, such as:

* Limiting the “own occupation” payments to 2 years.
* Precluding the insured from working in any other field as a condition for benefits.
* Capping the amount of benefits to a specific sum over the life of the policy.
* Defining the occupation so as to cover a broad spectrum of employment.

The problem here may be that “own occupation” is frequently used by insurance agents and brokers to describe coverage which is really “modified own occupation”, without understanding or explaining the difference to the policyholder.

The planner and his client may believe that when the insurance agent says the policy has “own occupation” coverage, that such coverage is truly “own occupation” in the classic sense, i.e., if the client can no longer perform the occupation of brain surgery, the insurer will pay the benefit even though the client may be able to do some other type of medical work. Only when the claim is made does the reality of the distinction become clear. By then it is too late.

What the public (and many times their advisers) are not aware of is that insurance, particularly disability income (and long term care) is not nearly one size fits all. Subtle language differences can be critical at the time of claim, but are frequently overlooked or ignored at the time of the policy sale.

So, if one is negotiating such a policy for him or herself, or for a client, to accept a statement that a policy has “own occupation” coverage without plowing through the language of the policy so as to know exactly what one is actually getting, is doing a disservice to yourself and your client.

As with everything else, you get what you pay for. If you want a gold-plated policy which gives exactly the benefit you want for as long as you want, then the premium is going to be high, and if you are willing and able to pay for it – good for you.
If you are not willing or able to pay the required premium, then you have to settle for less protection.

But the important part of this transaction is that both the client and the financial planner know and discuss the details of the policy and make knowing choices based upon a full understanding of the options.

Accepting a generic label for an insurance clause without fully analyzing the actual language leads to a rude awakening if policy payoff time ever comes.

You may miss the true import of a policy clause when you are buying it. But, you can bet your bottom dollar the insurance company won’t miss it when it comes time to pay your claim.

"Own Occupation"

Don’t be blindsided by the simple words “own” and “occupation".  Joined together, in a policy of disability income insurance, these words become a minefield, ready to blow up your and your family’s life in the event of a disability. 

“Own occupation” is a complicated insurance policy phrase requiring your complete attention and understanding before you can believe you have done what you could to protect your own and your family’s future.

For those who don’t earn high incomes, the nuances of “own occupation’ clauses in disability income policies are not of great import.  But, to those earning the “big bucks” the definition of “own occupation” in their disability income policies can be the difference between life as they know it and an economic wasteland.

A cardiac surgeon making $750,000 a year and up, who becomes disabled and can’t practice and earn as a cardiac surgeon, adds a financial catastrophe to the already heavy burden of the disability.  Smart high earners insure themselves and their families by taking out “own occupation” disability policies to provide substantial disability benefits while they are disabled and unable to earn anywhere near their usual income. 

And, when buying these policies, these people are usually smart enough to ask their insurance agent or broker if their policy has an “own occupation” clause.  If the agent says “yes”, they feel content.  But that question hardly touches the core of what a person with a substantial income should be asking.

The major issue for the prospective policyholder is the way “own occupation” is defined in their policy.  Is it the occupation at the time you buy the policy or is it occupation at the time you become disabled?  Are there time limits on how long the ”own occupation” benefits will be paid?  How does the policy define “unable to perform the duties of your occupation”?  What happens if you start working in a totally different occupation while disabled? Are you entitled to benefits? Are there any other limitations or restrictions on the type of injury or illness which will trigger benefits in the event of a major disability?

Each of these issues is among a myriad of other considerations which have to be understood and evaluated before a high-earning professional can feel comfortable that whatever could reasonably be done to protect the family’s future has been done. 

Some other important considerations are:

* Should the renewal of your policy be guaranteed in case you contract an illness or injury which might lead your insurer to think it is in its best interests to cancel your coverage before you actually become disabled?
* Should you include a cost of living clause in the policy to keep your benefits in line with the cost of living since disability benefits may go on for years and years?
* Should you contract to continue benefits after age 65, the usual termination of policy benefits?
* Should you contract for residual (partial) disability in the event you still can do “some” but not “all” of your “own occupation”?

As with everything else, you have to pay for any additional coverage protection.  But, the important thing is that you should have the opportunity to decide before you buy the policy whether you want or need the added protection. 

So, if you are a person to whom an “own occupation” clause is important, you shouldn’t feel secure even if your insurance adviser assures you that your policy contains an “own occupation” clause. 

While you are thinking of it, read your disability insurance policy TODAY!   The language may be tough to understand but you can do it if you try.If you haven’t the time, get someone who knows to help you with it NOW.

Making the effort NOW is better than having your complacency shattered by receiving a letter from your disability carrier when the chips are down: BENEFITS DENIED!



ERISA Is Great, But

If you have an ERISA income disability policy (a group LTD insurance policy most often purchased through an employer), you may think you have the same coverage and benefits as a privately purchased disability policy – but, you would be flat out wrong.

First off, in most states you would have to deal with the ERISA “discretionary clause” which puts a policyholder behind the 8-ball before a claim is even filed. Some 16 states have prohibited the clause in new policy language, but most states haven’t.

This clause allows the insurance company, which will pay the claim, to initially determine if the claim is covered by the disability policy. If the insurer says “no”, then the claimant has to climb out of a deep legal hole to prevail no matter what the actual facts of the claim.

A private policy has no “discretionary clause” to put the claimant on the defensive right from the start. If a private insurer denies a disability claim, the policyholder has to prove the disability is covered by a straightforward preponderance of the evidence and does not have to prove that the insurer’s denial of a claim was “arbitrary and capricious” a tough standard of proof in any court.

Other advantages of private over ERISA polices are:

* The way covered earnings are calculated. ERISA covers base salaries while private policies usually cover base plus incentive compensation.
* Taxation. ERISA benefits are taxed to the extent of employer contribution. Private benefits, usually paid with after-tax dollars are non-taxable.
* No benefits offsets. ERISA benefits are frequently subject to offsets from other group insurance benefits, SSDI, and Workers Comp. Private policies usually hve no benefits offsets.
* Portability. Private disability income policies are transferrable if employment changes. ERISA policies are generally not transferrable.
* “Own Occupation”. Private policies have “own occupation” clauses which are more tailored to the policyholder’s occupational status at time of policy purchase. ERISA policies usually have a 2-year “own occupation” coverage and then switch to an “any occupation” disability definition.
* Contract Changes. Private coverage usually prohibits rate increases until age 65 while ERISA rates can increase during the life of the policy.
* Cost of living. COLA increases are much more common in private coverage while it is rare in ERISA policies.
* Mental and nervous disorders. ERISA policies often limit benefit coverage to 2 years. With a private policy, even an unlimited benefit coverage for these types of ailments may be purchased.
* Legal rights. Private policy claims permit jury trials, while ERISA claims do not. In addition, private disability insurance allows full discovery and punitive damages in a proper case while ERISA coverage permits very limited discovery and no punitive damages.

If you are covered only by an ERISA policy and believe you would like to have some of the benefits of a private disability income policy, there is nothing stopping you from buying additional cover age to supplement what you have under ERISA.

If so, don’t delay. Buy the additional coverage BEFORE something untoward happens. Otherwise you’ll cry over spilt milk and lost benefit dollars.


An Important Prescription For Doctors



 Being invited to speak to a doctor’s organization in the New York Metro Area about how confident they should be in the protection they think they get from their disability income insurance policies, got us thinking specifically about doctors’ insurance problems.


And, doctors have plenty of them, although most physicians don’t know it until they are stricken and it is too late.

First off, doctors have to realize that they will get special attention (of the wrong kind) from a disability carrier if forced to make a long term disability claim. Why? Because a doctor’s long term DI claim, especially if the doctor practices in a specialty, usually involves a heavy potential payout for the insurer and heavy payouts are something insurance companies despise.

Most physicians think they have “Own Occupation” coverage and feel secure. Not so fast. Believe it or not, there is no one definition of “own occupation” in insurance policies. For example, a policy may have a perfectly sound “Own Occupation” clause, but with a time limit. Therefore, it may be described by the company as an “Own Occupation” policy, but the protection of the clause ends in say, 2 years, and after that the definition of disability may become much more general.

So, if you are a surgeon and think you are buying a disability income policy that will cover you and your family in the event you can no longer perform surgery, you may be surprised to learn, after 2 years, that you have to go back to work in a lesser medical field and will no longer be paid your disability benefits by your insurer.

Another major issue doctors should resolve before they can feel secure about income if they should become disabled is to determine if their policy is an individual policy or a group policy which involves ERISA, a Federal statute, which adds a completely new set of problems to the doctor’s woes if the unthinkable happens.

It is difficult enough to pursue a disability income claim when the insurance company is determined to find any way it can not to pay, without having the insurer have the advantages that a group ERISA policy gives it.

The way to tackle this problem before a disaster strikes is for the doctor to read and parse every word of his or her disability income policy before the need for claim arises (hopefully it never will), because the policy language (strictly construed) determines the benefits available. No more and no less.

If the doctor wants help to understand the language of the policy a lawyer with disability income insurance experience should be consulted. Don’t rely on what the insurance company ad or the insurance agent or salesman told you. Read it and understand the policy yourself.

And, most important of all – DO IT NOW – while you think of it and BEFORE you have to make a claim.




No Good Deed Goes Unpunished

There’s nothing a disability insurance carrier likes better than a claimant who is “Mr. Nice Guy”. These are people who keep trying to do work even though they can no longer continue the occupation for which they have an “own occupation” policy and have a
clear cut claim for disability benefits.

What’s wrong with trying to keep working, one may be tempted to say? It’s the pioneer spirit. “Don’t give up the ship” and all that.

What’s wrong is that Mr. Nice Guy may scuttle his claim for benefits by trying to work at another job before making a claim under his policy. The carrier may have the right to say the claimant can perform duties similar to the ones he is performing at the time the claim is made, so he is not disabled as defined in the policy and, therefore, is not entitled to any benefits, let alone benefits for the occupation and income intended to be protected when the policy was purchased.
The problem is that “own occupation” is interpreted to mean the actual occupation at the time of claim – not the original occupation for which the insured originally purchased coverage.

So, if you modify your occupation to accommodate a disability, by giving up the duties you can no longer perform, then those duties are no longer considered part of your occupation when you subsequently file a disability claim.

Also, even if the carrier has to pay, the carrier may be required only to pay benefits based upon the salary or income of Mr. Nice Guy’s employment at the time of making the claim. These benefits would likely be much less than the benefits originally contemplated by the policyholder at the time of purchase. And the hefty premiums paid for the anticipated coverage would be gone with the wind.

So, if you have been astute enough to cover yourself and your family with an “own occupation” disability policy and you become disabled under its terms, don’t be a Mr. Nice Guy. To be safe, make your claim with your insurer under the terms of your “own occupation” policy when you become disabled under its terms and before you start doing any other work.

Certainly be Mr. Nice Guy to your family, your friends and even to people you may meet in the street. But, not to your disability insurance carrier.