Submitted Courtesy of MGMA Connexion Magazine
Used by Permission
Are your physicians losing sleep over asset protection? We caught up with Jeffrey S. Allen, MD, and asked him a few questions about how physicians can protect their ability to earn an income.
What risks do you see keeping physicians up at night?
Our physicians are very concerned about asset protection. We help them realize that their ability to earn an income is their greatest asset, and the greatest service we can provide them is to help them protect that asset. The only way to do that is with disability insurance.
For years, physicians thought they were entitled to a good living as long as they provided good patient care. But, because of pressures on our healthcare system, physicians are becoming even more concerned about income. Also, when they were young, they thought they were invincible.
Now, as some physicians get into their 40s and 50s, they realize there is a higher incidence of disability. In our community, we have seen several well-publicized disabilities by prominent practitioners. Many physicians are starting to realize that, “Hey, wait a minute. This could happen to me. It doesn’t always happen to the other guy.”
What do you suggest physicians do to protect their income?
Most physicians bought individual income protection right as they came out of residency. Of course, their income at that time was probably at the lowest point of their careers. We find that many physicians do not have adequate individual disability coverage, so we encourage them to get the maximum amount of individual disability even though the limits insurance companies offer come nowhere near replacing their income.
What are the challenges with purchasing additional individual disability protection?
Well, some of these physicians, as they have aged, may have developed health problems. That is always a concern. Also, individual disability income limits tend to be fairly low. For surgeons or anyone in an invasive medical specialty, the paradox is those who need the most coverage are offered the least amount because they are in higher risk professions. They face a huge gap in protection. For these physicians, Group Long Term Disability (LTD) policies have been a major advantage.
Do most of your physician clients have a Group LTD plan?
Very few. Some of the larger practices have group LTD plans; however, most of those have nowhere near the coverage they need. Group LTD offerings have improved the past few years, yet many practices are not aware they now can get higher limits and better coverage. Smaller practices–10 physicians or less–tend not to have group disability, and many are not aware that it is available.
Do you find that physicians understand what their group LTD policy says?
In most cases, no. Most physicians bought an individual policy 10 or 20 years ago when they were coming out of residency. They haven’t thought much about disability protection since that time. However, the industry has evolved significantly since the 1990s.
Now, there are some key issues as far as I’m concerned. My preference in a group LTD plan–and most of my clients’ preference–is that the Own Occupation definition be defined as their specialty or sub-specialty as recognized by the American Board of Medical Specialties.
There are other key differences we point out to them, such as residual disability benefits formulas, income limits, and other issues. We offer them a comparison of the coverage they may have versus what is available.
How do individual disability insurance policies and group LTD policies work together?
We make absolutely sure our clients have a group plan where the LTD benefit is paid in addition to the individual disability benefit, with no offset or coordination of benefits. For us, it has been great boon to tell physicians there is very good group disability coverage available. They can augment their level of individual protection, so they can get closer to the income they are used to living on.
What do you look for in a quality LTD carrier?
What we look for–and our clients look for–is a carrier with a history in the business, a history of paying claims, and a very high financial rating of their claims-paying abilities. The product is only as good as the company behind it paying the claims.
How important to you is an LTD claims unit that specializes in physician disability claims?
Absolutely critical. Our physicians want the assurance that there are going to be professionals who will advocate for them. It’s a complicated process for the person who is looking at his first-ever claim. So for us it’s critical to have an advocate–an experienced organization–for the physicians, such as an organization with the reputation of MGIS that has more than 40 years of advocating for physicians and knows how to help them navigate the claims process to ensure they can get the benefits they have been paying for.
How do you respond to practice managers who are concerned about the cost of a quality LTD plan?
First of all, group disability coverage is surprisingly affordable. For most of our practitioners, it has been significantly less expensive than their individual coverage. And, in many cases, our physicians want to pay the LTD premium so they will receive the highest possible replacement of their income. Surprisingly, we’ve replaced several plans where physicians did not realize that by the practice paying the premium, the benefit would be subject to taxes.
What are some things you believe can help practice managers run their own practices?
Because it’s getting more competitive for practices to recruit the best available practitioners and specialists for their groups, one of the many jobs of practice managers is to provide the best possible benefits for the physicians in their group. This can be a great recruiting and retention tool, and a great way to make practice managers look good. Salaries tend to be competitive across the board, so offering benefits such as group LTD provide great value to physicians. This benefit can create loyalty for physicians to the group when you get them the best available product and provide them with coverage that in many cases they were not aware of.
You’re an independent certified financial planner as well as a practicing physician. Is that correct?
Right. I am Board Certified in Internal Medicine. I practiced for 27 years full time, and now, because of a life-long interest in financial matters and a desire to help my fellow physicians obtain integrated financial services, I provide full-time integrated financial planning for physicians while seeing patients on a part-time basis.
Let me say again, for most of our clients, their first and biggest concern is their asset protection.
We have a great focus on asset protection. For our physicians, their greatest asset is their ability to produce an income. I’ve had a great deal of experience helping my physician clients evaluate this particular subject. And because I’m still practicing, I understand the issues that face physicians.
About the Author
During a 27-year career in Emergency Medicine, Jeffrey S. Allen, MD, acquired extensive experience in the business aspects of Medical Practice. Still seeing patients on a part-time basis, Dr. Allen is an independent Financial Consultant at Advisors Trust Planning and Investment Company, an advisory firm in Naples, Florida, specializing in wealth management planning for medical practices, individuals, and families. The company is a member of the M Financial Group.