In all of the uncertainty around preparing for and adapting to the new world of the Patient Protection and Affordable Care Act (PPACA), a very basic need and opportunity may be missed by many agents and brokers: ensuring that physicians and providers have adequate disability coverage.
The same kinds of concerns should affect how agents and brokers think about many different kinds of protection arrangements, including life and long-term care planning arrangements, but the need to insure physicians’ ability to earn an income is especially urgent. There was a time when disability coverage was something physicians only thought of out of medical school or when they started a new job.
Even today, many physicians and practice administrators view insurance purchases as commodities — often making the decision solely based on price. In today’s market, that’s not a sound business strategy.
First, consider the fact that statistically, more than 40 percent of physicians who are now 40 years old will suffer an injury or illness that will impair their ability to work for at least three months by the time they turn 65.
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Second, who knows how the ACA will affect physicians’ ability to return to doing the kind of work they want to do? If you are currently working with physicians or other providers, here are some important points to understand about group disability coverage options for physicians in today’s rapidly evolving ACA marketplace.
1. Don’t be tempted by today’s soft market.
We are in the midst of a historically soft market. Pricing is lower and competition higher than ever before. But what happens when that now 50-year-old physician suffers an injury 10 years from now and the low-priced carrier is no longer in business? That’s a real possibility in today’s marketplace.
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Consider this scenario: When a carrier signs a long-term disability policy for a doctor, there is about $3.4 million of potential liability (assuming a 40-year-old doctor who becomes disabled and is subsequently paid $15,000 a month for 25 years).
Multiply this sum by potentially hundreds or even thousands of claims, and it’s clear that the carrier must have considerable financial strength for you to bet your client’s future economic well-being on them. And, when ticking off the boxes for a good carrier, also make sure it has specific experience and the reputation for fairly and quickly settling claims in the physician disability marketplace.