If you’re ever disabled, don’t be relying on the federal government for help. Federal disability benefits were never intended to cover more than very basic needs. The average Social Security Disability benefit is just $1,358 per month. And now it’s taking even longer to get approved.
In prior years, it generally took an average of about a year from the time an applicant first applied for federal disability benefits to actually receive them. Now, thanks to an increasing backlog and a backwards claims processing system, it’s taking twice as long. In some cases, qualified applicants are having to wait as long as three years to receive a final approval for disability benefits from the Social Security Administration, which administers the program.
Furthermore, only about 33 percent of applicants are approved on the first pass – mostly the most severely disabled applicants. Those who are turned down can file an appeal. But the average wait time for an appeal is 602 days – nearly two years.
According to the Social Security Administration’s inspector general, more than 7,000 Americans die every year while waiting for disability benefits to get approved.
Why Doctors Should Own Their Own Disability Insurance
The average physician earns an annual salary comfortably into the six-figure range. According to the 2023 Medscape Physician Compensation Report, the average physician salary was $352,000 per year. That’s $29,000 per month. If a doctor suddenly lost the ability to practice medicine and was able to quickly qualify for federal disability benefits, the average benefit would not even replace 10 percent of the doctor’s income pre-onset.
Disability Is More Common Than You Think
Too many Americans think disability is something that can’t happen to them – and doctors are no exception. Americans routinely underestimate their risk of incurring a disability that impedes our ability to earn a living. But statistics say that between 25 and 30 percent of Americans will incur an injury or illness severe enough to interrupt or end a career.
Doctors are especially vulnerable
Generally, doctors rely on keen visual acuity, manual dexterity (for surgeons), superior cognitive skills and the ability to remain on their feet for hours every day in order to practice medicine. It doesn’t take a severe disability to hamper a physician’s ability to remain on the job with a full workload. Even certain medications may make it impossible or even dangerous for a doctor to continue practicing if his or her analytic and decision-making capabilities are impaired.
Furthermore, because the medical profession is often stressful, doctors have a higher than average rate of depression and anxiety disorders that may interrupt or destroy an otherwise promising medical career. A study by Medscape found that rates of depression were higher among doctors than the general population.
Because of this, doctors have a higher than average probability, compared to other professionals, of having to file a claim for disability benefits. An attorney or accountant who gets rheumatoid arthritis can likely continue to practice. That’s not true of a surgeon.
Own Occupation Disability Insurance
Physicians should own an “own occupation” disability insurance policy with a benefit amount high enough to replace a meaningful amount of their income from practicing medicine. “Own occupation” means that you will be considered totally disabled if, solely due to injury or sickness, you are unable to perform the material and substantial duties of your occupation. As long as you are totally disabled, benefits will not be reduced even if you are working in another occupation. If you’re a dentist or physician who has limited your occupation to the performance of a single dental or medical specialty, the best insurance companies will consider that specialty to be your occupation.
For physicians, these policies are superior to the “any occupation,” which will only pay a claim if your disability makes it impossible for you to earn a living in any occupation. The ‘own occupation’ has a much broader definition of disability, and is much more likely to actually pay a claim than an ‘any occupation’ policy.
Is Employer-Provided Coverage Enough?
Many doctors who are employees receive a basic disability insurance policy as an employment benefit. Take it when you can get it, but these are generally best as supplements to a personally-owned disability insurance policy.
One advantage to a personally-owned disability policy is it follows you even when you leave your current employer. This can be a big issue if your health changes. If you want to leave your employer and go into private practice, but you can no longer qualify for disability insurance in the individual market, you may be stuck.
Furthermore, disability benefits from workplace group disability insurance are generally taxable, to the extent the employer pays the premium. If you have your own individual coverage, and you pay the insurance premiums, benefits are tax-free.
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