Worker’s compensation likely isn’t enough. Where worker’s comp falls short, disability insurance can pick up the slack. It’s not just us saying it – Doctors should own long term disability insurance. And preferably they should have their own coverage, in addition to whatever coverage they receive from their employers.
This is from a recent piece from Medical Economics:
“Securing LTD coverage can be complicated, confusing and expensive. But insurance experts, advisers and physicians who’ve suffered injury or illness all agree: Doctors need it.”
The article starts with a profile of Tom Davis, a physician who started experiencing vestibular migraines about five years ago. And then in July 2016, he suddenly experienced complete hearing loss. That hearing loss caused him to lose a great deal of income. Fortunately, he had significant long-term disability insurance in place.
“If you don’t have physician disability insurance, it’s like having a million dollars and just leaving it out on your front lawn,” said Davis to the editors of Medical Economics. “You can hope nothing happens to it, or you can invest $300 and buy a safe.”
The fact is that all Americans who work for a living are at risk of having their income disrupted by long term disability. Accidents and illnesses can strike anyone. And physicians have more at stake than most.
Here are the facts:
- About 25 percent of today’s cohort of 20-year-olds will experience a disability significant enough to affect their jobs and careers by the time they retire.
- About 12 percent of Americans – more than 37 million people – are classified as disabled.
- Illnesses are more common than accidents. Giving up your helicopter-skiing hobby and quitting cave diving and adopting a safe, sedentary lifestyle still leave you vulnerable to long term disability.
- The average disability lasts over 34 months. Most doctors don’t have that much in liquid savings.
Don’t Rely on Worker's Comp
Yes, worker’s compensation insurance covers workplace injuries and work-related illnesses – if you can prove it. But that only accounts for about 5 percent of disabling injuries and illnesses. If you become disabled, chances are overwhelming it won’t be covered by worker’s compensation.
It likely isn't enough
Even if it is, most state worker’s compensation insurance programs set limits on the monthly benefit – that’s nowhere near what doctors generally earn. In California, for example, the maximum weekly worker’s compensation benefit under any circumstances is $1,215.27. Multiply that by 52 weeks per year and that annualizes to a maximum of $63,194. But according to the annual Medscape Physicians Compensation Report, primary care physicians earn an average of $217,000 and specialists earn an average of $316,000 every year.
As you can see, worker’s compensation insurance doesn’t even come close to covering the need.
You can look up your state’s caps on worker’s compensation insurance benefits here.
The lower the cap, the more you need long term disability insurance even to cover the gap for the 5 percent of disabling incidents that are covered under worker’s compensation.
Don’t rely on worker’s compensation insurance to protect your income, even for the tiny minority of disabling incidents and illnesses it covers.