Disability Insurance Pitfalls Every Medical Provider-in-Training Should Recognize
Dr. Stephanie Pearson, a former OB-GYN physician, learned the hard way that not all disability insurance policies are created equal. After a delivery room mishap early in her career permanently injured her shoulder and left her unable to fulfill her physician’s duties, she became an expert in the field of disability insurance.
Now a disability and life insurance advisor with PearsonRavitz, Dr. Pearson sat down with us to share the lessons she’s learned and provide guidance to residents, attending physicians, faculty members, and other young medical professionals on what to look for as they make decisions about insurance coverage.
At 40 years old and at the peak of her career as an OB-GYN in 2012, Dr. Pearson was called down from her office to deliver baby number four of one of her favorite patients. She had delivered the mother’s three other children without incident, but this one was proving more challenging. The baby’s head was already crowning and the fetal heartbeat was in the 50s, so the patient had not arrived in time for any pain management.
As Dr. Pearson and a team of six nurses worked to position the mother in order to place a vacuum on the baby’s head, the patient kicked her in the brachial plexus. “My whole arm went numb,” she says. She still had a job to do so she repositioned herself, but as she was guiding the baby out, the patient kicked her a second time. The second kick “came across my shoulder. Two of my nurses were dropped to the floor, and both of them also ended up with serious injuries.” Crying as she placed the baby onto the mother’s chest and feeling like she had torn something, she called a senior partner to finish the delivery.
Fast forward and Dr. Pearson learned she had a torn labrum in her left shoulder and was told that it would likely heal. It did not heal, and she went on to develop a frozen shoulder. She had surgery and was told that she would be back to work in 12 weeks. The accident happened in December, and she cut back her hours in January and February, hoping to be back to full speed by March. By July of that year, she had almost no range of motion and couldn’t move her arm more than 15 degrees.
Given the significant range of motion deficits and nerve damage in her left arm, Dr. Pearson was no longer cleared to continue doing obstetrics or to operate. “Getting told that I couldn’t do my job anymore was pretty harrowing,” she says. She subsequently made the difficult decision to explore new passions, which ultimately brought her to where she is today – providing disability and health insurance guidance as an independent insurance broker.
Group Health Insurance Not Applicable
Dr. Pearson assumed, as most of us would, that because she had a group insurance policy through her employer (and had had it for nearly a decade) that her injury would be covered. To her great dismay, it was not. “The fine print didn’t cover work-related injuries, so I was flatly denied and told I would’ve been better off had I fallen off my bike.”
Workers Compensation: An Uphill Battle
Next, she went the worker’s comp route, assuming again, that because her injury happened at her workplace as a part of her normal job duties, that she would be covered. Again, she was denied. They reasoned that her frozen shoulder was idiopathic, meaning it had occurred “spontaneously” and was, therefore, her fault. They also cited the fact that she had continued to work in a more limited capacity for a few months after the accident while she was injured, so how bad could the injury really be?
Knowing her case was solid, she sued for worker’s compensation benefits. It took 14 months and three court appearances, but eventually, she settled her claim “probably for less than I should have.”
It was not the position she wanted to find herself in, but she counts herself lucky that her senior partner had insisted she get that policy when she first started to practice medicine. The ordeal also made her realize she was under-insured for disability insurance and over-insured for life insurance.
Insurance Tips for Young Medical Professionals
Policy documents are dozens of pages long, so it’s hard to know what to look for. After advising countless individuals through the maze of disability insurance, Dr. Pearson has honed in on a few areas that warrant special attention.
1. Where you are injured matters. Depending on whether you’re injured at work, at home, or doing something outside, your policy may or may not cover you. Dr. Pearson says people assume that if they’re injured wherever they’re practicing, like in a hospital, that they’ll be covered. That’s not always the case, which is why people often look to worker’s compensation.
2. Group disability insurance is not the same as worker’s compensation. Many companies will block out work-related injuries from their disability policy coverage because they will look to worker’s compensation instead. Unlike disability insurance, certain states limited worker’s comp. For example in Pennsylvania, Dr. Pearson’s compensation was capped at $500 a month, which was significantly less than she was earning. This is one of the reasons she strongly advises supplementing your coverage with private insurance.
3. Supplement group insurance with private insurance. There are a number of sound reasons to consider adding private insurance to your coverage, including the example above. Another is that most group insurance benefits are employment dependent, meaning if you leave your job your policy is not going with you. With a private policy, you control it and take it with you wherever you are.
4. Sign up when you’re young. When residents or attendings are young or just starting out, that’s the ideal time to get into a disability or life insurance policy. You’ll get the best coverage at the most affordable, discounted rates of your career and, if you add supplemental riders, you can leverage additional benefits, such as regular cost of living adjustments each year.
“We all think we’re going to be young and healthy and perfect,” Dr. Pearson explains, but about 90 percent of disability claims are for illnesses, not injuries. “Cancer doesn’t discriminate, and I’m seeing people getting sicker younger.”
5. Get as much coverage as you can afford. Dr. Pearson says everyone in training qualifies for a certain amount. As they become an attending physician, rates will be determined based on how much money they are making. She says they should try to have their policy keep pace as their income increases over time.
6. Coverage needs will vary by individual and household. Depending on your current assets and liabilities (e.g., private school tuition, mortgage, etc.), coverage will vary greatly. She also advises that everyone have their own coverage as divorce can greatly impact the non-covered spouse’s long-term financial outlook.
7. Definitions matter. Every private disability policy is different, especially when it comes to definitions for “occupation” and “total disability.” Your occupation at the time of signing up for a policy may not be the same as it is a few years down the road. You need to be covered for what you actually do, which may change over the course of your career – even with the same employer.
Likewise, some policies will define total disability as the inability to do your job and not being gainfully employed. So, if you are unable to do your current job, but are able to do some other type of job, the policy may no longer cover you since you are not considered “totally” disabled.
“It’s really important when you’re speaking with an agent or broker that you get both the definition of your job and total disability right,” notes Dr. Pearson.
8. Check the fine print. There are a variety of terms in these policies that warrant a closer look. For instance, there are residual and partial disability benefits, which come into play if you have to go part-time because of injury or illness. Make sure you know the ramifications of these important terms and ask your broker if you don’t.
9. Rates are different for men and women. While it may appear sexist at first glance, rates are built upon actuarial data. Because women, historically, have left all fields of the workforce due to injury or illness more often than men, their disability insurance rates are higher than men’s. Conversely, because men tend to die younger and more often at their own hands, life insurance is more expensive for men than women.
As a broad rule of thumb, Dr. Pearson says men should expect to pay one to three percent of their gross income on disability insurance, and women should expect to pay two to six percent.
10. Get coverage before you become pregnant. “Carriers look for any reason not to cover pregnancy. Having a miscarriage, having a workup for infertility, gestational diabetes, preeclampsia…there are so many reasons a carrier can create an exclusion,” Dr. Pearson warns. “I really urge women to get it in place before they first think about getting pregnant.
Likewise, life insurance has some of the same issues. “Things like gestational diabetes and preeclampsia will as much as double to quadruple the cost of life insurance, so women absolutely need to get this (coverage) in place before they get pregnant.”
11. Consider skipping student loan coverage. One of the riders available is for student loans. “In order for you to get that money, you have to become disabled in the first five or 10 years that you have the policy,” she says. Unless you’re taking on student debt a little later in life, she advises people to put that money into an interest-bearing account and let it grow instead.
As a medical professional, there’s a lot riding on your decision about which disability and life insurance plan to buy. Everyone’s needs are different, but Dr. Pearson strongly encourages people to educate themselves on the nuances of different policies. She became a broker precisely because she wants to help others avoid the same mistakes she made.
It’s hard to know what the future will hold, but she advises people to think of disability insurance like a mortgage or a car payment. “It’s just something you need to do.”
Dr. Pearson and her partners at PearsonRavitz believe in full transparency in working with clients to find plans that are right for them. “I have no reason to suggest one company over another. My job is to understand the differences between these policies and guide people to what’s right for them.”
If you’d like to explore your options for disability or life insurance, you can reach out through their website.
Stephanie Pearson, MD, FACOG, is a licensed broker specializing in disability and life insurance for physicians. Injured in the prime of her career as a board-certified OB/GYN, Stephanie was forced to pivot her career, and through her own firsthand experience, found a new calling in advocating for and educating her peers on their insurance needs.
Alongside her business partner, Scott Ravitz, and their team at Pearson Ravitz, LLC., Stephanie’s goal is to empower others to protect their most valuable asset: their ability to earn an income. As an insurance advisor, Stephanie combines her hard-won insurance expertise with personal experience to address the physical and mental impact of physician disability, underscoring the importance of proper coverage.
Stephanie’s background includes 9 years of medical practice after receiving her M.D. from Drexel University’s MCP/Hahnemann College of Medicine and completing a residency at Pennsylvania Hospital. She currently resides in Bryn Mawr, Pennsylvania, with her husband, two children, and dogs.