Tag Archives: disability

Are Benefits Taxable?

 

The Answer Is: It Depends

Whether your disability benefit payments are taxable depends on what type of policy or plan you have and how your premiums are paid.  This post is not intended as tax advice—we’ve outlined some basic information below only.  You should always speak with a tax professional regarding your particular situation.

Individual Policies:  These are policies that you purchase yourself.  Generally speaking, if you pay the premiums with after-tax dollars, the benefits you receive are tax free.  However, if you pay with pre-tax dollars or deduct your premiums as a business expense, then your benefits will likely be subject to federal income taxation.

Group Policies: Group policies are those offered through associations such as the ADA or AMA.   These types of policies offer special terms, conditions, and rates to members and function much like individual policies, with similar tax consequences.  Generally speaking, if you pay the premiums (with after-tax dollars) then the benefits you receive are tax free.

Employer-Sponsored Policies: These types of policies can be less straightforward when it comes to taxes, as the payment of premiums can be structured several ways.  According to the IRS website:

  • If your employer pays the premium and does not include the cost of the premiums in your gross income, then benefits you receive will generally be fully taxable.
  • If the employer only offers a policy, but you pay the entire premium without taking a tax deduction, then the benefits you receive will generally be tax-free.
  • If both your employer and you pay the premiums then the tax liability will generally be split.

If you are unsure what type of policy or plan you have, and you think your employer might be paying the premiums, you can look at your application (there is typically a portion that states who is responsible for the premiums) or talk to your HR department.  For more information, talk to your accountant.  You can also go to to the IRS website on disability insurance proceeds to find additional information.

It may be tempting to save money by enrolling only in a plan solely paid for by your employer, paying premiums with pre-tax dollars, or deducting premiums as business expenses.  But keep in mind that, if you do become disabled, the amount of your benefits actually available to you will substantially decrease if you are required to pay income tax on them.

Selecting a policy is an important decision, and how benefits will be taxed is a significant factor to consider. With statistics showing that one in four dentists will be disabled long enough to collect benefits at some point in their careers, choosing to save now could hurt you financially down the road.

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Watch Out for “Work” Provisions

In a previous post, we discussed the importance of how your policy defines the key term “total disability,” and provides several examples of “total disability” definitions.  The definition of “total disability” in your policy can be good, bad, or somewhere in-between when it comes to collecting your benefits.

Policies with “true own occupation” provisions are ideal.  Here’s an example of a “true own occupation” provision:

Under this type of provision, you are “totally disabled” if you can’t work in your occupation (for example, you can no longer perform dentistry).  This means that you can still work in a different field and receive your benefits under this type of policy.

Insurance companies often try to make other policies look like true own occupation policies, and include phrases like “own occupation” or “your occupation,” but then tack on additional qualifiers to create more restrictive policies.

One common example of a restriction you should watch out for is a “no work” provision.  Although these provisions can contain the phrase “your occupation” they only pay total disability benefits if you are not working in any occupation.  Here’s an example from an actual policy:

As you can see, under this type of provision, you cannot work in another field and still receive benefits.  This can be problematic if you do not have sufficient disability coverage to meet all of your monthly expenses, as you’re not able to work to supplement your income.

A “no work” provision is something that is relatively easy to recognize and catch, if you read your policy carefully.  Recently, we have come across a definition of “total disability” that is not so easy to spot, but can dramatically impact you ability to collect benefits.  Here’s an example, taken from a 2015 MassMutual policy:

At first glance, this looks like a standard “own-occupation” provision—in fact, it is entitled “Own Occupation Rider.”  But if you take the time to read it more closely, you’ll notice that the second bullet point requires you to be working in another occupation in order to receive “total disability” benefits.

Obviously, this is not a policy you want.  If you have a severely disabling condition, it may prevent you from working in any occupation, placing you in the unfortunate position of being unable to collect your benefits, even though you are clearly disabled and unable to work in any capacity.  Additionally, many professionals have limited training or work history outside their profession, so it can be difficult for them to find alternative employment or transition into another field—particularly later in life.

These “work” provisions appear to be a relatively new phenomenon, and are becoming increasingly more common in the newer policies being issued by insurance companies.  It is crucial that you watch out for these “work” provisions and make sure to read both the policies definition of “own-occupation” and “total disability.”  While many plans contain the phrase “own-occupation”, including this example, they often aren’t true own-occupation policies and you shouldn’t rely on an insurance agent to disclose this information.  Oftentimes, your agent may not even realize all of the ramifications of the language and definitions in the policy that they are selling to you.

Lastly, you’ll also note that this particular provision was not included in the standard “definitions” section of the policy, but was instead attached to the policy as a “rider,” making it even harder to spot.  It’s important to remember that many definitions and provisions that limit coverage are contained in riders, which typically appear at the end of your policy.  Remember, you should read any policy from start to finish before purchasing.

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Can Your Disability Insurance Company Dictate The Medical Treatment You Must Receive To Collect Benefits? Part 2

“Regular Care”

If you are a doctor or dentist and you bought your individual disability insurance policy in the 1980s or 1990s, the medical care provision in your policy likely contains some variation of the following language:

Physician’s Care means you are under the regular care and attendance of a physician.”

This type of care provision is probably the least stringent of all the care provisions.  If your policy contains a “regular care” provision, courts have determined that you are under no obligation to minimize or mitigate your disability by undergoing medical treatment.[1]  In other words, you cannot be penalized for refusing to undergo surgery or other procedures—even if the procedure in question is minimally invasive and usually successful.[2]

Let’s look at an actual case involving a “regular care” provision.  In Heller v. Equitable Life Assurance Society, Dr. Stanley Heller was an invasive cardiologist suffering from carpal tunnel syndrome who declined to undergo corrective surgery on his left hand.  Equitable Life refused to pay his disability benefits, insisting that the surgery was routine, low risk, and required by the “regular care” provision of Dr. Heller’s policy.  The U.S. Court of Appeals disagreed, and determined that the “regular care” provision did not grant Equitable Life the right to scrutinize or direct Dr. Heller’s treatment.  To the contrary, the Court held that “regular care” simply meant that Dr. Heller’s health must be monitored by a treatment provider on a regular basis.[3]

Unfortunately, the Heller case didn’t stop insurance companies from looking for other ways to control policyholders’ care and threaten denial of benefits.  For instance, some disability insurance providers argued that provisions requiring policyholders to “cooperate” with their insurer grants them the right to request that a policyholder undergo surgery.  Remarkably, when insurers employ these tactics, they are interpreting the policy language in the broadest manner possible–even though they know that the laws in virtually every state require that insurance policies be construed narrowly against the insurer.

Why would insurance companies make these sorts of claims when it is likely that they would ultimately lose in court?  Because insurance companies also know that even if their position is wrong, most insureds who are disabled and/or prohibited from working under their disability policy cannot handle the strain and burden of protracted litigation.  They know that if they threaten to deny or terminate benefits, many insureds will seriously consider having surgery—if only to avoid the stress and expense of a lawsuit.  Unfortunately, this can lead to insureds submitting to unwanted medical procedures, despite having no legal obligation to do so.

As time went on, and more and more courts began to hold that “regular care” simply meant that the insured must regularly visit his or her doctor, Unum, Great West, Guardian, and other insurers stopped issuing policies containing that language.  Instead, insurers started to insert “appropriate care” standards into policies.  In the next post, we will discuss this heightened standard and how insurers predictably used it as a vehicle to challenge the judgment of policyholders’ doctors, in a renewed effort to dictate their policyholders’ medical care.

[1] Casson v. Nationwide Ins. Co., 455 A.2d 361, 366-77 (Del. Super. 1982)

[2] North American Acc. Ins. Co. v. Henderson, 170 So. 528, 529-30 (Miss. 1937)

[3] Heller v. Equitable Life Assurance Society, 833 F.2d 1253 (7th Cir. 1987)

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Dealing with the Demands of Dentistry: It’s Ok to Ask for Help

Dentistry is not an easy profession.  The clinical aspects of dentistry are physically and emotionally demanding.  Performing repetitive procedures and holding static postures for prolonged periods of time can leave dentists feeling mentally drained, sore and fatigued.  And given the frequent exposure to patient anxiety and the need for precision when performing dental procedures, it is not uncommon for dentists themselves to develop anxiety about causing pain to patients or making a mistake when performing a procedure.

The other aspects of dentistry are no less challenging.  Many dentists work long hours, which makes balancing work, family, and other responsibilities difficult.  Other stressors include difficult and uncooperative patients, dissatisfied patients, finances, business problems, collecting payments, paperwork/bureaucracy, time pressure, cancellations, no-shows—the list goes on and on.  And that is not even taking into consideration major stressors, such as staff issues, board complaints, audits, and malpractice lawsuits.

When presented with these difficulties, dentists can become anxious and depressed.  Some even seek out mood altering drugs and/or begin to abuse alcohol, in an effort to alleviate the stress.

Thankfully, there are resources available where dentists can turn to for help.  Most dental associations have a subcommittee or group designed to provide confidential help to dentists struggling with emotional, mental and/or substance abuse issues.

For example, the Arizona Dental Association (AzDA) has a group called the Dentists Concerned for Dentist Committee (DCD).  The DCD is a group of fellow dentists who work with other dentists to help them with substance abuse problems, with an emphasis on “cure and return to practice.”  When the DCD is contacted, everything remains strictly confidential, and the State Board is not notified.  As explained by the DCD, “[t]here should be no grief or shame in seeking help.”  Accordingly, DCD records are “sealed and cannot be accessed by anyone.”

If you are a dentist in Arizona struggling with substance abuse, or you know a dentist who is, consider contacting the AzDA so that a referral can be made to the DCD.  You can find the contact information for the AzDA here.

If you live outside Arizona, consider contacting your local dental association to see if it has a similar program.

Remember, it’s ok to ask for help.

References:

“When Life Feels Just Too Hard,” INSCRIPTIONS, Vol. 30, No. 8 (August 2016) at p. 24.

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Long Term Disability by Gender, Age and Occupation

In previous posts, we have reviewed data collected by the Council for Disability Awareness related to long term disability claims.[1]  In the next few posts, we are going to look at the most recent study conducted by the Council for Disability Awareness.

To begin, here are a few of the notable trends that the study revealed regarding the gender, age and occupation of long term disability claimants:

  • The average age of long term disability claimants has increased in recent years, with the vast majority of claimants filing between the ages of 50 and 59.

CDA Graph - Age - 1

CDA Graph - Age - 2

  • The number of in-force individual disability policies for business management and administration, physicians and dental professional occupation categories increased, while the number of in-force policies for sales and marketing professionals decreased.

References:

http://www.disabilitycanhappen.org/research/CDA_LTD_Claims_Survey_2014.asp

[1] The Council for Disability Awareness is “a nonprofit organization dedicated to educating the American public about the risk and consequences of experiencing an income-interrupting illness or injury.”

See http://www.disabilitycanhappen.org/research/CDA_LTD_Claims_Survey_2014.asp

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Mind Your EIQ

In our last post, we talked about PDQ and why it matters. In this post we are going to be talking about another important calculation—EIQ.

What’s EIQ?

EIQ stands for “earnable income quotient.” Your EIQ estimates how much income you will earn before you retire.

Why Does EIQ Matter?

Many young doctors and dentists are understandably hesitant to go out and purchase disability insurance right away. Adding another insurance premium to the mix is often not very appealing to a young doctor or dentist facing substantial student loan debt and other expenses.

As time goes on, it is easy to forget about disability insurance. Once income is on the rise, many doctors and dentists raise their standard of living proportionally, without giving much thought to what might happen if that income suddenly disappeared.

Consequently, many doctors and dentists have not set up a safety net (such as disability insurance) to cover their expenses if they become disabled. Calculating your EIQ can give you a sense of how much income you are placing at risk by not having disability coverage. Depending on your salary and years remaining until retirement, the number may surprise you.

Once you know your EIQ, you will have a better sense of the amount of disability coverage you will need to maintain your standard of living and meet your goals for retirement. Remember that should you become disabled, your expenses will not simply go way. If anything, they will likely be higher due to medical bills and other out-of-the-ordinary costs that are necessary to accommodate the disability, so be sure to also factor such expenses into your level of coverage.

How Do I Calculate My EIQ?

The Council for Disability Awareness also has an online EIQ calculator. All you have to do is input some basic information about your annual/hourly/weekly income, expected salary increases, and retirement age and the EIQ calculator will estimate how much you will make before you retire.

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Mind Your PDQ

What’s PDQ?

PDQ stands for “personal disability quotient.” Your PDQ estimates the likelihood that you will become disabled during your lifetime, based on a number of lifestyle and health factors.

Why Does PDQ Matter?

Many young doctors and dentists think that because they are young and healthy, they do not need disability insurance, but this can be a dangerous way of thinking. In the first place, many disabilities are caused by unforeseen accidents, not poor health.  Additionally, the odds of becoming disabled are much higher than you might think. The Social Security Administration estimates that a 20-year old entering the workforce has a 1 in 4 chance of becoming disabled before retirement.

Still, each person is different. Your lifestyle, occupation, or medical history may place you above or below the average risk for disability. This is where your PDQ comes in. While your PDQ obviously will not be able to predict what will happen to you with 100% accuracy, it can help you have a better sense of your personal level of risk for disability.

How Do I Calculate My PDQ?

The Council for Disability Awareness has an online PDQ calculator that you can use to find out your PDQ. All you have to do is input some basic information about your age, height, medical conditions, and the kind of work you do and the PDQ calculator will tell you your chances of being disabled before you retire. The PDQ calculator will also tell you the chances of your disability lasting 3 months or longer, the chances of your disability lasting 5 years or longer, and the average length of a long term disability for someone like you.

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Alzheimer’s: Is there a Helpful Drug on the Horizon?

Alzheimer’s disease is a serious disability that can dramatically impact a physician or dentist’s ability to practice.  In this post, we will be looking at some of the risk factors associated with Alzheimer’s, some of the signs that may indicate the onset of Alzheimer’s, and some of the proposed methods of treating Alzheimer’s.

Risk Factors

Alzheimer’s is a form of dementia that affects memory, thinking, and behavior.  There are three primary risk factors for Alzheimer’s:

  1. Age: Most people that have Alzheimer’s are 65 or older, and the likelihood of developing Alzheimer’s doubles every five years after age 65.
  1. Heredity: Scientists have identified certain “risk” genes that can contribute to the risk of developing Alzheimer’s. Amyloid precursor protein (APP), presenilin-1 (PS-1), and presenilin-2 (PS-2) are proteins that directly cause Alzheimer’s, although “deterministic” Alzheimer’s occurs in only 5% of cases.  APOE-e4 is another gene that scientists believe may be a factor in 20 to 25% of cases, although they are not sure precisely how it increases the risk.
  1. Family History: People who have parents, siblings, or even children with the disease are more likely to have Alzheimer’s. The risk also increases as more family members develop the disease.

Warning Signs

The Alzheimer’s Association lists 10 warning signs that may indicate the onset of Alzheimer’s: Continue reading Alzheimer’s: Is there a Helpful Drug on the Horizon?

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Will Physical Therapy Help Your Back Pain?

In previous posts, we have discussed some of the methods used to treat back pain. One common method of treatment is physical therapy. However, according to a recent study published in JAMA, physical therapy may not provide significant benefits for patients suffering from lower back pain.

The JAMA study divided patients with back pain into two groups. The first group participated in sessions with a physical therapist. The second group was simply told that the pain would get better if they maintained an active lifestyle.

Although the physical therapy group demonstrated more improvement over the first 3 months (based on a scale that measures disability from lower back pain), after 1 year both groups’ results were substantially the same.

Additionally, the study did not find any meaningful differences in the groups’ pain intensity, quality of life, or number of visits to health care providers.

Thus, the study would seem to suggest that while physical therapy may help for a limited amount of time, in the long run it may not necessarily be an effective treatment method for back pain.

Notably, the sample size for the study was small (207 people), so further research may be necessary to more precisely determine the extent of the benefits provided by physical therapy.

See also http://well.blogs.nytimes.com/2015/10/14/physical-therapy-may-not-benefit-back-pain/?smid=tw-nytimeswell&smtyp=cur&_r=0.

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The Reality of Addiction: Physicians Are Susceptible Too

We’ve discussed the prevalence of depression and stress in physicians, but what about addiction?  While physicians are just as likely as the general public to become dependent upon alcohol and illegal drugs, they are more likely to abuse prescription drugs.  A survey of 55 physicians that were being monitored by their state physician health programs for problems relating to drug and alcohol abuse showed that 38 (69%) abused prescription drugs.  While certainly concerning, this is not necessarily surprising, as physicians have far greater access to prescription drugs than the average person.

Compounding this issue is the stigma associated with substance abuse.  Oftentimes, those who do not suffer from substance addiction believe that drugs and alcohol are something that people can quit easily, and that substance abuse can be solved by a quick trip to a rehab facility.  But in many cases, substance abuse is more than mere recreational use of medications.  In some cases, those who abuse prescription drugs may be trying to relieve stress or self-medicate chronic physical and/or emotional pain.  In other cases, substance abuse may be a result of the phenomenon called “presenteeism”—doctors may be taking the medication simply because they believe it is the only way to continue working in spite of an illness, impairment, or disability.

How can medical professionals with substance addiction get help? One way is to seek confidential treatment to avoid the scrutiny of a medical board or coworkers.  Confidential programs can be both outpatient and inpatient, with inpatient programs usually lasting around one to three months.  After treatment, patients are able to continue recovering by completing 12–step programs, like Alcoholics Anonymous.  However, this treatment option has similar relapse rates to the general public: nearly half of patients relapse in the first year.

A second road to recovery is physician health programs.  These programs actively monitor patients after treatment for a period of five years by conducting drug testing, surveillance and behavioral assessments.  This path may be difficult for physicians to come to term with after keeping their addiction hidden.  However, going through the physician health programs boasts a much higher success rate of 78% (only 22% tested positive during the 5-year monitoring period), and roughly 70% of medical professionals who pursue this method of treatment are still working and retain their licenses.

If you, or a physician you know, struggles with substance dependency, we encourage you to seek out appropriate help.  If you are a physician with a painful disability, you should not put your patients at risk by attempting to work through the pain or by seeking to dull the pain with self-medication.  If you have disability insurance, you should contact an experienced disability insurance attorney.  He or she will be able to guide you through the claims process and help you secure the benefits that you need without putting yourself or your patients at risk.

REFERENCES:

http://www.medscape.com/viewarticle/819223_3.

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