In an ideal world, you’d receive a favorable decision and your first benefit check shortly after your policy’s elimination period is satisfied. Unfortunately, even wholly legitimate claims get scrutinized, questioned, delayed, and in some cases, denied. Below are a few common reasons benefit payments are delayed, particularly at the outset of a claim.
Improperly Completed/Partially Completed Forms
If your initial claim forms are missing information, unreadable, or incomplete, your insurer will likely issue additional forms for completion or use the missing information as an excuse to delay processing the claim. This applies to both the forms that you are required to complete and sign and the forms the insurer gives you to give to your doctor to fill out, so it is important to follow up with your doctor and make sure that all of the necessary forms are completed and returned in a timely fashion. If you do not carefully document your claim, and you do not promptly respond to requests for follow-up information, most insurers will delay making a claim decision until you provide them with the requested information.
Pending Requests for Information
At the outset of your claim, your insurer will require you to sign an authorization that allows them to request a wide range of information from a wide range of sources, including your doctors and employer. Oftentimes, the insurer will request information from these other sources (without telling you) and then will delay making a decision on your claim if any of these requests remain pending.
This means that even if you provide the insurance company with everything they requested from you, there may be other information that the company is waiting that is holding up the claims decision. Consequently, it’s important to ask the insurance company to find out if there are any pending requests, adn then follow up with your doctors, employers, etc. as needed to ensure that the information is provided.
It’s also important to keep tabs on the pending requests, to determine whether the scope of the insurer’s investigation is appropriate. An experienced disability attorney can advise you on whether a particular request for information is warranted under the circumstances of your particular claim.
Failure to Schedule Medical Examinations/Interviews
When you file a disability claim, insurers will almost always require that you participate in a detailed interview and/or undergo an independent medical examination (IME). While the stated point of these requests is to confirm or verify your disability, they can often be an attempt by your insurer to discredit your own doctor or medical records and generate fodder to deny your claim. Depending on the nature of your condition, your insurer might also request other types of interviews or exams—such as a functional capacity evaluation (FCE) or neuropsychological evaluation.
Some claimants (mistakenly) believe that if they keep putting off these exams, then they’ll be able to avoid the exams. However, most disability policies contain a provision that expressly requires the policyholder to submit to exams, and states that failure to do so is grounds for denying a claim or terminating benefits. So if you put off these exams, it’s only going to delay the company’s claim decision, and possibly result in a claim denial. However, keep in mind that going into a medical examination, IME, or interview unprepared can be just as bad for your claim, so it’s very important to prepare beforehand. Once again, an experienced disability attorney can advise you regarding the proper scope of an interview or IME, and can also be present for the interview or IME, if desired.
The answer depends on what your disability policy says. Many people don’t realize that their policy may limit their ability to receive disability benefits if they move out of the country. If you’ve ever wondered why claims forms ask for your updated address, one of the reasons might be that your policy contains a foreign residency limitation, and your disability insurance company is trying to figure out if they can suspend your benefits.
Foreign residency limitations allow disability insurance companies to stop paying benefits under your policy if you move out of the country. These limitations may be especially relevant if you have dual citizenship, you want to visit family living abroad, or you plan to obtain medical care in another country. A foreign residency limitation may also affect you if your policy allows you to work in another occupation and you have a job opportunity in another country that you want to pursue. For instance, if you are a dentist and can receive disability benefits while working in another occupation, your insurance company may suspend your benefits if the opportunity you pursue is in another country.
Foreign residency limitations benefit disability insurance companies in several ways. By requiring you to remain mostly in the country while receiving benefits, these limitations simplify the payment process and reduce the possibility that insurers will need to communicate with doctors in other countries to manage your claim. They also make it easier for insurance companies to schedule field interviews and conduct surveillance of you to find out if you have done something that could be interpreted as inconsistent with your claim.
While these limitations are not included in every disability insurance policy, it is important to check if your policy—or a policy you are considering purchasing—contains a foreign residency limitation, because it could limit your ability to collect benefits later on.
Foreign residency limitations vary by policy. Here is an example of one foreign residency limitation from a Guardian policy:
Limitation While Outside the United States or Canada
You must be living full time in the 50 United States of America, the District of Columbia or Canada in order to receive benefits under the Policy, except for incidental travel or vacation, otherwise benefits will cease. Incidental travel or vacation means being outside of the 50 United States of America, the District of Columbia or Canada for not more than two non-consecutive months in a 12-month period. You may not recover benefits that have ceased pursuant to this limitation.
If benefits under the Policy have ceased pursuant to this limitation and You return to the 50 United States of America, the District of Columbia or Canada, You may become eligible to resume receiving benefits under the Policy. You must satisfy all terms and conditions of the Policy in order to be eligible to resume receiving benefits under the Policy.
If You remain outside of the 50 United States of America, the District of Columbia or Canada, premiums will become due beginning six months after benefits cease.
This limitation highlights several details you should look for if your disability policy contains a foreign residency limitation, including the length of time you can spend in another country before your insurance company will suspend your benefits, whether you can resume receiving benefits if you return to the country, and when you will have to resume paying premiums if your insurance company suspends your benefits. Another important consideration is the effect a foreign residency limitation will have on your policy’s waiver of premium provision. Under the policy above, premiums will continue to be waived for six months after benefits are suspended. However, your policy may have a different requirement regarding payment of premiums, so it’s important to read your policy carefully.
Here is an example of another foreign residency limitation from a different Guardian policy:
Foreign Residency Limitation
We will not pay benefits for more than twelve months during the lifetime of this policy when you are not a resident of the United States or Canada.
This limitation contains much less detail than the first limitation. For instance, it does not clarify how suspension of benefits will affect waiver of premium. If your disability policy contains a foreign residency limitation that does not discuss waiver of premium, you should look to your policy’s waiver of premium provision to find out when premiums will become due after benefits are suspended. The policy above also defines foreign residency differently than the first policy. At first glance, it may seem that you can continue to receive disability benefits any time you leave the country for twelve months or less. What the policy actually says, though, is that the insurance company will only pay benefits for twelve months that you are out of the country at any time you are covered by the policy. So, if you have received benefits for twelve months while living in another country—even if those months were spread out over several years—your insurance company will not pay benefits in the future unless you are in the United States or Canada.
As you can see, foreign residency limitations vary among disability policies. If you are thinking about leaving the country, it is important to read your policy carefully first so that you understand how leaving the country may affect your ability to recover benefits.
Previous posts in this series discussed why residents should secure disability coverage sooner rather than later and examined some important terms and provisions to look for in choosing a policy. In this final post, we’ll be discussing some provisions that allow you to increase your monthly benefits.
As a medical resident, you likely will not be able to obtain a high amount of disability coverage at first, due to your limited income. Consequently, it is important to look for a policy that offers a way to increase your benefits in the future, as your earning capacity and expenses increase. You can also, of course, just purchase an additional disability policy if you want to increase your monthly benefit amount, but there can be certain advantages to building benefit increases into your policy from the start. For example, if your policy has a future increase option provision, you can typically increase the monthly benefits without undergoing any additional medical underwriting (which could otherwise result in exclusions being added to your policy if you have recently suffered from a new medical condition).
Here are a few of the most common methods of increasing the monthly disability benefit of an existing disability policy:
The automatic benefit increase rider adjusts your monthly benefit on an annual basis to account for anticipated increases in income after you purchase your policy. The annual increases are typically for a term of five years, after which you will generally be required to provide evidence of your increased income in order to renew the rider.
This policy rider guarantees you the right to purchase additional coverage at predetermined dates in the future without going back through the long and tedious process of reapplying for a policy. These riders can be attractive because often no additional medical underwriting is required. Most insurers will not allow you to purchase this rider after age 45.
A COLA rider automatically increases your benefit amount by a certain percentage every year to account for increased cost-of-living due to inflation.
Assuming that you will not face a short or long-term disability until you are older is not a risk you want to take. An individual disability insurance plan is a key component in making sure you are financially stable in the event you are no longer able to practice medicine in your chosen field. However, not all plans are created equal. Take the time to evaluate your financial goals and look carefully at the benefits provided by the basic terms, provisions, and riders of the policy you are considering.
In our previous posts in this series, we examined why residents should not wait to acquire disability coverage and discussed some key provisions to look for when selecting an individual disability policy. In this post, we’ll be taking a look at a few more provisions you may want to look for when selecting a policy. More specifically, we are going to look at some policy provisions that can help you meet your monthly expenses in the event of disability, along with some policy provisions that can help you plan for your retirement.
Student Loan Coverage Rider
If you are like most residents, you have accrued a significant amount of student loan debt. The time it takes to pay off student loan debt varies widely based on income and other expenses. Many doctors must practice for several years before they are able to pay off all of their student loans, and student loan obligations can be a significant monthly expense to meet if you are disabled and no longer able to practice. Although not as common as other riders, a student loan coverage rider allows policy holders to insure their student loan for an additional amount each month, on top of their benefits.
This provision allows you to forego paying your policy premiums while you are receiving disability benefits, freeing up a substantial portion of the monthly income you would otherwise be paying back to the insurance company.
This provision, while not as common, entitles the policy holder to receive a refund of all premiums if he or she does not become disabled before the expiration of the policy term. This can be appealing to residents, whose plans will be in effect for a long time.
This important provision in a policy controls the period of time the insured is eligible to receive benefits. Most plans pay benefits until age 65 or 67, some pay lifetime benefits, and others pay for only a limited amount of time, even if a claim is filed decades before the policy terminates.
The majority of doctors under 40 list preparing for retirement as their top financial goal. There are several different disability policy riders directed towards this goal, including the following.
Graded Lifetime Benefit Rider: This provision, based on its terms, extends some or all of your disability benefits past the normal end date of age 65 or 67.
Lump Sum Rider: This rider provides for a one-time payment once the policy expiration age is reached. Typically, policy holders must have received benefits for at least one year and the lump sum payment is typically a percentage of the aggregate sum of benefits received during the policy term.
Retirement Protection Insurance: Depending on the insurer, this may be offered as a rider or a stand-alone policy. If you become disabled and your claim is approved, your insurer will establish a trust for your benefit, where benefits are deposited and invested (similar to an employer-sponsored 401(k)), with funds likely becoming accessible after the age of 65.
Our next post in this series will discuss the importance of choosing a plan where benefits increase over time.
 2015 Report on U.S. Physicians’ Financial Preparedness, Young Physicians Segment, American Medical Association Insurance, https://www.amainsure.com/reports/2015-young-physician-report/index.html?page=5.
In our previous post, we looked at how important it is for residents to have a plan to protect themselves financially in the unfortunate event they become disabled. In this post we will address some critical terms to look for when comparing potential policies.
Perhaps the most important provision in your policy is the definition of “Total Disability.” For physicians, dentists, and other highly specialized professionals who have invested both years and hundreds of thousands of dollars in their careers, a policy that defines “Total Disability” in terms of your inability to perform the specific duties of your “own occupation” (as opposed to “any occupation”) is critical. If your policy defines “Total Disability” as being unable to work in “any occupation,” it will be much more difficult to establish that you are entitled to benefits, in the event you suffer from a disabling condition.
In addition to knowing and understanding your policy’s definition of “total disability,” it is also crucial to know how working in another profession is treated by your policy. For instance, if you happened to be an oral surgeon with an essential tremor, you may no longer be able to operate safely on patients, but you may still be able (and want) to teach. Alternatively, if you happened to be a physician who did not take steps to increase your disability coverage to match your increases in earnings, working in another capacity may be the only way to maintain your lifestyle in the event of disability. Consequently, it is also important to know if your policy will allow you to work in another capacity and still collect benefits. Along those lines, here are a few other provisions you will want to watch out for:
No Work Provisions
These provisions mandate that 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 financial needs.
These types of provisions require you to work in another occupation. This, of course, can make it impossible to collect on your benefits if your disability prevents you from working.
In our next post we will look at how you can select a plan that grows with you over time, as both your financial obligations and income change.
As a medical resident who is just starting out, you have likely heard about disability insurance, but you may not know a lot about what it is, and why it is important. In this series of posts, we will be discussing a few things that every medical resident should know about disability insurance.
In this post we will look at the likelihood of disability, and discuss how you can begin to protect yourself now and in the future. In subsequent posts we’ll address some of the key provisions to look for in a disability insurance policy, ways to make sure your policy meets current and future expenses, and ways to increase your disability benefits over time, as both your earning potential and financial obligations expand.
Likelihood of Disability
As a resident, you are beginning what will hopefully be a long and successful career as a physician. The possibility of suffering either a short or long-term disability is probably the last thing on your mind, especially if you are still young and healthy. However, the American Medical Association (AMA) reports that 60% of surveyed physicians have a colleague who has sustained a disability accident or injury. A Social Security Administration report shows that it is significantly more likely that a worker born in 1996 will become disabled during his or her career than die, and just over 1 in 4 of today’s twenty-year-olds will become disabled before they retire.
Protection Against Disability
The majority of young doctors under 40 are married, have children, are homeowners, and 75% report that they are their family’s primary breadwinner. Young doctors also face substantial student loan debt, totaling around $166,750, on average. With a resident’s salary averaging just $50,000 a year, it can be tempting to put off adding the additional expense of an insurance premium. However, with most young doctors having less than $50,000 in an emergency fund , it’s never too early to start planning to protect your family and provide for care in the unfortunate event you can no longer practice.
While many residents and doctors choose to take part in disability plans offered by their employers, these plans will often not provide adequate coverage, and any benefits you do receive will likely be taxable. In contrast, an individual plan provides coverage that is yours as you move from your residency and through (potentially) many different employers. Individual plans also typically allow you to adjust your coverage as your income potential grows. However, not all individual policies are created equal and it is important to carefully choose a policy.
In our next post, we’ll examine some key provisions to be aware of when shopping for an individual disability insurance policy.
 Robert Nagler Miller, Residents: Your disability insurance coverage may fall short, AMA Wire, April 4, 2017, https://wire.ama-assn.org/life-career/residents-your-disability-insurance-coverage-may-fall-short
 Johanna Maleh and Tiffany Bosley, Disability and Death Probability Tables for Insured Workers Born in 1996, Social Security Administration, Office of the Chief Actuary, Actuarial Note, No. 2016.6, October 2016.
 You, disabled? What are your chances?, The Council for Disability Awareness, 2015, http://www.disabilitycanhappen.org/chances_disability/
 2015 Report on U.S. Physicians’ Financial Preparedness, Young Physicians Segment, American Medical Association Insurance, https://www.amainsure.com/reports/2015-young-physician-report/index.html?page=5
 Kathy Kristof, $1 million mistake: Becoming a doctor, CBS Money Watch, Sept. 10, 2013, http://www.cbsnews.com/news/1-million-mistake-becoming-a-doctor/
 2015 Report, Supra.
 Miller, Supra.
 2015 Report, Supra
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.
When a disability insurance company is fighting a claim, it will often agree to pay benefits – but with a “reservation of rights.” What is a reservation of rights and how can it impact a legitimate disability claim?
When an insurer pays a claim under a reservation of rights, it is essentially providing a provisional payment. Though the insurance company may be sending you a check, it is not admitting that it actually has any liability under the policy. Instead, it is “reserving the right” to stop paying your claim if it can find evidence to deny it later. Once the company denies your claim, they can also demand you to repay them whatever proceeds they have distributed to you.
This practice is good for the insurance company, as it buys it extra time to investigate – and often later deny – a claim without putting it at risk of violating the laws against undue delay in payment. However, because the insurance company can still investigate the claim and then demand full repayment at any moment, the reservation of rights provides no peace of mind for the policyholder. Fortunately, a disability insurance attorney can protect you from this uncertainty by properly presenting your claim and thoroughly monitoring the insurance company’s actions to reach a beneficial result.