Definitions of Long-Term Disability
The contractual definition of disability varies among disability policies. The strength of the definition is the key aspect of a policy that determines whether your injury or illness qualifies you for a claim and for how long. Listed below are the different types of definitions:
- Pure Own-Specialty Definition: If you are unable to work in your specialty after long-term disability, full benefits are payable even if you are working in a different specialty or a different occupation altogether.
- Transitional Definition: If you are unable to work in your specialty, full benefits are payable. If you choose to be employed in another occupation, full benefits will be paid until post disability earnings plus disability insurance benefits equal pre-disability earnings.
- Own-Specialty and Not Engaged Contract: If you are unable to work at your specialty, full benefits are payable if you are not working at a different occupation.
- Proportionate benefits are payable if you work in a different occupation but experience a loss of income. (Key: choice to work in another occupation is yours and not the company’s).
- Own Specialty for a Limited Time Then Any Reasonable Occupation: If you are unable to work at your specialty due to long-term disability, full benefits are payable for a limited time period (usually 2 years). After that, you must be unable to perform the duties of any reasonable occupation. Key: (choice to work in another occupation is not yours. The insurance company can stop paying your claim if you are able to work in another occupation).
Individual Disability Insurance Contracts vs. Group or Association Contracts
Group Disability policies are sometimes available through your employer and contain the same provisions for all employees in a company, regardless of income level. Group policies are the weakest of all contracts in the marketplace due to the limited protection the contractual definitions offer a physician. They also usually offer only a one- to two-year rate guarantee and then the premiums can fluctuate as the carrier sees fit.
Most group policies have only a two-year “own occupation” clause when you can’t perform as an MD or DO. These are typically not specific to your specialty, and after the own occupation period, you will be required to do “any job for which you are REASONABLY TRAINED, EDUCATED, OR EXPERIENCED TO DO”. It’s important to understand that your education opens you up for hundreds of jobs.
Group policies also contain “offsets” that typically reduce benefits if you qualify for the following:
- Social Security Benefits: Your group disability contract will reduce dollar for dollar from the amount of Social Security benefits you receive. We believe that you paid for both benefits and should receive both benefits.
- They will offset against other Group benefits.
- Worker’s Compensation plans.
- Lost wages if you are receiving benefits from, say, an auto accident, then your disability benefits don’t have to pay if another person’s insurance is paying you.
Association Disability insurance policies are offered from different affiliated groups to their members and typically resemble group policies in their features.
These disability plan policies typically have the following provisions
- Usually priced competitively in the beginning but trend up with your age with the average rate increase being 30-50% at ages 40, 45, 50, 55, and 60.
- Waiting period restrictions of “totally and completely disabled for the entire waiting period to become eligible for benefits to begin.”
- The new trend for association plans is going to an own-specialty and not engaged definition which reduces your benefit upon working for wage or profit in any form or fashion.
- The association and the insurance companies typically have the right to cancel the block of disability policies their members purchased with a 60-day notice to their disability plan policyholders.
