David B. Hoyt, MD, FACS
Surgeons work in a physically demanding field, and the risk of injury is considerable. Moreover, most physicians and surgeons in the U.S. are now 50 years of age or older, and like all aging Americans, need to be prepared for the likelihood that they will develop a debilitating or chronic condition that will prohibit them from remaining in practice. Furthermore, surgeons are facing heightened stress with each passing day due to reimbursement, liability, and workforce shortage issues. For some surgeons, the pressures can be extraordinary, leading to burnout, substance abuse, and other mental and physical health care problems.
Most of us have little time or inclination to contemplate these possibilities and to plan for a future in which we are unable to experience the financial and personal rewards of surgical practice. In fact, more than half of 2,365 physicians who responded to a survey conducted by a subsidiary of the American Medical Association admit they are behind in preparing for retirement and their financial future. Many reported gaps in their knowledge of personal finances and expressed a lack of confidence in their financial decisions related to retirement savings, estate planning, and insurance.*
As a professional organization, the American College of Surgeons (ACS) offers its members a range of services designed to help them plan for the years leading up to and beyond retirement, so that they can continue to enjoy the benefits of their many years of dedication to patient care. With the majority of surgeons looking toward retirement in as little as 10 years, protection of future income takes on significant importance. One form of protection that is particularly relevant to an aging population of surgeons is disability insurance.
Need for disability insurance
A disability is defined as any illness or injury that interferes with an individual’s ability to work. Among those individuals who experience a disability, one in three is out of work for three months or more, one in five is unable to work for a year or longer, and one in seven cannot work for five years or more.† When surgeons lose their ability to practice for extended periods of time, they are vulnerable to losing everything they have worked so hard to acquire.
According to the Council for Disability Awareness, nearly three in 10 new long-term disability claims in 2012 were caused by musculoskeletal system and connective tissue disorders, such as rheumatoid arthritis; the next leading cause was cancer or neoplasms.† As we all know, if a surgeon were to develop severe arthritis or end-stage cancer, his or her ability to operate would be significantly limited for at least some period of time, if not draw to an end.
Although certain safety nets are in place to assist individuals who are injured, such as Workers’ Compensation and Social Security, these programs offer little protection for most Americans, especially those of us in professional positions. Most disabilities are not directly work-related and, therefore, not covered by Workers’ Compensation. Meanwhile, to qualify for Social Security disability, an individual must be completely unable to work for at least a year or have a terminal, irreversible illness.
Surgeons may be underinsured
An estimated 81 percent of all physicians have private disability insurance; however, few of them have coverage that is sufficient to protect their income and allow them and their families to enjoy their current lifestyle. For example, if a surgeon earns $600,000 and has a maximum monthly benefit of $20,000, his or her family’s income will drop to 40 percent of its existing level.
According to the 2013 study of U.S. physicians’ financial preparedness cited earlier, 42 percent of the respondents had not reviewed their disability insurance policy either in the last five years or since they purchased it. Furthermore, most of them were uncertain whether they were carrying the right amount of protection for their needs, and another 50 percent said they were unsure if the disability benefit they would receive was considered taxable income.
In researching and obtaining disability insurance, surgeons should seek out opportunities within the traditional disability insurance markets as well nontraditional long-term disability insurance plans. The nontraditional marketplace offers coverage with higher limits on benefits as well as novel policy features and liberal underwriting with specialty occupation definitions. As a result, surgeons may experience an income replacement ratio of up to 65 percent of their current income.
Consider your options
It is important that surgeons take the time to review their current disability benefit amounts. I would encourage members of the ACS to research the possibilities available to them through this organization and their personal financial consultants to obtain a higher income replacement amount and higher disability benefits.
As unpleasant as it is to contemplate, we all need to accept the realities of being part of a demanding profession and of the inevitable effects of the aging process. Take the necessary steps to protect your family and to maintain the lifestyle you have earned and enjoy. For more information about ACS-sponsored disability programs, contact our administrator, NEBCO, at 1-800-433-1672.
*AMA Insurance. 2013 Report on U.S. Physicians’ Financial Preparedness. Available at: www.amainsure.com/resourcecenter/2013-report-on-physicians-financial-preparedness.html. Accessed September 1, 2013.
† The Council for Disability Awareness. The 2013 Council for Disability Awareness Long-Term Disability Claims Review. Available at: www.disabilitycanhappen.org/research/CDA_LTD_Claims_Survey_2013.asp. Access August 30, 2013.
