1. Short-term vs. long-term disability insurance
You may be filing a new claim, or have received a denial for either short- or long-term disability insurance coverage. Both short- and long-term disability insurance cover a percentage of your income if an illness or injury disables you from working.
As the names suggest, short-term disability and long-term disability insurance are distinguished by how long they pay.
Short-term disability insurance coverage usually begins a week after the disability begins and continues for just a few months, usually between 90 and 180 days after the disability starts. In most policies, it replaces 50% – 80% of your income for the period you have coverage.
Long-term disability insurance coverage starts after short-term coverage ends, if a more serious illness or injury prevents you from working as a physician for an extended period of time. It lasts until either you can return to some degree of work (depending on your policy’s definition of “disability” or “disabled,” a key provision affecting your claim, especially as a doctor, as discussed fully below), or until the end of the benefit period – typically either age 65 or “normal retirement age” if you remain disabled for that long. Long-term disability coverage typically pays 60-66% of your income at the time you became disabled.
Long-term disability insurance is critically important to have because it covers catastrophic disabilities that can keep you out of work as a doctor for years, or permanently.
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2. The key policy provisions that drive a physician’s long-term disability claim:
“Disabled,” “Disability,” and “Own Occupation” (or “Your Occupation”)
The success of a doctor’s long-term disability insurance claim is most heavily impacted by the definitions of “Disability” or “Disabled”, and “Own Occupation” or “Your Occupation” found in the policy. These definition provisions vary from policy to policy. In order for you, as a physician to qualify for disability insurance benefits, you must meet the definition of “Disability” or “Disabled” outlined in your policy.
If you’ve received a claim denial, your insurer should have quoted these defining provisions in your denial letter. Knowing exactly what YOUR provisions mean is key to knowing exactly what evidence and proof (not just argument) you, as a doctor, must BUILD into your claim or appeal record, medically, factually and legally in order to succeed in recovering long-term disability benefits.
The four most common different types of definitions of disability in physicians’ long-term disability policies are:
- True own-occupation
- Transitional own-occupation
- Modified own-occupation
- Any occupation
While different policies provide slightly different variations of each type of definition, in large part they work the same way.
Here’s how each type of definition applies:
A. True Own-Occupation Definition of Disabled or Disability
“True own occupation” coverage provides the strongest disability insurance protection for physicians. Since true own occupation long-term disability policies for physicians offer the broadest coverage and protection, they’re also the most expensive to purchase. A true own occupation definition of disability will clearly define you as totally disabled if you can’t perform the duties of your “own occupation” on a full-time basis, with “own occupation” meaning your specialty or sub-specialty.
The language of each contract can vary, but a true own occupation definition of “total disability” or “totally disabled” will read something like this:
“You are not able to perform the material and substantial duties of your Own Occupation. You will be Totally Disabled even if you are Gainfully Employed in another occupation so long as, solely due to Injury or Sickness, You are not able to work in your Own Occupation.”
True own-occupation coverage pays you your full benefit if you can’t perform the specific duties or specialty, even if you’re practicing medicine and earning a salary, even the same salary, in some other capacity. You’ll still be considered disabled and get your full benefit payout.
Take, for example, a cardiovascular surgeon with a disability preventing him or her from performing surgery, but who is still capable of working as a general cardiologist or cardiology professor. Under a true own occupation long-term disability policy, that cardiovascular surgeon is entitled to full policy benefits even if working as a general cardiologist or cardiology professor, and even if earning the same amount as he or she did as a cardiovascular surgeon.
There are a few other definitions of disability that can be confused or even mistakenly sold as true own-occupation disability insurance to doctors. However, these policies won’t continue to pay your full benefit if you can perform other jobs, even if they are lower-paying jobs.
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B. Transitional Own-Occupation Definition of Disabled or Disability
With this definition, your policy will pay benefits similar to a true own-occupation policy with one important difference: If you can’t work in your specialty, but you start earning an income doing something else, your total net income, including benefits, cannot exceed the total income of your former job.
A transitional own-occupation policy will include a provision something like this:
“You will continue to receive disability benefits if you become totally disabled from Your Occupation, but are working in another occupation. Benefits will be paid up to 100% of your prior earnings, but will not exceed the total monthly benefit.”
With transitional own-occupation coverage, the policy will generally cover your income up to the point of your income before the disability. As an example, prior to your disability, say you were making $12,000 a month. After your disability, you began working as a professor earning $6,000 a month. If you weren’t working at all due to your disability, and your policy benefit was 60% of prior earnings, it would pay $7,200 a month. But with your professor salary, a transitional own-occupation policy would then pay you only a $6,000 monthly benefit, because when added to your $6,000 monthly income from teaching, the sum would total your prior $12,000 monthly income.
Essentially, with a Transitional Own Occupation policy, you can take advantage of a new job opportunity while still getting your benefit. The difference is that the company will only pay the gap between your old monthly income and your new monthly income.
C. Modified Own-Occupation Definition of Disabled or Disability
In a modified own-occupation policy, the definition of disabled will read something like this:
“The Insured is Totally Disabled when both unable to perform the principal duties of his or her Regular Occupation and not Gainfully Employed in Any Occupation.”
Under this type of coverage and definition, benefits do not continue if the doctor becomes “Gainfully Employed” in another occupation – “Any Occupation”. Thus the options for a totally disabled physician with modified own-occupation coverage would be to either live off their benefit check, return to their “Regular Occupation,” or become “Gainfully Employed” in a different occupation without receiving their disability benefit. If the disabled physician becomes “Gainfully Employed” in a different occupation, such as in the cardiovascular surgeon-turned professor example above, benefits would cease under a modified own-occupation Policy.
One important caveat: “Gainfully Employed” is sometimes defined in disability policies to include an income threshold component, whereby the insurer can’t deny benefits on the basis that the claimant is performing the duties of any job, at any wage. Rather, to warrant termination of benefits, the physician must be earning above a certain amount, typically 80% of their pre-disability income.
D. Any Occupation Definition of Disabled or Disability
Under an any-occupation policy, you’re considered disabled only if you can’t work in anyoccupation for which you could be considered reasonably suited based on education, training, or experience.
The definition of disabled an any occupation policy will look something like this:
“You are unable due to illness or injury to perform the material and substantial duties of any occupation for which you are reasonably fitted by education, training, and experience.”
Thus, if you’re able to work in another industry and there are open positions that you’re capable of performing within your medical restrictions and limitations, the insurance company will argue that you’re no longer be totally disabled under the policy. Whether or not you choose to take the job doesn’t matter.
As with modified own-occupation policies, some any-occupation policies will include an income threshold qualifier, whereby the “any occupation” capability must be for jobs with earnings at or exceeding a certain percentage of the doctor’s pre-disability income.
Look at your own policy to see which definition of “disability” applies.
E. Illustrated Comparison of How the Different Common Definitions of Disability Work
This illustration is for physicians’ long-term disability coverage having a 90-day elimination period.
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