How Much Can Physicians Earn, and What Work Can They Do, While Receiving Full Long-term Disability Insurance Benefits?
A Long Term Insurance Attorney’s Analysis With Examples and Commentary from a Physician’s Sun Life Long Term Disability Insurance Policy
If you’re a physician contemplating filing a claim for long-term disability insurance, you’re likely also wondering: “What work can a physician do, and how much can a physician earn, and still receive full long-term disability benefits?”
Well, it depends, and the answer can be complicated. One driving factor will be whether your disability policy is a true “Own Specialty” occupation policy. The truth is, “Own Specialty” occupation coverage is more expensive to purchase. Some agents or employers may tell you that their policy provides “Own Specialty” coverage, but the policy language governs, and they’re often mistaken. Consulting a Physician Disability Insurance Lawyer can help ensure you understand your coverage and protect your long-term disability benefits.
This article will tell you how you can be sure.
Understanding “Own Specialty” Disability Coverage for Physicians
What Physicians Can Earn and What Type of Work They Can Do and Still Receive Long Term Disability Insurance Benefits Can Vary from Policy to Policy, and Depending on Whether the Policy in Question Provides True “Own Specialty” Occupation Coverage
Getting to the answer always begins with an analysis of the insurance policy language, with the definitions of “Total Disability” and “Regular Occupation” being key. These definitions tell us whether the physicians’ long term disability policy is truly an “Own Specialty” occupation policy, which is critical.
True “Own Specialty” policies will clearly define “Regular Occupation” to be the board-certified specialty of the physician, rather than just “physician” generally. This is important, because a medical condition such as a hand tremor, that would disable a surgeon, or other procedure-heavy specialty, would not necessarily disable him or her from the material and substantial duties of being a family practice physician.
If the policy is a true “Own Specialty” occupation policy, the surgeon disabled performing the material and substantial duties of being a surgeon due to hand tremor would get full disability benefits even if he or she were not disabled from being a “physician” in another capacity. The disabled surgeon with true “Own Specialty” disability coverage could also choose to practice any other type of medicine and still receive full long term disability benefits.
How to Identify True “Own Specialty” Disability Policy Language
Distinguishing True “Own Specialty” Coverage Policy Language From Language Not Qualifying as True “Own Specialty” Occupation Coverage
I recently analyzed a physicians’ Sun Life Insurance Company long-term disability insurance policy for a Pediatric Cardiologist who was asking what work he could do, and how much he could earn, and still receive full long-term disability benefits from Sun Life. His policy provided true “Own Specialty” occupation coverage.
We’ll use the Sun Life policy provisions as an example to explore several scenarios of total and partial disability under both true “Own Specialty” coverage, and coverage not qualifying as such
Earnings Allowed Under True “Own Specialty” Total Disability Coverage.
Permissible Physician Earnings and Work if Totally Disabled Under True “Own Specialty” Occupation Coverage
The relevant definitions qualifying his coverage as true “Own Specialty” occupation coverage were as follows, quoted word-for-word from the Sun Life policy:
- “Disability and Disabled: means that you are Totally Disabled or Partially Disabled.
- Total Disability and Totally Disabled: means you are unable to perform the material and substantial duties of your Regular Occupation.
- Regular Occupation: if you are a Physician, means the general or sub-specialty in which you are practicing immediately prior to the first date your Period of Disability commences for which there is a specialty or sub- specialty recognized by the American Board of Medical Specialties. If the sub-specialty in which you are practicing is not recognized by the American Board of Medical Specialties, you will be considered practicing in the general specialty category.”
Under the above language, if you went out on long term disability and were approved for benefits, you could still receive full benefits and do any future work that is not your “Regular Occupation” specialty. Income you could earn is unlimited as long as you remain incapable of performing the material and substantial duties of, and do not work in, your “Regular Occupation” specialty at all, meaning not even on a part-time basis.
Allowed Work Outside the Regular Occupation Specialty
Note that your capability of performing your specialty is still often a separate matter of dispute challenged by the insurance company.
Also note that If you are capable of part-time “Regular Occupation” specialty work, the above answer does not apply. Instead, the Partial Disability income provisions below apply. Whether a physician is capable of part-time “Regular Occupation” work is often a separate matter of dispute as well, and one of the most commonly disputed issues in a physician’s disability insurance claim. See below.
Partial Disability Considerations
Finally, keep in mind that sometimes, even when the insurer agrees that you cannot perform the material and substantial duties of your “Regular Occupation” specialty full time, and you are earning in employment that is not your regular occupation, they still argue that you are capable of performing all material and substantial duties of your “Regular Occupation” specialty part time. They can thereby attempt to pay you less under the policy’s Partial Disability definition.
Let’s look at the Partial Disability policy provisions.
Partial Disability Under True “Own Specialty” Occupation Coverage
The Sun Life policy under review had the following Partial Disability provisions, typical in substance to most long term disability insurance policies:
“Partial Disability and Partially Disabled means during the Elimination Period and the next 24 months you:
- are unable to perform the material and substantial duties of your Regular Occupation on a Full-time Basis; and
- have Disability Earnings of less than 99% of your Indexed Total Monthly Earnings. The Disability must be the material and substantial factor in causing the earnings loss.
After 24 months of receiving Total and Partial Disability benefits combined, Partial Disability and Partially Disabled means you:
- are unable to perform the material and substantial duties of your Regular Occupation on a Full-time Basis; and
- have Disability Earnings of less than 80% of your Indexed Total Monthly Earnings. The Disability must be the material and substantial factor in causing the earnings loss.
Disability Earnings means the income you receive from work performed while Partially Disabled or while participating in a Rehabilitation Program.”
So, if you are unable to perform the material and substantial duties of your Regular Occupation on a full-time basis, but can perform those duties on a part-time basis, you can earn up to 99% of your indexed total monthly earnings for the first two years, and 80% thereafter, and still get partial benefits as calculated below. But you can still choose not to work at all, and still get your full benefit.
Earnings Under Non-“Own Specialty” Coverage
Permissible Physician Earnings and Work if Totally Disabled Under Policy Language Not Qualifying as true “Own Specialty” Occupation Coverage
Now let’s contrast the true “Own Specialty” occupation definition of “Regular Occupation” quoted above with the “Regular Occupation” definition quoted below, taken from another Sun Life physicians’ long term disability policy that I reviewed for another disabled physician that does not qualify as true “Own Specialty” occupation coverage:
- Regular Occupation: the occupation you are performing immediately prior to the first date your Period of Disability commences. This refers to your occupation as it is typically performed in the national economy rather than the duties required by a specific employer or at a specific location.”
The two definitions are very different. True “Own Specialty” occupation coverage and coverage not qualifying as such are both available in physicians’ disability insurance policies. The true “Own Specialty” occupation coverage is simply more expensive in premium. And I can’t tell you the number of times I’ve heard physicians I represented say that their employer told them that their employment based long term disability coverage was true “Own Specialty” occupation coverage when it really wasn’t.
It’s important to know what coverage you actually have to accurately assess both the likelihood of qualifying for disability benefits under a given disability insurance policy, the source and amount of other income you can earn while collecting full benefits under the policy.
Consequences of Lacking True “Own Specialty” Coverage
Real Life Consequences of Not Having True Physicians’ “Own Specialty” Coverage:
What the Court’s Say
Court interpretations vary, especially when addressing policies that are not strictly written as true “Own Specialty” occupation coverage, or having “Regular Occupation” definitions that generically define “Regular Occupation” as “the occupation you are performing” when you become disabled.
Court Interpretations of Generic “Regular Occupation” Policies
Below is a direct quote from a court opinion interpreting such a definition very broadly, to hold that an Emergency Medicine specialist is not disabled under such a policy because he could still perform the essential duties of an Internal Medicine physician:
“Finding no controlling case law in Virginia, the court agrees with cases like House, Osborne, and Ehrensaft, which afford a more general meaning to the term occupation. The court notes that these cases interpreted “regular occupation” or “own occupation” rather than simply “occupation,” the term at issue here. The court, however, finds these distinctions to be of no consequence, especially considering that the term “occupation” contains no qualifier such as “regular” or “own,” which would narrow the meaning of occupation further. Thus, the term “occupation” should be viewed at as least as high a level of generality as these more limited terms. See Osborne, 465 F.3d at 300 (concluding that the distinction between “regular occupation” and “own occupation” is a relatively minor difference).12 Here, Doe is a physician, which occupation encompasses the more specific positions of IM physician and ER physician. See House, 499 F.3d at 453–55; Osborne, 465 F.3d at 298–300; Ehrensaft, 120 F.Supp.2d at 1258–59.
With respect to the facts, Doe identified his occupation as “Physician” in his application for the disability policy, and Doe concedes that he has been and remains able to perform the duties of an IM physician. Consequently, Provident is entitled to summary judgment on Doe’s total disability claim.”
- Doe v. Provident Life & Acc. Ins. Co., 601 F. Supp. 2d 290, 296 (D.D.C. 2009)
Impact on Physician Disability Benefits
The case sharply illustrates the vast difference having true “Own Specialty” occupation long term disability insurance coverage can make in the outcome of a physician’s disability claim. If the Emergency Medicine physician in the case quoted above had purchased a true “Own Specialty” occupation policy, he would have received full benefits because he could not perform the material and substantial duties of his “Own Specialty” occupation.
Not only that, he could have concurrently earned a full Internal Medicine physician salary, teach surgery or other medicine, or engage in any other occupation if he chose to do so without losing a dime of his benefits. But since he did not have true “Own Occupation” coverage, he walked away from court empty handed after paying years of hefty premium for a disability insurance policy that paid him nothing when he needed it.
Calculating Total Disability Benefits for Physicians
How are Physicians’ Long Term Disability Benefits Calculated for Total Disability Under True “Own Specialty” Occupation Coverage?
Turning again to the example Sun Life physicians’ long term disability policy, the following quoted provisions govern how physicians’ long term disability benefits calculated for total disability under true “Own Specialty” occupation coverage:
“To determine the benefit we will pay each month you are Totally Disabled we will subtract all Deductible Sources of Income from the lesser of:
- the Benefit Percentage you elected multiplied by your Total Monthly Earnings; or
- the Maximum Benefit you elected. The result is your Total Disability benefit.
The benefit payable will never be less than the Minimum Benefit shown in the Benefit Highlights.”
Example Calculation
Assume the following:
- Physician pre-disability total monthly earnings: $32,000
- Maximum total disability benefit: $17,000
- After becoming disabled from your own specialty, you begin earning $20,000/month as a medical professor or physician outside of your own specialty
- No deductible sources of income (such as SSD)
Calculation
60% × $32,000 = $19,200/month. Since this exceeds the maximum total disability benefit of $17,000/month, the maximum benefit of $17,000/month applies.
Because this is a true “Own Specialty” policy example, the continued monthly non-“Own Specialty” occupation earnings of $20,000 is irrelevant to the calculation.
Calculating Partial Disability Benefits for Physicians
How are Physicians’ Long Term Disability Benefits Calculated for Partial Disability?
Again, quoting from the example Sun Life policy provisions:
“To determine the benefit we will pay for the first 12 months while you are Partially Disabled, add your Deductible Sources of Income and your Disability Earnings to your Gross Benefit for a Total Disability.
If the calculation above is more than 100% of your Indexed Total Monthly Earnings, subtract the amount in excess of 100% from your benefit for a Total Disability. The result is your benefit for a Partial Disability.”
(Review of the “Partial Disability and Partially Disabled” definition above may be helpful for these examples.)
EXAMPLE 1:
Assume the following:
- Pre-disability indexed total monthly earnings: $32,000
- Maximum total disability benefit: $17,000
- Post-disability earnings (“Disability Earnings”): $20,000/month, part-time in your own specialty
- Deductible sources of income: $0 (e.g., SSD)
Your partial disability benefit would be:
- 0 (Deductible Sources of Income)
- + 20,000 (Disability Earnings)
- + 17,000 (Gross Benefit)
- = 37,000
Since $37,000 > $32,000 (Indexed Total Monthly Earnings) by $4,000, the partial disability benefit is:
- 17,000 (Max Benefit) – 4,000 = 13,000
But depending on the facts, the following provision from the Sun Life policy could also come into play:
“If the calculation above is 100% or less than your Indexed Total Monthly Earnings, your benefit for a Partial Disability is the same as your benefit for a Total Disability.”
For instance…
EXAMPLE 2:
Assume the following:
- Pre-disability indexed total monthly earnings: $32,000
- Maximum total disability benefit: $17,000
- Post-disability earnings (“Disability Earnings”): $10,000/month, part-time in your own specialty
- Deductible sources of income: $0 (e.g., SSD)
Your partial disability benefit would be:
- 0 (Deductible Sources of Income)
- + 10,000 (Disability Earnings)
- + 17,000 (Gross Benefit)
- = 27,000
Since $27,000 < $32,000 (Indexed Total Monthly Earnings), the partial disability benefit is the same as your total disability benefit: $17,000.
And if partial disability continues beyond 12 months, the following example Sun Life policy provision would apply:
“If you continue to be Partially Disabled after receiving Partial Disability benefits for 12 months, your Partial Disability benefit will be recalculated based on the following formula:
(A divided by B) multiplied by C
where:
A = your Indexed Total Monthly Earnings minus your Disability Earnings.
B = your Indexed Total Monthly Earnings.
C = your benefit for a Total Disability.”
EXAMPLE 3:
Assume the following:
- Pre-Disability indexed total monthly earnings were $32,000/mo
- After becoming disabled, you begin earning “disability earnings” of $20,000/mo. Part-time in your own specialty.
- Max total disability benefit = $17,000/mo.
- You have no deductible sources of income (such as SSD).
Your partial disability benefit would be:
- A = Indexed Total Monthly Earnings – Disability Earnings = 32,000 – 20,000 = 12,000
- B = Indexed Total Monthly Earnings = 32,000
- C = Benefit for a Total Disability = 17,000
- Partial Disability Benefit = (A ÷ B) × C = (12,000 ÷ 32,000) × 17,000 = 6,375
Your partial disability benefit would therefore be $6,375/month.
Key Takeaways for Physicians Filing Long-Term Disability Claims
Hopefully the above is helpful to any physician contemplating filing a claim for long-term disability benefits who wants to know “What work can I do, and how much can I earn, and still receive long-term disability benefits?”
Remember, all policies are worded differently, and very subtle differences can make big differences in how courts will interpret them in answering the question.
There are also many strategic things to consider regarding the timing of filing your claim, when to give your employer notice, and important things you need to do before filing for best chances of success.
Price McNamara ERISA Insurance Claim Attorney has helped numerous physicians navigate long-term disability claims, interpret policy language, and secure the benefits they are entitled to.
Reach out to Price McNamara ERISA Insurance Claim Attorney at 1-225-412-6235 or contact us online to discuss your case today.
