By Lawrence B. Keller, CFP, CLU, ChFC, RHU, LUTCF
The term “Own-Occupation” and the definition of total disability associated with it means different things to different people, all depending upon who you ask. What was once considered the “gold standard” and the crux of a plastic surgeon’s disability insurance policy was questioned by a well-known disability insurance company only a few years ago. Now, Berkshire Life Insurance Company of America (a Guardian company), another leader in the disability insurance industry, has taken that concept one step further, providing a qualifier within the definition of total disability in order to clarify some of the confusion that was created in the “medical market” to make it easier for plastic surgeons to understand exactly what they are purchasing and what is required in order to qualify for total disability benefits.
“Own-Occupation” Definition of Total Disability
Typically, “total disability” or “totally disabled” means that due to an accident or illness, you are not able to perform the “material and substantial” duties of your occupation. Some companies including Berkshire, Standard, Ameritas, and Ohio National will even go so far as to state that if you have limited your practice to a single medical specialty, that specialty will be deemed to be your occupation. This definition of total disability makes it possible for you to work in another occupation or medical specialty and still receive your full disability benefits—even if you are earning the same or more income than you were prior to your disability.
The “Medical Occupation” Definition of Total Disability
This definition of total disability is promoted as providing both “flexibility and choice” at the time of claim since, when an injury or illness prevents a physician from doing the most important duties of their medical specialty, the physician will have the flexibility to work or not work—whichever choice makes the most sense for them at the time and they can even change their mind after they have made a decision. But does this definition of total disability really allow for this? Let’s see how a plastic surgeon might qualify for benefits assuming he/she was diagnosed with a persistent tremor in their dominant hand and can no longer perform their duties as a Plastic and Reconstructive Surgeon but can still perform nonsurgical and minimally invasive procedures which might include the use of Botox, Juvéderm, and other fillers.
I will also assume that 70% of his/her time and income was a result of performing plastic surgery and 30% of his/her time and income was a result of nonsurgical and minimally invasive procedures. Under the “Medical Occupation” definition of total disability, since more than 50% of this surgeon’s time was spent providing direct patient care and services and due to an accident or illness, he/she can’t perform the principal procedures of his/her procedure-based1 board-certifiable specialty, but can still do his/her other principal duties, the “Medical Occupation” definition of total disability would leave him//her with two choices:
- Discontinue working, and qualify as totally disabled in order to receive full benefits.
- Continue working and qualify as partially disabled. He/she would then receive a benefit proportionate to his/her loss of income if he/she earned 20%-80% of their pre-disability income. However, in order to receive full benefits, he/she would have to earn less than 20% of his/her pre-disability income.
Personally, I don’t know of many plastic surgeons that would not want to continue to work and contribute positively to society if they could but, at the same time, if doing so could jeopardize their ability to continue receiving their disability insurance benefits, does it really make sense for them to work?
Enter the “Enhanced “True “Own-Occupation” Definition of Total Disability
Berkshire’s Enhanced true “Own-Occupation” definition states that “total disability or totally disabled means that, solely due to injury or sickness, you are not able to perform the material and substantial duties of your 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 occupation.”
It then defines “Your Occupation” as the occupation (or occupations, if more than one) in which you are gainfully employed during the 12 months prior to the time you become disabled. Your occupation does not mean a specific job title, designation, industry, or job within a certain employer. If you have limited your occupation to the performance of the material and substantial duties of a single medical specialty, we will deem that specialty to be your occupation.
And finally, in their most recent offering, Berkshire adds a qualifier or a threshold that can be met in order to receive full disability insurance benefits if you are a surgeon or invasive practitioner by stating that, “If your occupation is limited to a Medical Doctor or Doctor of Osteopathy and more than 50% of income is earned from performing surgical procedures, we will consider you to be totally disabled even if you are gainfully employed in your practice or another occupation so long as, solely due to injury or sickness, you are not able to perform surgical procedures. This language changes the focus from solely your duties to your source of earnings and provides more ways to qualify for total disability benefits.
Surgical procedures means the medical interventions involving an incision with instruments performed by you in a clinical or hospital setting normally involving anesthesia and/or respiratory assistance, that you regularly perform, during the 12 months prior to your disability. These procedures can be performed on either an inpatient or outpatient basis. Providing hypodermic injections, in itself, is not a surgical procedure.”
In the previous example, the plastic surgeon would likely qualify for total disability benefits under a policy with a true “Own-Occupation” definition anyway, as long as, the occupational analysis showed that just prior to disability his/her main duties were performing surgery and the majority of his/her office based practice was pre-operative consultations and post-operative follow-up. However, under the enhanced true “Own-occupation” definition of total disability, he/she could be working full-time or part-time anywhere – even if he/she continued to work in his/ her practice as a Plastic Surgeon performing nonsurgical and minimally invasive procedures. The same would also be true if their practice changed as they became older and were performing fewer procedures and a larger portion of their income might be coming as a result of speaking fees and acting as the Medical Director for a MedSpa. As long as more than 50% of income is earned from performing surgical procedures, Berkshire would still consider them to be totally disabled under the terms of their disability insurance policy.
Will this make a big difference for surgeons and influence the way that disability insurance claims are paid? In most cases, I don’t think the ultimate claim decision will be any different. However, for surgeons that earn a substantial amount of income from consulting and/or other professional activities or for those in hybrid medical specialties, which might include Obstetrics & Gynecology, Urology, and Otolaryngology to name a few, it very well may be the difference in terms of receiving full benefits compared to a proportionate benefit or no benefits at all.
Under Berkshire’s new definition, they will not only look at your source of earnings, but also your key duties, including those you were performing in your medical specialty at the time your disability began, to access whether or not you qualify for total disability benefits. Since your situation will be evaluated from multiple perspectives, it may allow you, as an invasive practitioner, to collect full benefits if an accident or illness takes away your ability to perform procedures – even if you choose to remain in your practice or pursue another occupation or medical specialty without fear of jeopardizing your disability insurance benefits in the process.
Over the past few years, the disability insurance marketplace has continued to evolve. Carriers have come and gone, the monthly benefits available have increased and the income required to qualify for them has decreased. This is just one more step in the evolution of the industry and provides guidance to help answer the age old question “If I am a surgeon or perform invasive procedures, and can no longer perform those procedures, will I receive total disability benefits”?
Lawrence B. Keller, CFP, CLU, ChFC, RHU, LUTCF, is the founder of Physician Financial Services, a New York- based firm specializing in income protection and wealth accumulation strategies for physicians. He can be reached at (516) 677-6211 or by email to Lkeller@physicianfinancialservices.com with comments or questions.
1. “Procedure based” means more than 50% of medical charges come from performing surgical interventions and non-surgical invasive interventions.
Individual disability Policy Forms 18ID and 18UD underwritten and issued by Berkshire Life Insurance Company of America (BLICOA), Pittsfield, MA. BLICOA is a wholly owned stock subsidiary of and administrator for The Guardian Life Insurance Company of America, New York, NY. Optional riders are available for an additional premium. Product provisions and availability may vary by state.
An individual’s eligibility for benefits is determined on a case-by- case basis, taking into consideration the factual circumstances presented as well as the terms and conditions of his/her policy(ies).
These are the personal views of the author and may not represent the views and opinions of The Guardian Life Insurance Company of America or its subsidiaries or affiliates thereof.
Registered Representative and Financial Advisor of Park Avenue Securities LLC (PAS), 355 Lexington Avenue, 9th Floor, New York, N Y 10017-6603, 212-541-8800. Securities products and advisory services are offered through PAS, 1-516-677-6200. Financial Representative, The Guardian Life Insurance Company of America, New York, NY (Guardian). PAS is an indirect wholly owned subsidiary of Guardian. Physician Financial Services is not an affiliate or subsidiary of PAS or Guardian.
PAS is a member FINRA, SIPC
2017-39725 Exp. 4/19