Income Protection Solutions for Physicians and Administrators

Income Protection Solutions for Physicians and Administrators

Achieving Adequate Benefits for the Highly Compensated

Healthcare providers work long, hard hours supporting their patients, practice, and profession.
Top salaries may not be enough incentive to recruit and retain top medical talent in today’s competitive and ever-changing healthcare market. Benefits can make a difference. Integrating group and individual disability plans can provide a valuable benefits package of income and asset protection for your team.

Your Organization’s Most Valuable Asset

A challenging economic environment makes providing competitive benefit strategies to physicians and administrators especially important.

  • Employees are extending their working careers, thereby extending the need for adequate income protection.
  • Medical advances are extending life expectancy, resulting in a lifespan that is more likely to include disability rather than an earlier death.
  • Many employers are shifting much responsibility for retirement funding to employees.
  • The upshot is physicians are under greater pressure to maintain uninterrupted income during working years.
  • Even highly compensated physicians usually depend on their ability to work and earn income in order to maintain their lifestyle and accumulate retirement funds.
  • An employer-sponsored group long term disability (LTD) plan can provide a false sense of security for many physicians and administrators. While group LTD may provide basic coverage to all employees, it does not address the needs of higher incomes.

Some possible disadvantages and undesirable consequences of an employer-sponsored LTD for highly compensated physicians and employees are described below.

Unintended Impacts on Key Employees

Reverse Discrimination – Monthly benefit maximums (caps) on employer-sponsored LTD plans subject the highly compensated to lower percentages of earnings actually replaced. LTD plans replacing 60% of earnings to $10,000 per month would provide a physician earning $350,000 per year only 34% of income, while an entry-level employee would receive 60%.

Insufficient Benefits – Benefits from disability plans paid for by the employer are generally taxable when received, further reducing the level of actual income replacement. Additionally, most LTD plans do not provide sufficient coverage for “catastrophic disabilities” or disabilities that require expensive custodial services.

Excludes Significant Forms of Compensation – Variable performance pay, bonuses and other incentives continue to be an important component of a physician’s or administrator’s compensation and often needed to meet financial obligations. However, many group LTD plans cover only a portion of base salary and exclude these other forms of income.

Insufficient Retirement Accumulation – Higher income partners need to save more for retirement and an extended disability would severely restrict their ability to continue funding for retirement. Qualified and non­qualified contributions and employer matches cease during a long-term disability, resulting in investment earnings and capital loss to a retirement plan that could be disastrous.

No Ownership of Coverage-Group insurance coverage provided by an employer is generally
not portable.

Disability Income Solutions

Offer Employer-Sponsored Supplemental Income Protection to Physicians and Key Employees Not Fully Protected by the Current Group LTD Program
Effectively meet the income replacement and asset protection needs of physicians and executives in a coordinated fashion.

Disability Income Solutions

Offer Employer-Sponsored Supplemental Income Protection to Physicians and Key Employees Not Fully Protected by the Current Group LTD Program.

Effectively meet the income replacement and asset protection needs of physicians and executives in a coordinated fashion.

Guaranteed Standard
Issue (GSI) Programs

Group of three or more have access to individual disability products not available to single applicants without the normal evidence of insurability requirements. Benefit amounts of $2,500 to $10,000 per month are available on a guaranteed basis, reducing the amount of sub-standard coverage.

Institutional Pricing

Premiums for coverage purchased in a group setting (multi-life basis) can be 33% to 67% less than premiums for policies purchased individually without premium discounts.

Retirement Accumulation
as an Executive Benefit

Physicians are concerned about accumulating enough assets to generate adequate retirement income.

Additional Benefits

Individual disability insurance policies can be designed to include specialty occupation language, and provide additional benefits for catastrophic disabilities requiring extended care or lump-sum payments for severe disabilities, such as cancer, stroke, and heart attack.

Benefits of an Integrated
Income Protection Plan

  • Reduce “reverse discrimination” resulting from uninsured forms of compensation and inadequate plan maximums
  • Provide comprehensive contractual definitions that “match up” with the needs of physicians and key executives
  • Enhance purchasing power by leveraging corporate tax deductibility of premium
  • Provide for guaranteed standard issue coverage and premium discounts
  • Address employee and family’s retirement funding needs offering peace of mind
  • Enhance recruiting and retaining of key employees
  • Present an opportunity to improve communication and enhance appreciation of employer-provided benefits

Integrated Lifestyle
and Retirement Protection

Innovative supplemental income protection policies offer flexible solutions to address multiple risks associated with long­term disabilities.