If you are a medical resident, you are likely young and healthy, and rightly feel like the world is ahead of you. Long-term disability insurance is probably the last thing on your mind. However, statistics show that 1 in 4 young adults will become disabled before retirement age. If you should ever become disabled, long-term disability insurance can provide the income to meet your living expenses – and pay back your student loans – while you can’t work.
You may think this doesn’t apply to you. Like most medical residents, you have a group benefits package at the medical center where you are completing your training. But be aware - the disability coverage that you have may leave you financially exposed in several surprising ways.
Surprise: Your Coverage Doesn’t Fully Cover You
Because employer plans were never meant to be your only protection, most provide minimal coverage. If you experience a long-term injury or illness, the typical disability plan for residents will only provide you with 60% of your current income. If you are a resident working in a Texas hospital or medical center earning $60,000 a year, your employer’s disability insurance only protects $36,000 of your salary. Your $5,000 per month paycheck will drop to only $3,000 a month.
Surprise: The Tax Man Cometh
Because your employer pays for the disability insurance premium, any benefits you receive will be taxed. Depending on your tax bracket and deductions, your $36,000 annual benefit could be cut another 25 or 30 percent. This means your $3,000 benefit would drop to $2,100! That’s barely enough to cover rent and car payments, not to mention student loan payments and your other financial obligations.
Surprise: Your Employer Can Cut Back on Benefits
Hospitals and medical centers across the nation are feeling the pressure to reduce costs. If your employer decides to cut back on employee benefits, your group disability insurance could take a hit. Though many employers offer 60% coverage, some now offer 50% or less. With a group disability plan, your employer is in control of the policy, not you.
Surprise: When Residency Ends, Your Coverage Ends
The group disability plan that covers you during your residency ends when you end your affiliation with the hospital or medical center. Because the policy is paid for by the residency program, it stays there. The policy may not be portable; you can’t take it with you to a different hospital or into private practice.
Surprise: Protecting Your Future is Easier than You Might Think
As a new physician, you’ve invested much in your future. Protect that investment with a disability insurance policy written in your own name, not your employer’s. TMA Insurance Trust understands your situation: with a new physician’s salary and student loan payments, affording disability coverage can seem challenging. However, residents and young physicians can take advantage of the best rates in the marketplace. You can lock in those rates now, for many years to come.
TMA Insurance Trust offers a full range of disability plans, including plans with exclusive features and member discounts that can further reduce the cost of disability insurance. Call one of our experienced advisors today and let us help you find the plan that’s right for you.
For over 60 years, TMA Insurance Trust advisors have been serving Texas physicians, their families and staff. TMA Insurance Trust prides itself on offering unbiased information and strategies to members, along with exclusive group rates on a range of the highest-rated plans in the industry.