If you’re like many physicians, employed by a medical group, hospital or medical center, you may be unaware of how much your long-term disability policy actually covers. Most policies paid for by an employer are limited to 50 to 60 percent of a physician’s base salary, excluding bonuses — leaving a gap in coverage that falls short of what’s required to meet ordinary living expenses. To illustrate this point, we'd like to give you a hypothetical example of how you could be caught off guard by inadequate disability coverage:

As a specialist, you possess the ability to earn a sizable income after years of education and training. Yet if an unexpected illness or injury prevented you from practicing your specialty, you would need a disability benefit commensurate with your expenses to avoid depleting your savings and investments, and putting your family’s future at risk.

Many tools are made to serve only one purpose. For example, you know that a blade is designed to cut. But there are many types of specialized knives, and for the most part, they aren’t meant to do double duty. You wouldn’t use a surgeon’s scalpel to slice vegetables for dinner.

In a similar vein, there are two different types of disability insurance that serve different purposes; for comprehensive protection, you should consider having both.

You as a Texas physician have a great deal to protect, and we at TMA Insurance Trust work hard to help you do so. Recently, we conducted a survey to find out what TMA members’ most common questions were with regard to disability insurance. After we reviewed these questions, we addressed some of the most pressing concerns.

How much does it cost to lose a physician in your practice? According to HR experts G&A Partners, the cost of replacing a skilled professional employee amounts to 125% of that employee’s annual salary. Consider the cost of severance pay, recruitment costs, lower productivity while other employees pick up the slack, lost time while training, and lower productivity while the new employee becomes acclimated. The expense adds up quickly, and the financial impact adversely affects your bottom line.

Many employed physicians receive disability insurance from their employers as part of a comprehensive benefits package. Typically, employer-provided long-term disability insurance provides a benefit for up to 60% of a physician’s salary. For this employer-provided coverage, you will most likely have to pay taxes on any benefits you receive.* The amount you owe in taxes could be considerable, which would leave you with even less income than the 60% of protection you thought you had - right when you need it the most.

If you become sick or hurt and are unable to work, proper long-term disability insurance can be your financial failsafe. Sadly, some physicians are leaving themselves vulnerable to potential hardship. They may purchase a disability policy based on what they can afford at the time. They know they have some long-term disability coverage, but the truth is, they may be underinsured. If a serious illness or injury strikes, they realize that the coverage they obtained is not adequate, and their funds are draining at an alarming rate. How can you keep this from happening to you?

Many young physicians buy individual disability insurance based on price alone, thinking that all own-occupation coverage is the same. However, there are other factors to consider. Your choices can have financial consequences for your family, should you become sick or hurt and unable to work.