The Policies Nobody Explains to You: Insurance Every Physician Should Understand

By Michael Woo-Ming, MD, MPH

Somewhere between your last week of residency and your first real paycheck, somebody slid a folder across a desk and asked you to initial about nine places. You did. You were tired, the job was starting Monday, and the person handing you the folder seemed to know what they were doing.

That folder is probably still governing what happens to you if you get sick, if you leave, or if something goes wrong. And most physicians I talk to could not tell you what's in it.

I couldn't have told you what my own disability policy said until I was well into practice, and I'm not sure I could have found it. Nobody teaches this in medical school. Four years of pharmacology and not one hour on the paperwork that determines whether your family keeps its house if your hands stop working.

So let's go through the ones that matter. Not to make you an expert — to make you dangerous enough to ask a real question.

Disability coverage, which almost nobody reads closely enough

This is the one I'd put first, and it isn't close.

Your ability to earn is the single largest asset you own. Not your house. Not your retirement account. The thirty-odd years of income ahead of you. Most physicians insure the house carefully and insure the income with whatever the group plan happened to include.

The phrase to look for is own-occupation. A true own-occupation policy pays if you can't do your specialty. A cheaper "any occupation" policy pays only if you can't do any gainful work at all — meaning an interventional cardiologist with a hand tremor who could theoretically teach or do chart review may not qualify for anything. Own-occupation costs more. That's the trade. But the gap is usually smaller than physicians guess, and the difference on the worst day of your career is not close.

A few other things worth knowing about your own policy:

Whether it's portable. Group coverage through an employer usually ends when the job does, and it tends to end at the exact moment you're least insurable — mid-career, with a new diagnosis in your chart.

Whether the benefit is taxable. If your employer pays the premium, benefits generally come to you taxed. If you pay it with after-tax dollars, they generally don't. That can be a third or more of the number you were counting on, depending on your bracket — which makes it a specific question for your tax advisor rather than a rule of thumb.

Whether it covers partial disability, and how long the elimination period runs. Ninety days of no income is survivable for some households and not for others. You should know which one you are before you need to know.

Tail coverage, and the trap in the word "claims-made"

Malpractice policies come in two flavors, and the difference matters mostly when you leave.

An occurrence policy covers anything that happened while it was in force, whenever the claim shows up, subject to that year's limits — whether or not the policy still exists. A claims-made policy covers you only while it's active. When you leave that job, that coverage stops — including for the years you already worked. Tail coverage is what fills the gap.

Somebody pays for that tail. The question is who, and the answer lives in your employment agreement, usually in a sentence you skimmed. I've watched physicians discover the answer at the worst possible time: they've accepted a better position, they're excited, and they learn the exit comes with a five-figure bill attached. It's a bad week.

Ask now, while you're calm. Is my policy claims-made or occurrence? What's my retroactive date, since that determines what a tail actually buys? If it's claims-made, who pays for the tail when I leave, and is that answer different if I'm terminated versus if I resign?

One more that almost nobody asks: if you're moving to a new position, will the new carrier cover your prior acts instead? That's sometimes cheaper than buying a tail, and it's a real alternative rather than a technicality.

Get the answers in writing, and have your attorney read the actual clause — this language varies more between agreements than you'd expect. A verbal reassurance from a manager who may not be there in three years isn't worth much.

Cyber and the boring commercial policies

Small practices tend to assume they're too small to be interesting. That's exactly backwards. Small practices get hit because they're the ones without a security team, and most of what happens isn't sophisticated. It's a staff member clicking a link in an email that looked like it came from your billing vendor.

Cyber coverage varies enormously in what it actually does. Some policies pay for the technical cleanup and stop there. Better ones cover the notification costs, the credit monitoring, the forensic work, and the business you lose while your systems are down. Read what yours does, and specifically check whether it covers an incident that starts at one of your vendors rather than inside your office. That's how a lot of them start.

While you're in there, look at business overhead expense coverage too. Disability insurance replaces your income. It doesn't pay your rent, your staff, or your equipment lease while you're out — and those bills keep coming whether you're seeing patients or not. For a practice owner, the two policies do different jobs and you probably need both.

An hour, once a year

Here's what I'd actually do with this, because a list of coverage types isn't worth much sitting in a browser tab.

Put an hour on your calendar. Pull every policy you're covered under — through the practice, through your specialty society, through anything you bought yourself. For each one write down three things: what triggers a payout, what it pays, and when it ends. If you can't answer those from the document, that's your call list.

Then send the questions to your broker in writing and keep the reply. Not because anyone's going to be difficult about it, but because you will not remember in four years what somebody told you on the phone, and the person who told you may have moved on.

Do it once and it takes an afternoon. Do it annually and it takes twenty minutes, because you're only looking for what changed.

The reason I keep coming back to this stuff is that the doctors who get hurt by it aren't careless people. They're busy people who assumed somebody more specialized had it handled. Nobody is coming to check your coverage for you. That job belongs to the person whose income it protects.

You don't need to enjoy it. You just need to know what you have.

Dr. Michael Woo-Ming is a Mayo Clinic-trained physician, practice owner, and founder of BootstrapMD. He's the author of The Positioned Physician: Earn More, Work Smart, Love Medicine Again. Learn more at michaelwooming.com.

This is general educational information, not legal, medical, insurance, or compliance advice.