While most residency programs provide residents and fellows long-term disability coverage that replaces a percentage of monthly income in the event of an accident or illness, the terms of these policies may not adequately address the needs of doctors in training.

Without having an adequate amount of income protection, a disabled resident, fellow or practicing physician will be confronted with having to make significant and unwelcome life changes to meet their ongoing financial obligations.

You can determine how much of your income will be protected during and after your training by reviewing their terms found in your teaching hospital’s handbook or online resources. Recognizing that it might be difficult to decipher the language contained in these contracts, here are a few are a few areas of protection you should explore:

What percentage of income protection can you expect to receive?

The majority of teaching hospitals provide their residents and fellows with long-term disability insurance coverage that replaces 60% of income. While replacing this percentage of income might be adequate for highly compensated professionals,  most residents can barely cover all of the expenses with their full salary and an income loss of 40% due to disability could be disastrous.

Will benefits be reduced by taxes?

In life they say nothing is for free and this is true when it comes to disability insurance benefits. If the coverage provided by your teaching hospital doesn’t cost you anything, you can expect to pay taxes on any amount you receive. This additional tax burden could prove to make it impossible to meet your financial obligations without borrowing money or liquidating assets.

How soon are benefits provided? 

When an accident or illness occurs, disability benefits will be provided after specified period time, called a “waiting period”.  It is not uncommon for a disabled resident to have to wait six months before being eligible to receive long term disability benefits. It’s important to have a source of income that can be used to cover expenses until long term disability benefits begin. 

Does the coverage provided during training provide a benefit to cover loan payment obligations?

While there are a few institutions that provide long term disability coverage that include provisions to address this need, it’s not as common as one would hope.  Without this type of contractual language, your monthly loan obligations will further reduce your ability to cover your expenses.

Can an employer’s disability benefits be continued after training without any medical evaluation?

The answer is maybe. In recent years an increasing number of residency programs have recognized the need to provide portable long-term disability protection to their residents and fellows. This portable coverage will be made available without the need to answer any medical questions and it can be used to supplement the coverage provided to practicing physicians by future employers.

However, even if you can continue this coverage after graduation, the opportunity to secure this coverage usually isn’t made available until you are close to graduation, potentially leaving you underinsured for the majority of your training program.

Are all medical conditions covered? 

Unfortunately, the type of policy used by teaching hospitals to protect their residents and fellows may include “special conditions limitation” language for a wide range of medical conditions, which can significantly limit the period of time that benefits will be paid (as little as one or two years). Some of the more worrisome special conditions limitation issues you should look out for include limitations due to muscular skeletal issues, environmental allergies, chronic fatigue syndrome and even post viral events (e.g., Zika, Covid-19).

Understanding your coverage is an important first step to protecting your financial future

Taking the time to evaluate your employer’s long-term disability insurance program will help you determine if your expected monthly benefit in the event of disability will be enough to meet your ongoing expenses, as well as allow you to determine if you can secure protection that is portable and can last throughout your career.