Group vs. Individual Disability Insurance for Physicians
Employer group coverage and an individual disability policy can play different roles. Compare the actual benefit certificates, covered earnings, limits, offsets, tax treatment and continuity rules. Neither the group nor individual label establishes every benefit or limitation.
By Navid Lalezari · Author
Reviewed by Navid Lalezari
Last reviewed
In this guide
Start with the benefits you actually have
Ask human resources for the current certificate and confirm your enrollment. Record the percentage of covered earnings, the monthly cap, and whether bonuses, call pay or other compensation count. A headline percentage is not the same as the amount you would receive after a cap, an offset or taxes. Put proposed individual coverage in a separate column until it is in force.
Read next: How to Read Your Employer’s Disability Benefit Summary
Sources:[1]
Compare the definition and any offsets
Read how each contract defines total disability and whether that definition changes during a claim. Ask how work in another occupation, Social Security benefits and other disability income affect payment. Group policies can differ, and an individual policy is not automatically free of every offset or restriction. List the clause rather than assuming the answer from the category.
Read next: Own-Occupation Disability Insurance for Physicians
Separate tax treatment from the policy label
Federal income-tax treatment generally depends on how premiums were paid. Benefits attributable to employer-paid or pre-tax premiums can be taxable; benefits attributable to personally paid after-tax premiums are generally excluded. Mixed funding needs a closer review. Ask payroll and your tax professional which treatment applies to your arrangement.
Read next: Are Disability Insurance Benefits Taxable? Questions for Your CPA
Sources:[3]
Check what happens when you leave a job
An individually owned policy can generally continue when employment changes if its conditions and premiums are maintained. Employer coverage has its own termination, portability or conversion provisions. Ask both administrators for dates before replacing coverage. Also compare any premium guarantee and renewal period; no single guarantee applies to every individual policy.
Read next: Changing Physician Jobs: A Disability Coverage Handoff Checklist
Common questions
Should I cancel my hospital coverage when I buy an individual policy?
Not automatically. Review costs, coordination, limits and continuity first. Existing coverage and a proposed policy can serve different needs; do not cancel based on an unissued proposal.
Where to go from here
These next steps are educational and have no cost or obligation. They do not start an insurance application or begin coverage.
- Check My Options
Tell Drs Choices what you are weighing and request a conversation about your situation.
- Compare Policies
See how the coverage types and policy terms on this page differ side by side before you decide.
- Start Your Plan
Build a discussion brief from your own numbers. No account or email is required.
Sources
Drs Choices summarizes and compares these sources on this page. Each entry links to the original if you want to verify the wording yourself.
Guardian: Disability insurance for medical residents
View original source for “Guardian: Disability insurance for medical residents” (opens in a new tab)Guardian: Disability insurance definitions
View original source for “Guardian: Disability insurance definitions” (opens in a new tab)IRS: Taxation of disability insurance proceeds
View original source for “IRS: Taxation of disability insurance proceeds” (opens in a new tab)Guardian: Non-cancellable and guaranteed renewable coverage
View original source for “Guardian: Non-cancellable and guaranteed renewable coverage” (opens in a new tab)