Protecting
Your Practice
Owning a practice presents a wide range of risks that could impact your ability to recruit employees during good times and help retain them in the event of an accident or illness that could threaten the viability of your organization. Taking the time to address these risks before they occur can reduce the impact an unexpected event will have on your ability to meet your personal and professional obligations, ensure you have a business to return to, or protect its value if new ownership is needed.
Supplemental and Voluntary Opportunities
The needs of your staff and partners will vary based on personal needs and risk tolerances. Providing or offering additional protection solutions through individual policies will greatly enhance your benefit package by allowing your partners and employees to address the needs and concerns most important to them.
Individual Income Protection
Individual contracts can be used to address the coverage limitations that are inherent in group long-term disability insurance contracts. These policies can be used to increase the maximum monthly benefit for highly compensated employees, insure non-salary compensation, replace a greater percentage of income and provide “own specialty” protection during a long-term clam.
These policies can be offered on a voluntary basis with permanent rate discounts or provided as part of the practice’s benefit package. Applications for coverage through a voluntary offering may require the satisfaction of medical underwriting questions, but it is possible to waive these medical underwriting requirements when purchased for all employees or when offered by multi-specialty practices with 75 or more healthcare professionals and executives.
Retirement Contribution Protection
Healthcare professionals and employees are likely to incorrectly assume that the money being contributed into their qualified retirement plan can continue during a long term disability. When a disability occurs, all employee and employer contributions must cease (due to IRS regulations), and this could substantially reduce the disabled employee’s or partner’s retirement account when they reach normal retirement age.
This threat to one’s financial well-being can be addressed by individual disability insurance contracts offered by several insurance companies that have been designed to match either current contribution amounts or a percentage of annual income.
These contracts can be provided as part of the organization’s benefit package or offered on a voluntary basis.
Student Loan Protection
One of the greatest financial threats facing healthcare professionals is having to continue to make student loan repayments during a prolonged disability. Whether it’s the accrual of interest or the payment demands of a private lender, having to address this ongoing obligation while trying to recover for an accident or illness and living on a reduced income is not ideal.
Individual contracts are available from several insurance carriers that can reimburse monthly payments for and allow you to avoid the accrual of interest or having to make your payments using your disability benefits or savings. The terms of coverage will differ by insurance carrier, and it is important to evaluate if the benefits are paid if you are able to work in another occupation, if it’s expected you won’t ever return to work again, or if there is a limit to the benefit you can expect to receive.
Business
Insurance
The death or illness of a partner or key employee can threaten morale and the ability of a practice to meet its financial obligations during a difficult and disruptive time.
Business Overhead Expense Insurance
Being able to meet monthly financial obligations can be threatened by the unexpected accident or illness of a partner or practice owner. The immediate loss of revenue created by the inability to service as may patients can create a significant burden on any remaining partners and the ongoing viability (or ultimate sale) of the practice. Individual disability insurance policies can address this need by replacing all of the ongoing monthly expenses associated with keeping the doors open, meeting payroll obligations and even covering the cost of hiring another professional to make sure your patients continue to be served in a professional and responsive manner.
The premiums for this policy are tax deductible and can be paid as early as 30 days after the disabling event and can be provided for 12, 18 or 24 months.
Buy-Sell Agreement Funding
The death or disability of a partner has far reaching effects on the morale and ability to address any financial obligation that the doctor estate or loved ones may rightfully expect to receive . Without having the funding in place to address this immediate obligation, the surviving partner(s) may find themselves obliged to pay a significant amount of money at the worst possible time. Insurance contracts can be used to fulfill any financial obligations created by this disruptive event and allow the practice to use their available revenue to recruit and retain a new professional who can fill this void. The amount of coverage will be tied to the valuation of your practice and the benefits can be provided after a predetermined period of time.
Employer Provided
Group Benefits
Group Long-Term Disability
Providing partners and staff with protection in the event of a long term disability (LTD) is one of the most important components of a benefit package. Through the introduction of a group LTD, all of your partners and staff will know that they’ll be entitled to receive a significant portion of their income while they focus on their recovery or having to make significant life changes. These group insurance contracts can be offered to practices with as few two full time employees, replace 60-70% of income after a predetermined “waiting period’, and become effective immediately upon employment.
Group Short-Term Disability
Many employees don’t have the ability to make ends meet if they were to lose their income for more than a few weeks. To address this very real and too common concern, it is possible for a practice to protect its staff though a short-term disability policy that can provide an ongoing income until recovery or when long-term disability benefits begin. These policies can provide benefits in the event of an accident or illness and will normally replace 60% of salary up to a predetermined maximum weekly benefit. They also don’t require the employee to satisfy any medical underwriting requirements.
