Questions To Ask Your Employer About Your Disability Benefits
By Kate Sellers, JD, CLU®
Vice President, Charles J. Sellers & Co., Inc.
If your employer provides you with disability insurance, that’s a terrific employee benefit. While no physician wants to think about being sick or hurt and unable to work, it’s a real risk, and the financial impact can be devastating. So it’s important to not only have disability coverage, but to understand the coverage that you have – there are huge variations between employer disability plans. It’s better to find out exactly how you’re covered now, while you’re healthy and can make necessary adjustments, than to find out once you need the benefits that you don’t have what you need. Here are questions to ask your hospital system or group’s HR department about your disability coverage:
- How much of my income is covered?
Employer disability plans cover a percentage of your monthly income (up to a cap – see below), and that percentage can vary. Your plan may cover 60% of your income or more, or it may cover a lower percentage unless you buy up.
- What’s the monthly cap on benefits?
This question is key for physicians.Employer plans have a monthly cap on benefits.If your plan covers 60% of your income with a $15,000/month cap, and you earn $380,000/year (or $31,666/month), you won’t receive disability benefits of $19,000/month (60% of your income).You’ll receive $15,000/month.These caps vary between employer plans, so it’s important to know what yours is.
- Are my benefits taxable?
Knowing whether your benefits will be taxable is also important. Typically, benefits from personal disability insurance are tax-free, when you pay your own premium with after-tax dollars. But some employer-paid plans are set up so that if you receive benefits, they’re taxable. If you know your benefit is $12,000/month and is taxable, it may be something more like $9,500/month after taxes. This can widen the gap between the income you’re bringing in now and what you’d end up with if you were disabled.
- If I leave this job, can I take any disability coverage with me?
Most people today don’t stay with the same employer throughout their careers. The next practice setting you work in may not offer disability benefits, or may offer less robust benefits. Typically, only a small portion of the disability benefits offered by an employer can be “ported” with you if you change jobs, so it’s important to know this and plan ahead. If you change jobs after you’ve developed a health condition, and find out that your new employer doesn’t offer sufficient disability benefits, you may not be able to secure new personal coverage at that time.
In our agency, we’ve been helping Medical Society members secure the disability income protection they need for over 70 years. We recommend that you ask these questions now, and if you find that your employer coverage leaves an income gap that you’re not comfortable with, look at your options for a personal disability policy to help close that gap.
