Newly matched 4th year med student. When to buy disability insurance?

[res153]

Hi, I'm a 4th year medical student who just matched into an anesthesia residency this past week.

I've read through the WCI and the disability insurance blog post series. I was wondering when's the best time for me to purchase an individual disability insurance plan? Right now, I am covered by my school's disability insurance policy through Guardian. That policy should expire at the end of June. Should I aim to purchase an individual policy now or should I wait until I start residency in July?

My other question is that anesthesia residencies have a clinical based intern year which means we rotate through several different specialties (e.g. medicine, surgery, emergency, etc.). I actually will be practicing very little anesthesia during my intern year. Will I need to specify other specialty clauses when I request a disability quote?

Thank you all very much!

[Miss Bonnie MD]

What state are you in and where are you going?

[res153]

I'm currently in NY. I'll be moving to Seattle, WA.

[Zaphod]

Your program will probably have one for you which may or may not be adequate. You want to make sure you buy some before you get out of residency as it will be cheaper than waiting. Follow the rules and any changes to make sure you dont need to change any plans.

[nachos31]

1) I think I had to submit some form of documentation of my income (either an acceptance letter with pay listed or actual contract) when I applied for my indiv disability insurance policy. So the earliest you could get one would be after you have something like that in hand, the timing of which will vary based on your program.

2) Anesthesiologists get a less favorable designation due to the procedural nature of the field (more chance to hurt yourself) as well as more ready access to fun meds of abuse. I wonder if there was any way you could pretend you were doing a nonspecific intern year with unknown subsequent residency so you could lock in a more favorable designation like for IM?

[wideopenspaces]

Congratulations! I used the disability policy I was given at work during residency. Then I chose to continue it upon graduation because it is super cheap. And then bought a second policy that covered my attending salary. So you are probably OK to wait until after residency, but wait at least to see what you get through work first. Honestly the fact that you even know to ask about this puts you way ahead of the game. You're going to be just fine! Keep reading and asking questions.

[adventure]

Congrats on matching!! And do enjoy the pacific northwest.

nachos31 wrote:

1) I think I had to submit some form of documentation of my income (either an acceptance letter with pay listed or actual contract) when I applied for my indiv disability insurance policy. So the earliest you could get one would be after you have something like that in hand, the timing of which will vary based on your program.

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Yeah, I think before the end of residency (and potentially fellowship) is the key here. I could be mistaken.

nachos31 wrote:

2) Anesthesiologists get a less favorable designation due to the procedural nature of the field (more chance to hurt yourself) as well as more ready access to fun meds of abuse. I wonder if there was any way you could pretend you were doing a nonspecific intern year with unknown subsequent residency so you could lock in a more favorable designation like for IM?

Click to expand...

Most residencies have you spend the first year in a variety of rotations. I can't see the need to explain this, nor file additional paperwork. Given the student matched already, I'm not sure such an argument would hold up anyway, if things really got messy.

[The White Coat Investor]

I would probably wait until after my HR meeting that first week at work. See what you get there. Decide if it is good enough. If not, supplement it with a good individual policy with a future purchase rider.

[res153]

Thanks for all your replies!

I looked online at my institution's website regarding their disability plans for residents/fellows. The basic plan costs me nothing -- it's a long term group plan that pays $240 / month after a 90 day waiting period. I do have the option of purchasing additional coverage that covers 60% of my pre-disability income (up to max of $6000) and the ability to adjust my waiting day period.

So based on the WCI's recommendations for residents, it doesn't seem that this will be enough even I purchase the additional coverage.

Should I even bother enrolling in my institution's plan? or should I forgo it completely and just purchase my own individual plan? The reason I ask is because the WCI mentioned that a group policy may limit my ability to purchase an individual policy (https://www.whitecoatinvestor.com/disability-insurance-part-6-other-types-of-disability-insurance/).

EDIT: see updated post below

[shantster]

res153 wrote:

Thanks for all your replies!

I looked online at my institution’s website regarding their disability plans for residents/fellows. The basic plan costs me nothing — it’s a long term group plan that pays $240 / month after a 90 day waiting period. I do have the option of purchasing additional coverage that covers 60% of my pre-disability income (up to max of $6000) and the ability to adjust my waiting day period.

So based on the WCI’s recommendations for residents, it doesn’t seem that this will be enough even I purchase the additional coverage.

Should I even bother enrolling in my institution’s plan? or should I forgo it completely and just purchase my own individual plan? The reason I ask is because the WCI mentioned that a group policy may limit my ability to purchase an individual policy (https://www.whitecoatinvestor.com/disability-insurance-part-6-other-types-of-disability-insurance/).

Click to expand...

$240/month or 2400/month? If it's the former, that is practically nothing. If the latter, it's only $28,800 annually prior to taxes coming out (since the group would be paying premiums with pre-tax money).

 

For the option to purchase additional coverage, that is still within the group plan and not one that you can take with you, correct? If so, I would recommend looking for an individual policy rather than adding to the group plan, if you can afford it. Your group plan pays so little that you will probably want to supplement it in case of disability in residency, and it would be of greater benefit for you to have that money going to a policy you can take with you in case of change in your health during residency.

[StarTrekDoc]

That is kind of low.  Also check own occupation definitions along with tail during and lifetime definitions of disability.  Back ages ago, we were group insurance and then was able to convert to individual policy with same favorable own occ terms.  Have had that for nearly 20 years now--and thankfully never need to utilize it.

 

[res153]

Ok, I made a mistake - I apologize (the website is pretty confusing). It looks like there is a separate LTD plan exclusive for residents/fellows. The one quoted above seems to be for regular employees.

The plan defines "own occupation" disability as "Unable to perform the substantial and material duties of your Residency or Fellowship and receiving care from a physician and if working, earning less than 80% of pre-disability earnings". The plan will pay $2500 / month.

The plan then defines Total & Permanent Disability as "After 12 consecutive months unable to work in Own Occupation or Any Gainful Occupation and will continue for remainder of your lifetime." This will pay $5000 / month plus one additional lump sum payment of $5000.

There is a 90 day waiting period and $18/month premium.

This plan has a lifetime benefit period, and I will have the option of converting this plan into an individual policy at the end of my residency.

[Scott at MD Financial Services]

So what you have is an Own Occupation Not Engaged definition for the first 12 months then it will be up to the claims adjuster to determine if you can do anything (Gainful occupation) after that.  You certainly have one of the weaker group policies made, be mindful of that.  If in fact it has a lifetime benefit that is good just remember in order to get benefit you have to unable to anything since it has the "gainful occupation" terminology in it.  I would suggest that any contract where the carrier can tell you what to do and if you don't they get to cut your benefits is not ideal and you might want your own your policy that you control, not the carrier.  You can certainly wait to do this or you can get as a medical student if you want, really it just is a matter of when you have time to get a contract executed.

[The White Coat Investor]

Take the group policy paperwork with you and sit down with an independent agent. Have them explain the weaknesses of your group policy and give you quotes for several individual policies and then make a decision about what you want to use. The group policy will probably be cheaper, but weaker.

I bought the individual policy I still have as an intern. The benefit was only $2500 a month initially (but I was only making $37K as a resident.) My PGY3 year I could buy an increase to $3500 a month, then as an attending I exercised the FPO option to get up to the maximum $7500 a month. That's still the policy I have. I also have a $10K group policy through my current partnership.

I'll probably drop both of them in the next 1-2 years. Part of the issue is that I wouldn't get the full benefit if I were only disabled from practicing medicine due to my WCI income. So the DI policies will likely go slightly before the life policies.

[res153]

Thank you all for the advice and information. I will definitely get in touch with an independent agent in the near future to go over my group policy and see what my alternative options are for an individual plan.