For many new doctors, understanding what insurance coverage is needed to protect various individual and practice needs can be confusing. Here, we outline what practice overhead insurance provides, as well as disability income insurance, and how it will protect your income over time.
Practice Overhead
Some doctors question if they really need practice overhead insurance. While it’s a decision that only you can make, it’s one that you should heavily consider as a physician, employer and business owner. This coverage not only protects your individual needs, but those you entrust to give your patients the best care possible. Practice overhead protection, in the event of an illness or disability, provides you the option to continue to pay for your staff and expenses, as well as hire another doctor to take your place during recovery. This coverage ensures that your practice will remain open and that your patients won’t be referred elsewhere. Practice overhead can also cover:
- Utility Bills
- Office Supplies
- Property Taxes
- Accounting Fees, Legal Fees, and Professional Dues
- Malpractice and Other Business Insurance Premiums
- Maintenance and Janitorial Services
- Interest on Business Debts
- Depreciation
This allows for your current income and future income to be protected, and the livelihoods of your staff and partners to remain intact. Doctors are vulnerable to the threat of disability, and adequate coverage if you own a practice is necessary to a secure financial future. So exactly how much coverage do you need? Doctors often make mistakes when it comes to calculating overhead insurance, but a general rule of thumb is that doctors should insure 50% of their normal business overhead expenses.
Disability Insurance
If you’re worried about losing your income, another way you can protect your hard-earned money is through disability income insurance. Disability coverage allows you to protect your financial future – allowing you to earn income and pay expenses if you become injured on the job or off the job and cannot provide patient care for an extended period of time. Doctors are people too and are susceptible to injury or illness. In fact a family physician has a one-in-three risk of becoming disabled or out of work for six months during his or her career. Don’t risk going through those months without an income.
New doctors in the field are carrying hundreds of thousands of dollars in student loan debt. If you add a serious injury to the mix without the proper levels of disability coverage, you could end up in financial ruin. To ensure this doesn’t happen, see if your employer offers disability coverage. If they do not offer adequate coverage, it would benefit you to supplement that coverage with your own personal disability income protection, like from the AAFP Insurance Program. But before you purchase disability coverage, make sure you find out the following:
- How does my employer define disability?
- How much of my income is covered?
- What is the waiting period?
- How long will I receive benefits?
- Can I take my plan with me if I change jobs?
While caring for your patients is your number one priority as a family physician, don’t forget about yourself. Protect your practice, your health and your income with practice overhead and disability insurance to ensure your financial independence so you can continue to practice medicine for years to come.
