By Ben Glass and Damon Miller, Guest Writers
You’ve put a lot of blood, sweat, and tears into building your medical practice, which is why it is only fair that you receive the full value of what you’re owed when it’s time to say goodbye. You put in the work, so you should reap the benefits.
A great deal of thinking goes into selling a practice, and mistakes can be costly. For one physician that we’ve worked with, that mistake cost him something to the tune of $1.2 million. Don’t make that same, expensive mistake. It probably goes without saying that selling a medical practice involves numerous considerations, but one consideration that physicians often overlook is, “Should I file for a disability claim?”
Why Do Physicians Sell Their Medical Practice?
Most physicians sell their practice for one of two reasons:
- I’m getting too old for this, and I’m ready to retire and spend time with my family;
- I physically cannot do the work anymore, and I’m going to transition into another specialty or into another line of work entirely.
If you’re in the second group, the question you should ask yourself is whether you should file for disability benefits. When you finished medical school, you (hopefully) took out an individual disability insurance policy to protect your income. If you had a smart broker who knew what they were doing, you probably purchased a policy that defines “disability” as the inability to work in your own occupation within your own specialty.
Should I File a Disability Insurance Claim?
In other words, you don’t need to be disabled and unable to work “any” occupation or even unable to work as a physician. You only need to show that you cannot perform your own specialty. In fact, you don’t even need to stop working. The very best policies will pay your full disability benefits even if you are working full-time in another physician position as long as you cannot work in your previous specialty—even if you are making more money in your new specialty.
Let us repeat: You may be able to continue working and still receive full disability benefits from your insurance company.
Of course, policies vary, and it depends on what you purchased when you signed up for coverage. Some cheaper policies will pay you full disability benefits while you work in another occupation but then transition into only paying benefits based on your loss of income. For example, for the first 12 months, it would pay your full disability benefit as long as you cannot perform your own specialty, even if you are working in another specialty making more money; on month 13, the insurer will only pay a benefit if your new occupation has a loss of earnings compared to your previous specialty.
Better policies, on the other hand, do what we described earlier. For example, my (Damon’s) policy says that it will pay my full disability benefit even if I’m working in another occupation making more money. If I ever can’t practice law as an ERISA and disability insurance attorney, helping physicians and other professionals with their disability insurance claims and appeals, then my insurer will pay me my full monthly disability benefit—even if I transition into another career or another specialty in law and earn more money than I do now.
But before you can receive disability benefits, you must ask for them. That’s where mistakes can happen.
More information here:
Disability Insurance: Your Health Is Your Wealth
People Aren’t Buying Disability Insurance, But They Should
Why You Should Consider Filling a Disability Insurance Claim Before Selling Your Medical Practice
We recently spoke to a doctor whose name and specialty we’ve changed for this article (we’ll call him “Fred”). For decades, Fred operated an orthopedic surgery practice, making hundreds of thousands of dollars a year. That was until his own orthopedic conditions started interfering with his ability to stand for the lengthy surgical procedures he performed on patients.
He sought treatment briefly in 2020, only to find out nothing could improve his condition. So, he decided it was time to sell his practice to his partners and try out something new in life. He’s doing well now. He is looking into some entrepreneurial opportunities, and he will continue working. But he’s never going to be physically able to return to the practice to which he devoted so much of his life.
He came to our office and asked if we could help him file a claim for disability benefits. We told him no. He could file for disability benefits, but the insurance company would probably deny his claim—all because he didn’t think about filing a claim when he first sold his practice.
His only treatment for his condition was more than two years ago when he saw a surgeon and found out that his condition wouldn't improve. Now, he faces the unenviable position of trying to explain to the insurance company that he was disabled two years ago without any treatment records from that time period to prove it.
If he saw us before he started the process of selling his practice, we would have helped him file his claim, explained to him what information he needed to gather to prove to the insurance company that he couldn’t work in his specialty anymore, and made sure that he had a solid claim. Instead, he came to us two years after the fact without having any real treatment in the interim or contemporaneous letters in 2020 from his doctors explaining why he could no longer work in his specialty.
The second problem with his claim is that his “own occupation” specialty was no longer that of an orthopedic surgeon. You see, these policies typically look at the occupation you are performing immediately before you file a claim for disability benefits. He either needed to show that two years ago he couldn't work as an orthopedic surgeon (which was true but there were no records to back that up) OR the insurance company would look at the occupation he performed immediately before he filed his claim today. The problem is that since he waited two years, the occupation he was performing at the time he filed his claim was not that of an orthopedic surgeon but that of a retired orthopedic surgeon. And even Fred agreed that he doesn’t have any difficulty cutting it as a retired physician.
What this physician should have done two years ago is to have had a strategy discussion with an experienced disability benefits attorney. At the time, he would have had a valid claim. He just needed the medical support to back it up. Instead, he waited too long, and now he probably will not collect on his disability insurance that would have paid him over $14,000 a month until age 65. That's a loss of $1.176 million.
What about simply documenting the medical visit and then using that for disability insurance purposes later? Seeing the doctor that one time, even if it was well-documented, probably would not have made a difference. These policies usually (if not always) have a provision that says you must be under the regular care of a doctor in order to claim benefits. In Fred’s policy, it said as part of the policy’s definition of Disabled that “The Insured [must be] receiving care, by a Doctor, for a condition causing the Insured’s Disability.” In other words, you have to be receiving treatment, even if there is no cure or if your condition is not going to improve.
More information here:
How Much Disability Insurance Should You Buy?
What Disability Insurance Riders Do Doctors Need to Buy?
Don’t Make a Million-Dollar Mistake
Whether you’re selling your practice or you’re switching specialties since you no longer physically can perform your own specialty, that’s the time to file a claim for disability insurance benefits. Many physicians wait since their condition isn’t that difficult at first or because they know they can continue working in a different specialty. But if you wait, you’re only cheating yourself.
You’ve faithfully paid premiums on your disability insurance for years. When it comes time to collect and you cannot perform in your specialty anymore, that’s the time to file a claim. If you can’t perform your specialty anymore—even if you switch to a different specialty, leave medicine altogether, or earn more money than you did in your prior specialty—then, under many policies, that means you’re entitled to benefits.
Have you successfully received disability benefits despite continuing to practice in another specialty? Are there other disability insurance mistakes you've heard about? Comment below!
[Editor's Note: Ben Glass and Damon Miller are disability insurance attorneys at Ben Glass Law—a firm that, since 1999, has helped doctors, dentists, and other high-earning professionals nationwide tell their stories to skeptical insurance companies. Ben Glass Law is a paid advertiser and a WCI Recommended Physician Contract Review and Legal Services partner. However, this is not a sponsored post. This article was submitted and approved according to our Guest Post Policy.]