Disability Insurance Insights, Long-Term Care & Financial Planning Strategies. #430

You're not likely going to get more healthy as time goes on , and you're certainly not going to get younger , so the most ideal time to get a policy is when you are young .

All you have to do is show that your income is increased and you can buy more benefits at that time . No medical questions asked .

When I finished residency , when I finished fellowship , for me money wasn't my strong point , it was my weakest point and I just went through med school and just hoping that , you know , once I become a resident , like we're going to make some money , like $50,000 is like that's , I'm a millionaire , and so forth .

But when I started to realize , going through you know , residencies that look , I got bills , I got to pay , I got a mortgage , I got to pay and all of these different things are kind of chipping away at how much I'm actually bringing home .

And I just to say I was house poor , which meant I was spending more than half of my paycheck on a mortgage , probably a house that I should not have gotten . But this is , this is 2006 . You know , I'm saying everybody could get one .

I came in it with like blinders on and initially very resistant , because I was like , look man , I don't have enough money to go around . There's no more money to go around . I checked my the website of Morehouse and they offer disability insurance . Why are you talking to me about this ?

Are pre-meds like you're going to be spending the next eight years taking out loans , putting out a large investment on becoming a doctor , but one thing that you never think about is what could happen to you if you get sick , if you get into an accident . Absolutely you know or in general , something physically or mentally happens that you can't practice anymore .

Right , and you need some protection from that . The question is is how likely is it going to happen to you ? And do you want to play those games ?

And I think that's one of the things that I think more more physicians , residents , people are coming out of of of training they struggle with because they're like well , you know , like I'm healthy , I'm going to practice , I'm going to practice for the next 20 or 40 years , but it's those little things that you don't really think about that could really trip you

up and cause a big issue down the line and stuff .

We like to jump out of planes more so we get on motorcycles and things like that . But you know I'm generalizing , but with women there's childbirth . There's a whole bunch of other issues that we can get into . But the most important thing , folks , is that we work as locum tenens docs . We're independent contractors , we do our own thing , so we work really hard .

But one of the things that we have and we don't roll without is disability insurance .

And , depending on how you look at the screen , the woman up above , like almost like this , is the Brady Bunch right , like I think she's above or maybe , depending on how the video is done , maybe here or over there , we don't know if she's below but either way we have Jamie Fleischner who , low key , has kind of helped us get out of debt .

She didn't know that , but she helped us get out of debt . So I had a life or , excuse me , I had a disability insurance plan . That was very expensive and it probably was something that I didn't need .

Jamie Fleischner is she is run SEP for life insurance and we've been affiliated in some form or fashion for over 12 years . She is an independent broker of disability insurance , life insurance , works with professionals , works with a lot of professionals in the medical field , and I think we , our relationship , has changed right Like we initially started off .

You're like look , I just got to get out of the most expensive plan and get me into something that makes more sense it off . You're like , look , I just got to get out of the most expensive plan and get me into something that makes more sense . To Jamie , like Renee is pregnant , what does that mean for disability insurance ?

To hey , jamie , we're no longer employed by our hospital anymore . What does that mean for our own disability insurance ? So , without further ado , jamie Fleischner , welcome to Docs Outside the Box .

Sometimes it's still really good to assess what you have , to make sure it's still appropriate . So it's important that you have it , but you also don't want to overspend on it . Like you said , you had a lot of student loans , you had all these other things and it was holding you back from your overall financial health .

So it's really important to just assess where you are initially and then grow with it , and you're both a really good example of and you have been doing this for three decades now and as things change in your career and in your life , you also need to reassess your insurance , because where you were 12 , 14 years ago is very different than where you are now .

I mean , you've got those little kiddos and you have all these other obligations and other types of needs , and your income has changed and your situation has changed .

So it's really important to not just make sure you have the appropriate insurance , make sure you're not overspending on it , but also make sure you're monitoring it and looking at it as your situation changes .

And you know most of them big buffed dudes , big buff women , they want to get out there and they are young and viral and they're like I'm going to work for the next 30 years , disabled , disability , what are you talking about ? I got all this stuff . Yeah , talk to us

about that .

You're in the hospital and your patients don't think they never thought they were going to be the ones that needed surgery , or it always happens to somebody exactly and so when you're younger , you think about your future and you feel invincible . But when you're younger , what you do have is you do have your health , and that's when you need to get your policy .

So when you initially get a disability insurance policy , they will ask you medical questions head to toe last 10 years . You're not likely going to get more healthy as time goes on and you're certainly not going to get younger . So the most ideal time to get a policy is when you are young and you're healthy .

You can answer the medical questions and then you don't have to worry about it . So if you do decide to jump out of airplanes , like you mentioned , or ride motorcycles or you develop an illness or you know you have some kind of surgery , you're completely set . You don't ever have to answer those medical questions again .

So when you're young , that's the time to get it , especially during residency , because there's special residency discounts . So if you're able to get that on the policy , you're going to save even more money over the course of your career .

So it's a higher risk pool , so it's sort of a generic plan . So most group policies say you have to be totally disabled , not working , as opposed to an individual policy . Your policies say if you're sick or injured and can't work in your medical specialty , you're covered , even if you can work in another specialty or occupation . That's called own occupation .

So that's a huge difference . So in your case again something happens If you can't do surgery , you're going to get paid . Even if you can do your podcast , even if you can teach , you could do research , you're going to get paid regardless .

Whereas if you're only relying on the group policy , they're going to say , oh , you're able to earn income elsewhere , we're not going to pay your claim . So that's one of the things . Number two a group policy has limits , so typically really more intended for rank and file employees .

So the higher your income is , the less your benefits are going to replace your income . They usually have a maximum of 10 to 15,000 . If the employer's paying for it , that's taxable . So if somebody says , oh , I have $10,000 for my employer , if you're in a high tax bracket , guess what ?

That's going to really only be about $6,000 a month depending on where you're taxed $5,000 a month . So it really is more expensive , exactly . And then the last reason is most people don't work at their same employer their whole career . So if you leave , you can't take your group policy with you .

If you want to go and do local work , or you want to have gig work , or you want to start your own business or anything else , those policies don't go with you . So let's say you're 40 years old , you've worked at a hospital these years , didn't have your own policy . Now you want to leave , but you just had back surgery or you're now type two diabetic .

You're kind of out of luck . You may not be able to go get your own insurance . So that's why you want to have some supplemental insurance that's going to cover you more comprehensively and it's also portable .

So if you have that portable policy , you can leave the hospital and then just say okay , here's my new income , it's gone up , they'll allow you to increase it without any medical questions .

So it's just a minimum tiny policy , Because then when you finish and you leave and you start getting your big paycheck , then you say okay , now I want to go from $1,000 a month to $10,000 a month . Now we can increase the policy Again , no medical questions asked .

So the goal is just to protect that insurability and then you don't have to worry about it in the future .

Now we do have there's something relatively new in the industry that's called guaranteed standard issue that we are one of the partner brokers in the country that have this available , and it is . It's only available at select hospitals through select brokers , but it allows residents to get a policy with no medical questions asked .

So the benefit of that is , especially if you maybe already have health issues maybe you're type one diabetic or again you had back surgery or something you can get a policy , no medical questions asked . Now it will limit how much you can increase it in the future up to $15,000 .

For a lot of people that's totally sufficient and sometimes in some circumstances it's a little bit more expensive , but it's a really great option . So when our clients come to us we look at it and say wait a minute , you have some health issues , don't worry about it . We can get this policy for you .

So if you do have some health , issues you want to talk to us first and we can discern . Maybe you get that first and then so you can at least get the coverage . So typical exclusions probably the biggest one that we see is mental health .

What if I have ms or something ? No , no , that's all covered , just like any other condition .

Without disability insurance , how are you going to replace your paycheck ?

In episode 176 , jamie Fleissner of Cephalife Insurance explains why the best time to buy disability insurance is during your residency .

Usually you get less healthy over time , so when you're healthy , it's easier to acquire the coverage . Number two it's also less expensive because it's based on your age and your health . You're not getting younger or healthier over time , so you're at the ideal time . The earlier you get it and the younger you are , the less expensive it's going to be .

Here's one that I think a lot of people don't think about IVF .

However , if you get a pregnancy exclusion on your policy after you give birth , you can just apply to take that off . That's really not a big deal and when you think about it , of all the exclusions , I think pregnancy is probably the most benign because you're pregnant for nine months . You have a 30-day wait , you don't find out .

The maximum amount of claim is probably five , six months anyway . But it does also cover any kind of complications at delivery . So , if you have , I've had a couple of people that claims they've been out for like two years after having major complications at delivery . That's all covered too . So if you're going through fertility , they're going to exclude it .

If you get your policy before , you don't have to even disclose it later . You can even be pregnant . When you increase your policy , they don't need to know it , disclose it later , you can even be pregnant when you increase your policy .

You know , with mental health becoming more of a acceptable thing to seek treatment for publicly at least you know we're we're encouraging more people to either see a therapist , speak to someone um , you know any of those types of things Like , let's say , you don't go on medications and so forth , but you're like seeing a therapist , or that's usually not a problem .

If you've been taking medication for a long period of time , they're probably just going to exclude it . So that's just now this is better than the way it used to be 10 , 15 years ago . If you'd ever taken medications , they would just decline you , they would just turn you down , and I don't think that that's right . I personally I might . What I've seen .

I think people who actually do seek treatment and do get help are probably mentally better off anyway , and so my estimation are probably less likely to file a claim .

But she would like to get into doing locums , which means that she would have to get her own disability insurance policy , and she had suffered from depression in the past and her physician literally gave her samples , just samples of lithium , which she never actually really went on .

And she's afraid , because she's tried to get disability insurance and that has been , either she's been denied or that part has been excluded , and actually I think she's just been flat out denied . So is there anything that you would say to her ?

The other thing you can also do and that's why sometimes it helps to have somebody experienced to sort of on your side and advocating for you . You can also say what's the period of reconsideration . They might say once you've been off meds for two years , we'll reconsider you and then you can apply again . So it's not the end of the world .

There are also alternative policies that we get through , like Lloyd's of London , peterson's , that they'll , they can , they likely will accept her . So it's a different policy . It's only a five-year policy , but it's better than nothing . So , and then there's also sometimes association policies .

If she's a member of a um , a physician association , she might be able to get . So there are other options that she might be able to have .

You've gotten something that's through your medical society . That's at another level . And then you got one at your job . That's to another level . Talk to us about , educate us on what's the better one , what's the worst one when you're eligible .

Sometimes you can , sometimes you can't , but again it's not going to be nearly as comprehensive as your individual . Sometimes you just don't have a choice . So that's the group policy .

So the benefits of the group is you don't have to answer medical questions . So , especially for somebody who has any kind of preexisting .

But that's going to be the most comprehensive , especially because it's got that own occupation definition , meaning you can't do your specialty , it's going to pay you even if you could do something else . Now I didn't mention there's really two ways you can file a claim . That own occupation is for total disability .

So many other types of claims have what's called a partial disability or residual , and so what that says is you only need a 15 or 20% or more loss of income to trigger a claim . So I've got people right now they're going through chemotherapy , so the first month maybe they're still working , but as time goes on they can work less and less .

So they're not totally out , they're still working , but on a limited basis . They're still able to file a claim . A group policy won't let you do that . It's all or nothing . So that's another reason to have an individual policy . I have people right now they have carpal tunnel , and so they have to cut back . They just can't work full time .

They might have that for years . So again a partial disability type of claim . So that's why the individual one is superior . But again you're going to pay more . The association is kind of in between , so it sometimes has own occupation for like two years and then you have to be totally disabled .

The premiums are usually less , but they go up every year so it becomes really expensive . I usually get people calling me in their 40s going . I've had this association plan all these years . Oh my God , I'm hanging out the nose . It's not that great .

So again , the association could be great if maybe you're a locum and you don't have a group policy and maybe you can get it through the group . Some association plans don't ask medical questions , so I kind of consider that a hybrid of the two .

Like what proof do you have to say that my CV joint does not need to be trust ?

Oftentimes they're referred and I can either walk them through and tell them everything they want to know . Some people want to know everything and some people just say here's my situation , what do I do ? So there's really sort of the gamut . So we're actually in the process .

We're putting together a lot of YouTube videos to really get into the nuts and bolts of all of the insurance , because it depends you can get as in depth as you want or as generic as you want .

Is there a certain type of lingo that they need to familiar , familiarize themselves with , so that when they talk to you , it's , it's a much easier conversation , or at least something that they feel more equipped with when they walk through the door or they get on a phone and say , hey , I need X , y and Z , and this is why so I think that one of the

biggest questions that I ask people is how much do you need ?

Well , they might have different needs , they might have six kids or whatever .

So it's really important to figure out for your own self how much you need on a monthly basis . If it hits the fan and you need to replace that income , how much do you need to be able to pay your bills ? So when you're looking at disability insurance , you're always looking at it in monthly benefit amount .

So if it's a group or if it's individual , it's a monthly benefit . Individual policies are tax free , so you're covering take-home pay . There's only a maximum amount you can get based on your income . So you can usually insure about 80% of your take-home pay or about 60% of your gross income .

Because some people say , well , I make 10,000 a month , why can I only insure it for 6,000 ? Well , you're not taking home 10,000 a month , you're paying a lot on taxes . So there's always a little bit of a gap . So a lot of people forget that .

So I think the first question people need to think about is how much do they need to have , because that dictates how much it's going to cost . So maybe you're eligible for 10,000 a month , but maybe you only need 8,000 a month . You don't need to pay for more than you need . So that's the first thing . And then , how comprehensive do you want it ?

Do you want all of the writers on the policy or do you just want to kind of have a bare bones policy to cover yourself ? And then a lot of it also depends on your situation . People come to us in their forties and fifties .

Maybe they've paid off their debt , maybe they've paid off their house and they just need to get the kids up and out , or they just need to take care of those next five to 10 years . So maybe we do a shorter benefit period . So we really try to listen to the needs of the client and help to customize it .

So again , I don't want people to overspend on something that they don't need , but they need to be properly covered . So when they come to us to answer your question , the most important thing is how much do you need to have ? So how much do you need to have ? And then we can figure it out from there .

And when it comes to budget , we shop it around , look for all the discounts and say it's going to be between this and this , you know , and help them figure out the best policy .

If you're in your final year of residency or your last six months , you can actually get up to $7,500 a month benefit , which is more than your take-home pay . So again , it just kind of depends on where you are in residency . There's no need to overspend or over-insure in residency .

The whole goal is just to get that policy and capture that discount , because when you go to increase it you'll still increase at the discounted rate .

Paying for your disability insurance personally , like out of personal funds , or using your business to pay for it . Talk to us about that .

If you have a $10,000 a month benefit , getting 10,000 tax-free , or 7,000 a month or 6,500 , it's going to cost you a ton if you have to pay taxes on it . So always pay with after-tax dollars .

And another thing is if you're currently working and thinking about becoming a locum , you're better off getting the policy while you're employed because you have a guaranteed income and you can show that pay stub .

Once you go out as a locum , you will have to show an income pattern for at least a year or two , so you might be going flying without insurance for a year or two . It's because you need to show that income pattern Same goes if you're going and starting your own practice .

So maybe you're not going to locums , but maybe you're going to be hanging your own shingle , you're starting your own practice . They need to have that income pattern . So if you're employed you can get your policy here's my pay stub and that policy just becomes portable .

Now let's say you go buy a $10,000 a month policy while you're employed and you go do locums , but maybe you're just working every other month and you're not even making $10,000 a month . If you go unclaimed , you're going to get paid that full $10,000 a month because you're paying premiums for it .

So they're still going to pay that benefit for you because you've been paying for it . They can't force you to reduce it either . So you might even be overinsured initially or over time .

They even if , let's say , I've had people who are stay at home moms , so they're not even gainfully employed with a paycheck , and if you go on claim you get paid that full benefit even though you weren't actively working , because they cannot force you to cancel that policy . So so at that point it does become a total disability policy .

So I've had people have had cancer or complications of pregnancy or childbirth or things like that , and it's paid even though they weren't on a payroll .

We've talked about having even neurological dysfunctions , maybe even Alzheimer's or dementia , and I wanted to kind of pivot . You know we're talking about disability , but what about when your disability now turns into something that is much more long-term and you're needing actually care at home ?

Let's talk a little bit about long-term care insurance , because I know that your company itself , Step for Life Insurance , does provide some services with long-term care insurance .

. So I have a lot of clients that are kind of in that transition period where they're in their fifties and they're kind of letting go . Maybe they're getting ready to retire . But now we're looking at it going now , what's your biggest risk ? You've saved for retirement , you paid off all your debt , you have this big nest egg .

Your biggest risk is becoming having , like you mentioned , dementia , alzheimer's or some kind of long-term healthcare issue and it can wipe out those finances . So statistically , 70% of people will have some kind of long-term care need at some point in their life , whether it's nursing home , home healthcare , something like that .

So a lot of our clients , as they kind of let go of their disability , we're starting to look at long-term care insurance to cover that risk , so that way you don't deplete all of your retirement assets that you worked your whole life to save for . And then another thing too is we have a lot of clients whose parents are also .

Maybe they're in their 70s , 80s and they're in their seventies , eighties and they're looking at it going . There's our inheritance . Something happens to mom and dad . We're the ones in charge for paying for all of that care . So a lot of the times the siblings all get together and they buy a policy on their parents so that way they can outsource that risk .

So something happens , that risk is covered . Long-term care will pay for all of those needs and their estate is preserved .

And so sometimes you have nursing home needs for your parents or for yourself , and in order to be able to get that help that you need from the government , you often have to put up your assets . And are people using long-term care insurance to be able to kind of buffer or protect them from having to do that , to basically give up their assets ?

Like you said , there goes our inheritance , there's the house that we thought that we were going to live in or to be able to rent . Talk to us about kind of the implications of not necessarily having long-term care insurance .

I mean , you don't want to wipe out all of the assets to be able to do that , so with long-term care , but still , even if your family or your parents still have some assets , it is important to make sure they're covered with long-term care . So I just looked it up this morning in Colorado , where I live , the average cost of long-term care is $86,000 a year .

In New York it's 100,000 a year .

Now , nhi , you had also asked about the tax write-off for disability , something very interesting . For long-term care , it's the only type of insurance that you can pay for through a business and deduct the taxes , or deduct the premiums from your taxes , and the benefits are still tax-free . So that's something really interesting .

So , if you're a locum and maybe in your 50s you're kind of thinking you know , maybe I'm kind of aging out of the disability . But gosh , you know I'm rock climbing , I'm doing all these things and something happens . You know you can maybe pay those premiums through your're done and you don't have to pay for them the rest of your life .

And that way , by the time you retire , you know that you're going to be insured .

You know , I think that there are quite a number of maybe not so much medical students , but maybe residents who might fall into that . You know , into that particular situation . What is the cost of your average long-term care insurance plan , considering that they're not really making that much money ?

So if something happens , they really literally can't take care of their parents , whereas hopefully you're living in the same place as your kids who take care of your kids , but you're sandwiched in and you're your parents on another coast or something . It's really tough . So the cost has so many different variables . It depends on your age .

There's also discounts If you're married . There's discounts If you're healthy . Depends on how much you want to pay for all you know . Do you want to have different writers on the policy ? But just for an example , like I had a client of mine , he's 50 and he's in that period where he's thinking about transitioning out .

For him it's like $150 a month for just sort of a starter plan and just to have that , if he wanted to have the 10-pay plan it was like $6,000 a year but in 10 years he's paid up . He could do it . He's a low-income physician . The older you are , the more expensive it is . If you wait until you're 70 or 80 to buy a policy , it's very expensive .

You could be $1,000 a month or something very , very expensive . It really again , it just depends , and sometimes you don't cover the whole risk . You just say we're just going to cover a portion of it , we can't afford the full amount , but parents or the kids are going to just chip in and get some for mom and dad yeah .

It's really skewing there , and so what is that going to do to the long-term care community , the nursing homes and the cost of the care and everything ? So we're entering some uncharted waters in this and this is not covered by Medicare maybe Medicaid , like you said , if you deplete all your assets .

So , and there's been a lot of changes in the marketplace , so companies have come in , come out . They're not having priced it right , so there's still some shifting around that's happening .

Hey , jamie , thank you for coming on the show and kind of schooling us on things that obviously we didn't go to school for , but we really appreciate it and we also appreciate the partnership that you've had with Docs Outside the Box for all these years and for the folks that are listening .

Listen , we have worked with Jamie for close to 10 years now and we are very happy with this relationship and has moved on into this podcast , and I do believe that you want to work with people who have a heart of a teacher . You want to work with people who have your best interest at heart and , depending on where she is , she might be up here or here .

Jamie definitely has it . So make sure you guys check it out . Don't be afraid to even just start the conversation . Even if you're just a resident Okay , it can never be too early Just have the conversation .

And obviously , if you're a young attending and you've left residency and you're wanting to know , just you know , pick up the phone or send an email and have that conversation .