Almost every month, I receive an email or call from a client that would like to inform me that their practice is growing. Their next question is almost always, “What do we need to do to add a physician to our policy?”
Items to consider:
- Is your practice going to provide prior acts coverage?
- If your practice is going to match the new physician’s retroactive date, you are inheriting the risk of claim for this physician from another practice. For this reason, most administrators require the physician to purchase a “tail” for their current policy before joining the group’s policy. See #4 below.
- Is the physician entering private practice for the first time since completing training?
- New physicians receive a large discount, thus reducing the cost of their coverage. This discount can be up to 65% and added to the first-year claims made policy premium.
- Has the physician had any claims?
- Prior claims will increase the cost of insurance for this physician. Even though the claims occurred while working in a different practice environment, your practice will have to pay more for the physician’s coverage with your group.
- Does the physician need “tail” coverage?
- If your practice will not be providing prior acts coverage, and the physician is not entering private practice for the first time, chances are he/she will need to secure “tail” coverage. This is also called an Extended Reporting Endorsement.
- If the physician leaves your practice, who is responsible for the “tail”?
- This question is typically addressed in the physician’s employment contract. A “tail” typically costs 150% of the expiring premium.
- Will the physician be retiring in the next 5 years?
- Most admitted insurance companies will give a physician a free “tail” at retirement if they meet a few conditions:
- Completely retire from the practice of medicine.
- Be 55 years of age or older.
- Maintain coverage with the same company for 5 years*.
- Most admitted insurance companies will give a physician a free “tail” at retirement if they meet a few conditions:
*Most companies have reduced this 5 year requirement to 3 years. Some companies have even reduced the requirement to 1 year.
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To contact the author, call 800-457-7790 and ask for Myles Donnell.