Whether your benefits are provided to you by an employer or you must choose your own, these are the most common benefits physicians should be looking for.
The robustness of a benefits package can vary significantly depending on the type of employer. Nonetheless, when evaluating job opportunities, it often becomes a focal point. For physicians joining private practices, the benefits provided are typically limited. You operate more as an entrepreneur and must pay your own way when it comes to most benefits. Working for a large hospital or university hospital means practicing more as an employee, but the benefits package tends to be more robust. Private equity groups often land somewhere in the middle.
Whether your benefits are provided to you by an employer or you must choose your own, these are the most common benefits physicians should be looking for:
Whether allotted at the beginning of the year or accrued throughout, two to three weeks per year is common. Be sure to check whether sick days and time off for continuing medical education (CME) fall into their own separate category of time off or if they are included in your PTO bank.
$2,500 to $3,500 is common. It is usually smart to verify what items are reimbursable. Many employer policies have caps on what amount is reimbursable such as airfare and hotel expenses.
Pay special attention to the deductible and out-of-pocket maximums. Premiums, copays, and coinsurance are important, but the deductible and out-of-pocket maximum can be the true indicator of your potential financial liability under the plan. The deductible is the amount you must pay before the insurance starts paying anything. The out-of-pocket maximum is the most you will pay in a calendar year between your deductible, copays, and coinsurance (premiums not included). Once the out-of-pocket maximum is reached, the insurance plan will cover 100% of the costs above that amount for the remainder of the calendar year.
Pay attention to the annual maximum benefit as this is the maximum amount the insurance company will pay for dental work within a calendar year. These typically range from $500 to $2,000. Think of this as an out-of-pocket maximum but for the insurance company in this case. Most dental plans are fairly standard in terms of deductibles, copays, and coinsurance.
Most plans have relatively low copays for eye exams in the $10 to $20 range. They also provide an allowance for eyeglass frames and contacts in the $130 to $150 range. Lenses and medically necessary contacts are often covered in full. Elective and specialty lenses will likely have a copay.
There are two accounts offered: a healthcare FSA and a dependent care FSA. These accounts allow you to pay for some healthcare and childcare expenses on a pre-tax basis. You contribute to the accounts on a pre-tax basis, and as long as that money is spent on qualified expenses, the money comes out tax free. The maximum you can contribute to a healthcare FSA in 2021 is $2,750, and the maximum you can contribute to a dependent care FSA is $5,000. These are use-it-or-lose-it accounts, so use them with some caution. Any money remaining in the account at the end of the calendar year is forfeited back to the plan, not to you.
Physicians should have at least 60% of their pre-disability monthly income covered by an LTD policy. Employer provided plans often cap the monthly benefit an employee can receive, leaving many physicians under-protected. If the employer provided plan is insufficient, then a physician should acquire a supplemental disability policy to make up the difference. When reviewing supplemental disability plans or those offered through work, pay close attention to the definition of disability. A True Own Occupation definition is a specialty specific policy and provides the most protection to a physician in the event of a long-term disability. If the employer provided policy does not have this definition, a physician should consider getting as much coverage as possible through a supplemental policy with a True Own Occupation definition.
1 to 2 times a physician’s salary is common. [DB1] Some may limit coverage to $50,000, but that is done for your own tax purposes.
These common retirement plans allow for tax-advantaged retirement saving and investing. Employers often contribute by making a guaranteed 3% safe harbor contribution, matching a percentage of employee contributions, or a mixture of both. Employers may also make discretionary contributions. Pay attention to the vesting schedule as this will tell you how much of the employer contribution you can take with you if you leave the company. As an employee, you can also contribute to this account on a pre-tax (and sometimes Roth) basis. In 2021, the maximum amount an employee can contribute is $19,500. You are always 100% vested in your own contributions.
While less common, you may also have available a 401(a), pension plan, and/or 457.
Some additional benefits you may have at your disposal are a Health Savings Account (HSA), Short-Term Disability, Accidental Death & Dismemberment Insurance, Adoption Assistance, Tuition Reimbursements, Wellness Programs, and discounts on certain services.
Jeff Witz, CFP® is the Educational Program Director and a CERTIFIED FINANCIAL PLANNERTM at MEDIQUS Asset Advisors, Inc. He specializes in wealth management solutions. He can be reached at 800-883-8555 or at witz@mediqus.com.
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