A surgeon whose hands no longer let him operate has two disability policies. One is through his employer’s benefit package and the other he bought himself.
Both disability policies cover the same person and the same hands, and nothing obligates the two companies behind them to reach the same conclusion about him. They are separate contracts written by separate carriers under separate rules, which is why one can pay while the other does not, and why the decision that settles it gets made years earlier, at purchase.
Income replacement insurance is the half of that pair the professional actually chose. Everything about it was fixed at purchase, by the buyer, rather than handed down inside a benefits package.
The surgeon is a client of Michelle L. Roberts, who has spent more than 21 years watching that split play out. She is a disability attorney in the San Francisco Bay Area who has represented disability claimants since 2005, first in plaintiff-side litigation and later as a partner at Kantor and Kantor before launching her independent practice.
On this episode of the Income Protection Journal Podcast, I ask her what she has learned about the choices a buyer makes when they buy an individual disability policy, and how those choices impact whether or not the carrier pays out their claim in the event of a disabling injury or illness.
Group Disability Policies vs Individual Disability Coverage
Carrying two policies is always the better position, and Roberts said so plainly, because a lot of people have no individual coverage at all. What catches the two-policy owner off guard is that the second contract is operates quite differently than the group plan.
It is a separate contract, from a separate carrier, governed by its own language.
“So there’s already two different decision makers, and one is decided yes based on the evidence… you are disabled from your own occupation, and then let’s say in the group policy context… the insurance company denies it.”
Michelle L. Roberts, a Berkeley-trained benefits lawyer who has spent more than 21 years reading employer disability plans and the individual policies that sit alongside them
Getting two answers on one set of facts is not a contradiction. Each company applies the definition printed in its own contract, and her client is disabled from surgery from performing their own occupation, without being disabled from every occupation that exists.
A contract that insures his occupation reaches one conclusion. A contract that insures his ability to work at all reaches another. He bought two different promises, not the same opinion twice.
That difference is priced, and Roberts put the reason in terms I had not heard stated that plainly. Group coverage is inexpensive and individual coverage is not, and only part of that is distribution.
An employer buys in volume, payroll handles the premium, and often the employer covers some or all of it. The rest is that the two products do not carry the same obligation.
An individual policy is written to one named person and priced against the full, definite commitment the company has made to that person for as long as the contract stays in force. Employer coverage is written to a company under a separate set of federal rules, and what the carrier takes on there is narrower and more contained.
A narrower obligation costs less to price. The cheaper premium is not the same coverage at a discount. It is a different product, and the price is saying so.
None of which the employee chose. A group plan arrives finished, and Roberts made the point that most professionals were never in the room where its terms were set.
“A lot of times, professionals are not owners of the company necessarily, and don’t have that negotiating ability with the insurance carrier.”
Michelle L. Roberts, past president of the Federal Bar Association’s Northern California chapter and principal of Roberts Disability Law, P.C.
Reading the document is the only say a candidate has over it, and reading is not the same as changing. The one disability contract a physician, an attorney or an executive genuinely controls is the one bought in their own name, where the definition, the benefit amount and the length of the promise are settled at purchase.
Benefit Period Length Decides What Long-Term Disability Coverage Pays
The first thing Roberts looks at in a policy is not the definition of disability. It is the number of years.
“I’ve seen policies that pay only five years, and you know that’s a huge difference, particularly for somebody who’s 40 years old. You know, to have a policy that pays five years, you need to know that. Does it pay to 65 or does it pay to Social Security retirement age? You know, with the latest of which is now 67. That two years of extra benefits makes a difference.”
Michelle L. Roberts, a benefits attorney who has evaluated long-term disability policy terms for high-earning professionals since 2005
Read as a purchase decision, the benefit period stops being a technicality. A 40-year-old physician with a five-year benefit period who never returns to clinical work is covered until 45 and uncovered for the two decades of earnings that were supposed to follow.
A policy that runs to the Social Security full retirement age, now 67 for anyone born in 1960 or later, covers the whole arc. The premium difference is small. The difference in what they promise is most of a career.
Benefit period length is also where the two contracts disagree most quietly. A dentist comparing an employer plan against a policy of her own is usually comparing monthly amounts, and those can match to the dollar while one contract stops at five years and the other keeps paying for another 20.
Any-Occupation Language in Employer Disability Insurance Carries a Wage Floor
The second thing Roberts reads is the definition, and specifically what becomes of it after the first two years. Most employer plans she sees pay on an own-occupation basis for roughly 24 months and then hand off to a broader any-occupation test. That handoff is a separate constraint from the monthly benefit cap a group plan places on a high earner’s coverage, which the Journal has covered on its own.
She was careful with the numbers when I pushed her on how common the handoff is. She was speaking from her own experience, she said, and her pool is the people who contact her office, in the Bay Area, many of them from large technology employers whose plans she describes as written more favorably than most.
“I would say, for the most part, the majority of the policies we see will have an any occupation definition. So maybe roughly, you know, 10 to 20% tops that come through our door will have a own occupation for life policy.”
Michelle L. Roberts, a San Francisco Bay Area attorney whose practice has reviewed employer disability plan definitions for more than two decades
What the any-occupation test actually asks for is where the money sits, and Roberts said roughly half the definitions she sees carry a station-in-life requirement. The language asks whether someone is qualified for another occupation based on education, experience, training and station in life, and that last phrase does real work.
The alternative occupation has to pay somewhere in the range of 60 to 80 percent of prior earnings before it counts against the benefit. Someone earning half a million dollars a year is not expected to take an $80,000 job and call that a career.
Strip the phrase out and the test changes character. Without a wage floor, the only question is whether some occupation exists that the person is qualified to perform, and part-time work at almost any wage answers it.
Roberts framed it with one illustration, a lawyer who can no longer practice law but could work at Burger King. With a wage floor, that job does not end the benefit. Without one, it can.
This is the comparison I run for clients before anything gets signed. A professional who already has employer coverage is not choosing between a group plan and a policy of their own.
They are deciding whether to layer supplemental disability insurance on top of the plan they were handed, and the case for it does not rest on the employer plan being bad. It rests on that plan being one company’s contract, on one company’s terms, with a definition that can hand off at 24 months and a benefit period that can stop at five years, none of which the person covered ever got to set.
The full conversation is on the Income Protection Journal Podcast, including the question Roberts says she would ask about a carrier before any provision, what she tells professionals about partial disability benefits and the earnings line nobody should ride too closely, and how remote work has changed what a professional’s own occupation even means. What stays with me is that owning two contracts is not redundancy. It is the only way to have a second answer available at all, and it gets bought years before anyone knows which answer will matter.