With all of the extra expenses physicians’ medical practices face today, and the many cuts to reimbursements such as Medicare and Medicaid, doctors are in need of ways to save premium dollars on their physician malpractice insurance. Can a deductible on your medical malpractice insurance policy truly save money or is there a catch? Educate yourself on these options and make a decision based on knowledge because deductibles are not all the same.
Deductibles or Self Insured Retention:
The truth on this premium saving option is that many times deductibles are built into medical malpractice insurance policies to protect the insurer from indemnity payments and defense costs. In many cases, deductibles are on medical liability insurance policies for physicians that have had a compromising claim history. With that thought in mind, is this an option that a physician with a stellar claim history should even consider?
There are two types of deductibles and one has little financial value at the moment you report a claim. The other type may be something you want to think through carefully.
Breakdown of the Two Deductible Types
First Dollar Deductible:
The first option, known as a first dollar deductible, is often a consideration for physicians that have a good claim history on their medical malpractice insurance policy. When you report a medical malpractice claim with this option, typically payment for the deductible is requested immediately from the medical liability insurance carrier. If they do not use this money in it’s entirety for the first expenses of a claim then the carrier will reimburse the balance. The term “first dollar” means that the insured physician or medical provider will owe all of the cost of the deductible as soon as the cost is incurred.
As an example, if a physician has a $5,000 deductible on his or her medical malpractice insurance policy, that doctor will owe all of the cost of defending the medical malpractice claim up to the first $5,000 dollars incurred by the insurance company.
The second option is a referred to as an “indemnity only” deductible and is payable only if there is an indemnity of loss on a medical malpractice insurance claim. The cost savings on an “indemnity only” deductible is not as high as the savings on a first dollar deductible. It is important for physicians to remember that over 80% of medical liability insurance claims are dismissed with no indemnity payment. The doctor that includes an “indemnity only” deductible is not assuming as much as risk as the doctor who includes a first dollar deductible on their medical malpractice insurance policy. Therefore, the premium savings is smaller.
Physicians and surgeons should consider the county that they are practicing in and their specialty to determine how high their medical malpractice risk is. If the physician has a history of receiving claims due to the county they are practicing in, but all of the claims were dismissed with no payment, then an “indemnity only” deductible would be a much better solution. However, that physician would have paid at least a portion of the deductible each time a claim was received and defended by his medical malpractice insurance company.
Most medical malpractice insurance policies include coverage for medical board incidents. Physicians can be called before the medical board for a number of reasons. It is important for doctors to have legal representation when being audited by the medical board. The physician malpractice insurance policies will typically offer $25,000 dollars of coverage for medical board investigations. These policies almost always include a deductible. It is important that doctors and medical providers understand how deductibles work on their medical liability insurance policies relating to medical malpractice claims and medical board investigations.