Let’s face it: Physicians’ contracts are complicated! You can spend hours poring over your contract in an attempt to figure out compensation structures, call schedule, wRVU schedules, collection rates and overhead ratios.
In the midsts of sorting through the legal aspects of the contract, such as the non-compete clause, intellectual property rights and Stark Law provisions, physicians might overlook something very important‹the employment benefits in the contract.
More often than not, benefit packages are pretty vague. Items usually included in a benefit package are: medical, dental and vision insurance; life and disability insurance; retirement savings or investments; vacation and sick time; CME funds and time off; malpractice insurance; board certification fees and support; paternity/maternity leave policies and loan assistance, to name a few.
We’ll break down some of the more complicated aspects of your benefits so you know what to look for.
Most employers provide medical malpractice insurance for physicians.
There are two main types of malpractice insurance that you need to know about: occurrence-based and claims-based.
"Occurrence based" policies are more expensive and less common. Occurrence malpractice insurance will cover you for whenever the claim occurred, not when it is filed. With occurrence malpractice insurance, you would still be covered even if you are no longer employed at the clinic where the claim occurred. Occurrence malpractice insurance does not require the purchase of an extended reporting endorsement, often called a "tail" policy.
"Claims made" insurance is the other main type of malpractice insurance. It is less expensive and therefore more common (we see around 75 percent claims-made policies). These types of policies will cover you if a claim is made during the policy. In order to be covered in the event that you leave your position where the claim occurred, you need to purchase "tail" insurance.
Tail insurance is priced specific to your specialty and history and can be quite expensive. We have seen neurosurgery tail policies of over $93,000 that are the sole responsibility of the physician. These amounts are not financed, and are usually due in full when the policy is purchased and employment terminated.
There are many clauses in a contract around malpractice insurance. The contract should clearly state which type of insurance is being provided, who is responsible to purchase "tail" if required, and the limits of the insurance policy.
Vacation time is important! When looking at your contract, pay attention to the way your vacation benefits are stated. Will you have specific days for vacation, illness and CME, or are you given a lump sum of PTO (paid time off)?
Will your vacation time be paid out on termination? Will it be rolled over to the next year if you don’t use it all? You may look at your paid time off differently if it’s a "use it or lose it" policy.
When reviewing your contract, request any specific vacation policies to which it refers. Certain policies may require specific notices by physicians when requesting days off or limit the number of consecutive days a physician can be absent from clinic.
Many contracts lack any specific details around retirement saving plans. Often the contracts will refer to a retirement plan policy that you haven’t read.
Retirement benefits are a very important part of your future. If there is a plan offered by your future employer, you’ll need to know the specifics and details regarding contribution and match limits, vesting schedules, investment choices and potential tax implications.
Not fully understanding the retirement package your employer is offering could cost you in the long run. Physicians who do not understand vesting schedules may sign a five-year employment contract with a seven-year retirement vesting schedule. If you leave the position in five years, you may not be able to take all of your retirement savings with you.
It’s important that you know and understand the various retirement vehicles available to you so you can make informed decisions about your future.
As you can see, the benefits section of a contract is very important. There are many consequences to not fully understanding all the benefits being proposed by your potential future employer. Don’t simply look at the compensation and sign‹make sure the benefits section is up to par as well.
J. Appino is the founder of Contract Diagnostics (contractdiagnostics.com), a national company that specializes solely in physician contract reviews.