Anesthesiologist Malpractice Insurance (How MUCH is Tail Coverage?)

How much does tail insurance cost for an anesthesiologist? First, you need to identify the type of malpractice insurance in your contract. 

What are the Types of Malpractice Insurance?

If you have a claims-made policy, it will require tail insurance. And then, in the agreement, it will state who’s responsible for paying the tail insurance cost. If you have an occurrence-based coverage plan, tail insurance is not necessary. So, it wouldn’t matter how much the tail costs in that event. The last type of insurance would be if you’re working for an extensive healthcare network and they’re self-insured. In that scenario, it’s implausible that the physician would have to pay tail insurance. So, in this scenario, it would only apply if you’re working for either a physician-owned group or a small individual hospital with a claims-made policy. So, that’s the first thing you need to do. 

How Much Does Tail Insurance Cost?

Next, how much does tail insurance cost? A good rule of thumb is that tail insurance is around twice your annual premium. And your annual premium is how much it costs to ensure you annually. You would take that amount, multiply that times two, and that’s how much the tail insurance would cost. It can vary somewhere between one and a half to three times your annual premium, which would be based upon claims history and then the length of time with the employer. But most of the time, most of the time, around twice your annual premium would be an average amount. Now, how much is a annual premium for an anesthesiologist?

How Much Is the Annual Premium for an Anesthesiologist?

It depends upon where you are. It does vary state by state. Some states have very strong caps on malpractice damages, reducing the insurance needed for physicians like Texas. Then other states have either no caps or very few caps. And so, the insurance in those states could be much more expensive. It would be unlikely that an anesthesiologist would have a policy for less than $10,000 a year. And depending upon what types of procedures you’re doing, it can be much more than that. 

Somewhere between 10 to 20 a year would be, I would say, an average amount based upon the factors I just said. Let’s say you’re a physician and must pay tail insurance. How do you pay for it? Well, the employment contract will very likely state that you must secure the tail insurance before the termination of the contract. So, maybe by the last week of your employment with the employer, you would have to secure the policy and pay the amount. It’s a one-time payment. It’s not like tail insurance which is a yearly thing. You pay one time, and it covers however long the tail lasts. And that’s up to you. 

You could buy a tail policy for two years, five years, or indefinite. And then that will influence the cost as well. Some companies accept payment plans for tail insurance costs, but most require just the entire amount upfront. So, it’s not like a tiny amount of money. It’s worth planning for that. If you’re going to leave an employer and you’re required to pay the tail, you need to anticipate that and set a little money aside.

How to Avoid Paying You Tail Malpractice Insurance?

Now, a couple of ways around having to pay for the tail. Well, negotiating in advance before signing the contract and ensuring that the employer covers it is one way. Two, having your new employer pay your old tail it’s called nose coverage. And so, that would almost be like a quasi-signing bonus, but that would be one way around it. And then the third way would be if you’re staying within the same state, usually, but more importantly. 

Suppose you’re staying with the same insurance company with your new job. Usually, in that scenario, if you’re going from a physician-owned group to another physician-owned group, it’s the same insurance company. In that case, they’ll usually roll over the policy into your new policy; that way, you don’t have to pay for the tail. It’s impossible to anticipate when you will accept a job and where your next job will be. Still, those are three ways of getting around having to pay for tail insurance.

Other Blogs of Interest

• Why is Physician Tail Coverage so Expensive? | Tail Insurance
• Do you Need Tail Coverage for Occurrence? | Tail Insurance
• How Long Does Tail Coverage Last? | Tail Insurance

Who Typically Pays Tail Coverage?

Who typically pays for tail insurance coverage? To talk about tail insurance coverage, we also need to talk about underlying malpractice policies. We’re going to hit both of those. First, when do you need tail insurance coverage? There are three main types of insurance for physicians. They may be self-insured if you’re with a large hospital or healthcare network. And in that scenario, you usually would not need tail insurance. If you have an occurrence-based policy, it means a policy must be in effect when the malpractice event occurs. You do not need to buy tail insurance for that as well. And then the third is claims-made. Under a claims-made insurance policy, a policy must be in effect when the claim is made.

Why You Need to Add Tail Coverage in Claims-Made

And since you could terminate your relationship with that employer, there will be a gap between the termination date and the last day somebody can sue you. That’s called the statute of limitations. In most states, it’s two years. Now, two years from when the patient either knows or should have known of the malpractice event. Sometimes, it can go past two years. A tail insurance policy is a coverage that covers that gap between when you leave and the last day somebody can sue you. Why would an employer use claims-made versus occurrence? Let’s say it’s a private employer. We’re just going to assume hospitals are self-insured. In this scenario, let’s talk about a private physician practice. If they must choose between occurrence and claims-made, 9 times out of 10, they will choose claims-made because it’s cheaper.

Who Must Pay for Tail Coverage Depends on the Work Set-Up

An occurrence policy is generally around a third more expensive per year for a physician. But as I said before, tail insurance is unnecessary for an occurrence policy. A claims-made policy, if they’re cheaper than an occurrence-based policy. In the long run, it’ll be cheaper if the physician pays for the tail coverage. And that’s why they do that. The premise of this blog is who typically pays for tail insurance. If you’re a physician who does shift work, say hospitalist or ED, it’s almost always the physician who will pay for your tail insurance. If you work for a hospital and they’re not self-insured, and they have a claims-made policy, it’s extremely rare. 

Maybe one out of a hundred would the physician have to pay for tail insurance. Almost whenever a physician is employed by a hospital or health network. The employer will pay for your tail insurance. If you’re in private practice or an employee of private practice, 9 times out of 10, they’ll have claims-made coverage. And then, I’d say, probably 50% of the time, maybe a little bit above that. The physician is going to be the one that must pay for tail insurance. Is that fair? It’s just a matter of negotiation. 

Tail insurance costs about twice your annual premium. Let’s take a primary care physician. Their annual premium is between $6,000 to $8,000. If the physician had to pay for tail insurance, multiply that by two. So, it would be somewhere between 12,000 to 16,000. They’d have to pay for the tail coverage. That’s a one-time cost. You don’t have to pay annually for tail insurance. It’s just a one-time fee when the contract terminates. Then you’re covered for normally the entire gap, or it’s a specific period. 

Tips on Negotiating Who Pays for Tail Coverage

You want to get a policy that goes well past the statute limitations. It’s a real specialty, depending on whether this is a huge deal. In primary care, you must pay 12,000 for tail insurance. It isn’t very pleasant, but it will not break the bank for you. If you are an OB-GYN with a $50,000 annual premium and must pay a hundred thousand dollars for tail insurance. That’s something completely different. And so, negotiating who must pay for tail insurance could be the key point in negotiating an OB-GYN. It would help if you did the math on this. If you can increase your base salary by 15,000 versus negotiating with the employer paying for tail insurance, that’s a no-brainer. You’re going to get that 15,000 every year. And that’s worth much more than just having a one-time $15,000 cost for tail insurance.

Before signing the employment agreement, you must negotiate who pays for the tail insurance. Usually, the employer will send the agreement. The physician will look it over. If they’re smart, they’ll have an attorney review it. And then we’ll come up with a list of things that we need either clarified or that we’re going to ask for. And in that scenario, we figure out what is most important to the physician and then situate the counteroffer. 

Negotiate Tail Malpractice Coverage With Your Employer

Every situation is different. Some things are more important to a physician than others. Maybe some physicians need the non-compete amended because they cannot leave the area once the contract terminates. Maybe a bonus is most important to a physician to help them pay a down payment on a house. Or, in other cases, if they’re, as I said before, an OB-GYN. They don’t want to pay a hundred thousand dollars when the contract terminates. That might be the most important thing to them.

Two other considerations, one, if you’re with an employer and you must pay for tail insurance, but you move to a different employer that utilizes the same insurance company. Usually, that insurance company will allow you to roll over your old policy into your new one. Thus avoiding paying for the tail coverage. Now, there’s no way you’ll know that when you start a job. That it will have the same insurance company, but that’s one way of getting out of paying for it. The other way would be having your new employer pay your old tail insurance. That’s called nose coverage. 

In nose coverage, it simply would be a negotiation with your new employer that says, once the contract terminates with your current employer, they will pay your old tail insurance or reimburse you for whatever you paid for. Nose coverage doesn’t happen very often, but it certainly does. And it’s a possibility for a physician. So, who typically pays for tail coverage? I’d say, typically, it’s the physician. Still, it’s not completely out of the ordinary for a physician to be provided. It’s just a point of negotiation.

How Is Tail Coverage Calculated?

How is tail coverage calculated as far as the cost is concerned? Let’s first talk about when a physician would need tail coverage, who’s responsible for it, and then the good cost estimate. First, a physician only needs tail insurance if they have a claims-made policy. Claims-made policy means a policy must be in effect when the claim is made. It’s possible that if a physician terminates a contract, there will be a gap between the last day they work for the employer and the last day someone can sue them. In most states, it’s called statute limitations.

How long someone can sue for, and in most states, it’s two years. So, it’s two years from when the patient knows or should have known of the malpractice. That’s why some incidents can go beyond two years if it would be impossible for the patient to know that a malpractice incident had occurred. Someone needs to purchase tail insurance if a physician has a claims-made policy. And so, in the physician contract, it’s going to say who’s responsible for it. If it doesn’t, that’s a problem you need to solve before signing the agreement. Regarding who pays for it, it depends on where the physician is employed. First, suppose a physician works for a smaller physician-owned practice most of the time. In that case, the physician will be responsible for that tail insurance cost.

Claims-Made Policy Vs Occurrence-Based Policy

However, suppose the physician works for a big hospital network. In that case, it’s very unlikely the physician will have to pay for the coverage of the tail insurance. Depending on the size, the hospital network will be self-insured or will always cover the tail insurance for any of the physicians they employ. There is another instance where the physician would not have to pay tail insurance if there’s an occurrence-based policy. Under an occurrence-based policy, a policy must be in effect when the incident occurs. And so, that way, no tail insurance is needed. The difference between occurrence and claims-made is price. An occurrence policy is usually about one-third more expensive than a claims-made policy. So, you’ll pay one-third more per year. But then, you don’t have to pay that big chunk at the end for the tail coverage. 

Claims-made is cheaper per year. And when the physician leaves, that tail insurance policy has to be paid. And that’s when that big outlay of cash comes in. How much does tail insurance cost? When talking to a physician, I usually say the best estimates are around two times your annual premium. However, depending on the length of time the physician has been with the employer. It could be either shorter or longer. So, I think the best rate range is usually between 150% to 300% of the annual premium for that policy. 

Annual Premium Cost

The annual premium is simply what the employer pays to ensure the physician per year. Let’s take primary care, for instance. A good rule of thumb is that primary care malpractice insurance is usually around 6,000 yearly.

It also depends on your state, but just like an overall general estimate, we’ll say 6,000. Let’s say the physician has been there three years, and they terminate the contract, moving on to a new job. In that case, the tail insurance cost would be $12,000 or an estimated $12,000. And if the physician was responsible for paying for that. Before their last day of providing care to that employer, they would have to buy that policy, show proof of that to the employer, and then move on. There are, I guess, two scenarios where a physician would not have to pay tail insurance if they were responsible for it. One, they could always get their new employer to pay their old tail insurance, called nose coverage.

Consider it a signing bonus that the new employer will pay the old coverage for tail insurance or if the physician stays with the same insurance company. So, if you’re with one insurance company, your new physician utilizes the same insurer. In that scenario, they’ll generally roll your old policy into your new one. Then you won’t have to pay tail insurance. As I said before, most of the time, if you’re in a private physician-owned practice, the physician won’t be responsible for paying tail insurance. Now, there are a couple of ways to negotiate this. Just tell the employer I’d like you to pay for my tail insurance. If they’re unwilling to do that, another scenario would be to split the cost based on how long the physician has been there.

Why Is It Important that an Employer Covers the Tail?

I think one good way of doing it is, let’s say, a four-year term for a contract. Then 25% of the tail insurance costs will be covered by the employer for each year the physician is employed. So, if they’re employed for two years and then leave. They would split the tail insurance costs 50/50 with a new or old employer. That’s one way of doing it. This is important for some specialties like the higher-level surgical specialties. OB-GYN has enormous tail insurance costs, which need consideration. If the physician is an OB-GYN and must pay for all of their tail insurance, they’ve been there for eight years. They could have a tail insurance cost of a hundred thousand dollars, which has to be paid all at once.

That’s a lot of money for almost anyone. So, trying to figure out a way to split the cost of the employers is one of the higher points of negotiation as far as that goes. Anyway, I hope that was helpful regarding calculating a tail insurance cost. Anywhere between 150% to 300% of your annual premium. The longer you’re there, the higher the range. The shorter you’re there, the lower the range.

How Important is Tail Coverage?

How important tail coverage is for physicians. First, we’ll talk about what tail coverage is and what type of policy you need. Then the importance of it, and what kinds of negative repercussions if the physician does not have a tail. 

First, you will only need a tail if you have a claims-made policy. A claims-made policy must be in effect when the claim is made, filed, and served to the physician. If a physician leaves a job, there will be a gap between the last patient they see that employee. Then, the last day somebody can sue them is the statute of limitations.

In most states, a malpractice claim is two years. And that’s from when either the patient knows or should have known of the malpractice incident. That’s why it can sometimes go past two years if there was no way of knowing about the malpractice until later. Suppose the physician has a claims-made policy in the employment contract. In that case, it will state who is responsible for paying for the tail insurance policy. Suppose you are an employed physician. Maybe a small physician-owned practice, it’s very likely that you’ll have to pay for a tail. If you work for a big hospital network, it is unlikely you will have to pay for tail insurance. Most of the time, the big hospital networks are either self-insured. This means you don’t have to buy tail coverage, or they offer that as a perk of being in that job.

How Much Does Malpractice Tail Insurance Cost?

If you’re in private practice or employed with a private practice, you’re likely to be the one paying for the tail. One question I get very often is how much does it cost? A good rule of thumb is that tail costs about twice your annual premium. How long you’ve been with the employer can fluctuate. Sometimes from 150% up to 300%, but the average is about twice what you pay annually for your premium. The annual premium is how much the employer has to pay to cover you for one year. Some people have no idea how much it costs. Let’s say you’re in primary care. Usually, your annual premium will be somewhere between $6,000 to $8,000. 

So, the tail policy would be 12,000 to 16,000, something like that. Some of the other specialties like surgery and OB-GYN. It can be tens of thousands of dollars per year with a tail cost of fifty to a hundred thousand sometimes, so it’s very important. What happens if you don’t have tail insurance? Well, simple. If you leave an employer, someone has two years to sue you. You have no insurance policy to cover that gap. You can be sued and not have any insurance to back you up, which is a problem. Even though it sometimes costs a substantial amount, rolling the dice on hoping that a malpractice claim doesn’t arise in your gap is a bad idea. I mean, malpractice, not depending upon the severity, obviously, but most policy limits are 1 million per occurrence and then 3 million aggregate per year.

Search for Better Tail Insurance Policy Offer

You can imagine if you don’t have an insurance policy and there’s a million-dollar claim, it could bankrupt some people. So, you need to buy tail insurance. Where to find it? Well, you can go with the same insurance company. They’ll give you a cost, pay it, and you’re good to go. I would go shopping a little bit. You don’t have to go with the same underlying insurance provider. Whoever’s providing you with the annual coverage doesn’t necessarily mean you have to go with them for your tail insurance. I would suggest shopping around. Sometimes, I’ve had people who have found tail insurance coverage with the same limits. They also have the same length of time for 25, 20% less than the cost given to them by their current insurance provider. So, that is the importance of tail insurance. And then a little breakdown of claims-made coverage as well.

It depends upon where you are. It does vary state by state. Some states have very strong caps on malpractice damages, which then reduces the insurance needed for physicians like Texas, for instance, and then other states have either no caps or very little caps. And so, the insurance in those states could be much more expensive. It would be unlikely that an anesthesiologist would have a policy for less than $10,000 a year. And depending upon what types of procedures you’re doing; it can be much more than that. Somewhere between 10 to 20 a year would be, I would say, an average amount based upon the factors I just said. Now, let’s say you’re a physician and you’re required to pay tail insurance. How do you pay for it? Well, the employment contract will very likely state that you must secure the tail insurance prior to the termination of the contract.

So, maybe by the last week of your employment with the employer, you would have to secure the policy and pay the amount. It’s a one-time payment. It’s not like tail insurance which is a yearly thing. You just pay one time, and it covers however long the tail lasts. And that’s up to you, you could buy a tail policy for two years, five years, or indefinite. And then that will influence the cost as well. Some companies do accept payment plans for tail insurance costs, but most of them require just the entire amount upfront. So, it’s not like a tiny amount of money. It’s worth planning for that. If you’re going to leave an employer and you’re required to pay the tail, you need to anticipate that and set a little money aside. Now, a couple of ways around having to pay for tail.

Well, obviously, negotiating in advance before signing the contract and making certain that the employer covers it, that’s one way. Two, having your new employer pay your old tail, it’s called nose coverage. And so, that would almost be like a quasi-signing bonus in some way, but that would be one way around it. And then the third way would be if you’re staying within the same state, usually, but more importantly, if you’re staying with the same insurance company with your new job, usually in that scenario, if you’re going from a physician-owned group to another physician-owned group, and it’s the same insurance company, they’ll usually just roll over the policy into your new policy and that way you don’t have to pay for tail at all. Obviously, it’s impossible to anticipate when you accept a job where your next job is going to be, but those are three ways of getting around having to pay for tail insurance.