How Much Does Tail Insurance Cost for a Physician Assistant?
How much is tail insurance for a physician assistant? First, let’s talk about the different types of malpractice policies. And then we’ll talk about how much it’s going to cost if you must pay for it. First, the setting is important. If a PA is employed by a hospital or hospital network, normally, they’ll either be self-insured or have a claims-made policy, or they’ll cover the cost of tail. Very rarely if you’re a PA and you work for a hospital, will you have to pay for your own tail insurance. It just doesn’t happen very often. Now, if you’re in a private physician-owned practice, it’s more likely than not, that if they have a claims-made policy, that you will be responsible for paying the tail costs.
Most private practices use one of two types of insurance. The first is called occurrence-based coverage. With an occurrence-based coverage, it just simply means the policy has to be in effect when the malpractice incident occurs, and therefore, tail insurance is unnecessary. Now, why would you choose one over the other? Well, an occurrence-based coverage is about a third more expensive, so it’s kind of a math equation of, alright, would you rather pay a third more per year to be insured but not have to pay anything at the end for tail, or is it better to have a third less per year and then pay the tail cost at the end of it? For occurrence-based coverage, you don’t need tail insurance. Now, if it’s a claims-made policy, you do. Claims policy simply means a policy has to be in effect when the claim is actually made.
If a PA is employed, and the agreement is terminated, there’s still a gap in between the last patient that the PA saw at the practice and then the last day somebody sues you. In most states, it’s either two years from either when you knew or should have known of the malpractice incident. There are some exceptions for minors when they become adults. But for the most part, two years is kind of a good rule of thumb. In that scenario, if the PA left the employer and didn’t have a tail policy and was sued two years later, well, they’d be out of luck. They’d have no backup as far as malpractice insurance goes. Almost any employment agreement is going to dictate that one, tail insurance has to be purchased, and then two, who has to pay for it. Other topics of interest include:
- Tail Insurance for a Physician Assistant Explained
- What is Claims Made Insurance for a Physician Assistant?
How it would work is in the contract, if the PA is responsible to pay for tail, then normally, it will state they have to purchase the tail policy prior to the agreement terminating. Usually in the last week of their employment, they’d make certain that the tail has been secured, and then they’ll have to provide proof to the employer. Tail costs are usually around twice what the annual premium is for the PA. An annual premium is simply how much the employer must pay to insure the PA on a yearly basis. You just multiply that number times two, and then that’s how much the PA would have to pay for tail. It’s a one-time cost. You don’t have to pay it every year, but it does have to be paid upfront.
How much is a normal annual premium for PA because that’s going to dictate how much tail is. Usually, PAs are somewhere between 1500 up to 4,000, depending upon specialty, but I’d say 2,000 is around the average. If you take two, multiply that by two, and tail costs would be around 4,000. A couple of things to think about, one, you certainly can negotiate prior to signing the employment agreement who must pay for tail. If the employer is just simply unwilling to make changes, one thing we’ve had success with is just to say, alright, if the term of my agreement is three years, then the employer will then forgive a percentage of the tail cost per year. So, if you have a three-year term, then maybe the employer would agree to cover one-third of the cost if you stay for one year, two-thirds for two years, and then they’ll pay for all of the tail after three years.
Some employers are willing to do that versus an all-or-nothing type of thing. Another way of getting out of paying for tail insurance would be if your new employer pays for your old tail. That’s called nose coverage. And then another way of getting out of paying for tail is if you stay in the state, the new employer you have has the same insurance company. They’ll just roll over your policy into the new one most of the time. And then you wouldn’t have to pay for tail insurance. It’s not prohibitively expensive for a PA. However, it’s still going to be thousands of dollars that the PA is going to have to pay in one big lump sum. And most people don’t want to do that. As I said before, it’s more likely than not, probably like 75% of all private practice jobs require the employee to cover the cost of tail. Something to keep in mind:
Is this a deal-breaker for most people? Probably not. However, if you’re hopping jobs a lot, you’re still going to have to pay. And the contract says you’re going to have to pay for tail. You’re going to pay for tail every single time. If you’re going to be long-term with an employer, maybe not be that big of a deal if you must pay for it. If you’re going to have a new job every year and you must pay tail every year, well, that could add up over time. And that may be something you really want to make certain that the employer covers or even think, alright, well, if a hospital employee job almost always has the employer pay for tail insurance, then maybe I want to lean more towards hospital or hospital network positions versus private practice where I must pay for it more.
Definitely can be negotiated in advance. Deal-breaker? Probably not, but certainly something to think about. So, that’s a little primer on tail insurance and how much it costs.
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