What is Occurrence Based Insurance for a Physician Assistant?
What is occurrence-based insurance for a physician assistant? If you’re a PA and you’re working for an employer, maybe a physician-owned private practice, or maybe a small corporate-owned practice, you’re going to have two types of PA malpractice insurance. There’ll be a claims-made policy or an occurrence-based policy. Under a claims-made policy, a policy has to be in effect when the claim is actually made. It’s possible that when you leave an employer, you could get sued after the fact. So, you would need what’s called a tail policy that covers the gap between the last date that you saw a patient for the employer, and then the last day that somebody can sue you.
That’s called a statute of limitations and in most states, it’s two years. If you had a claims-made policy, you do need to purchase tail insurance. Now, this blog is about occurrence-based policy and an occurrence-based policy simply means a policy has to be in effect when the malpractice actually occurs. If you have an occurrence-based policy, you do not tail insurance, you are covered indefinitely. Whether the employer offers claims made or an occurrence-based policy is going to be up to the employer. They generally are not going to give the option of one or the other to the PA. They’re going to say, this is the coverage we offer. Several things to think about: an occurrence-based policy is around one-third more expensive per year than a claims-made policy.
Whereas with the claims made policy, as I said before, you must purchase tail insurance and tail cost is usually about twice what your annual premium is. The annual premium is simply how much it costs to insure you on a yearly basis. Most employers will use claims-made insurance because it’s a third less. And then they’ll also shift the responsibility to pay for tail insurance onto the PA. So, they not only pay less per year, but then they don’t pay that big chunk in the end either. If the employer offers an occurrence-based and they’re paying for it, it’s a no-brainer. Obviously, you need to go for that. I mean, one headache that the PA doesn’t have to worry about. If you work for a big hospital-owned network or just a hospital, most of them nowadays are self-insured and almost none of them utilize claims-made coverage, or if they do, they’ll almost always cover the tail costs for the physician assistant. So, really the only time you have to worry about paying for tail insurance is if you were to work for a smaller physician-owned practice, and then they were to shift the burden onto the physician assistant. Other topics of interest include:
- What is Claims Made Insurance for a Physician Assistant?
- Should a Physician Assistant Choose Claims Made or Occurrence?
If you do have a claims-made policy and you ask the employer to cover the cost, and they say, no, one effective tool would be to ask them to forgive a portion of that cost over time. For instance, let’s say you have a three-year initial term when you sign your contract, you should say, alright, for every year that I’m employed, you would forgive a third of the amount of whatever the tail cost is. And so, after the three-year initial term, the employer would pay for the rest of the tail insurance. As far as the underlying premium goes, with the occurrence policy being a third more expensive than claims made, that’s something that the employer will always pay for.
If you’re a physician assistant and you’re an employee, you should never pay for your underlying premium. If you’re working as an independent contractor, that’s a different story. Most of the time, if you’re working as an independent contractor, they’re going to expect you to purchase your own tail insurance if you have a claims-made policy in addition to paying for your underlying annual premium. So, you need to do a math equation of, alright, how long am I going to work for this employer?
How much is my underlying premium? And then that can help you decide, alright, I should get an occurrence-based policy, or maybe claims-made makes more sense. I mean, if you’re going to be short-term, an occurrence-based policy makes the most sense mathematically. So, something to think about.
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