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What is Tail Insurance for a Physician Assistant?

Blog, Physician Assistant Contract Review

What is tail insurance for a physician assistant? The setting of where the physician assistant is employed usually will dictate what type of professional liability insurance they have, also known as malpractice insurance. If a PA works for a big hospital network, generally, the hospital network will be self-insured, and tail insurance won’t be necessary. Maybe if they work for some smaller standalone hospitals, that facility might use claims-made insurance, but most of the time, like 9 times out of 10, if a PA is employed by a hospital or a hospital network, they will not have to pay for tail insurance. If they’re working for a smaller physician-owned group, that’s the setting where it’s most likely claims made insurance is used, and then the PA would be responsible to pay for tail insurance.

Let’s kind of break down all these terms. First, in a kind of smaller physician-owned setting, there are two common types of malpractice insurance. One is occurrence-based, and the other is claims made. In an occurrence-based coverage, it just simply means a policy must be in place when the malpractice incident occurs. Tail insurance is not necessary for an occurrence-based policy. Now, why would you get claims made versus occurrence? A good rule of thumb is an occurrence-based is usually about a third more expensive than claims-made coverage. I find smaller physician-owned practices usually use claims-made insurance just because it’s cheaper. And then they’ll pass the cost of tail insurance onto the employee. And therefore, not only are they saving a third a year on malpractice costs, but then they’re giving the tail coverage responsibility to the PA as well.

In occurrence-based coverage, you don’t need tail insurance. When you do need tail insurance is if there’s a claims-made policy and a claims-made policy simply means a policy must be in effect when the claim is actually made. Now, someone could leave an employer, and then there’s going to be a statute of limitations which is the amount of time that somebody can sue the PA. In most states, it’s two years from either where you know or should have known of the malpractice incident. There are some exceptions for minors and things like that, but let’s just use two years for example. In that scenario, the PA leaves the employer, and then a year later, somebody sues them. Well, if they have claims-made policy, that policy ends when they leave the employer. Other blogs of interest include:

  • Tail Insurance Cost for a Physician Assistant

So, they need a gap policy, a tail coverage that covers that gap in between when they leave and then the last day somebody can sue the PA. As far as cost goes, a good rule of thumb is, tail is usually about twice what the annual premium is. The annual premium is simply the amount the employer pays to insure the PA each year.  For a PA, usually, somewhere between 1500 to 3000 is kind of a good standard amount for malpractice coverage. If they had to pay, it’s somewhere between 3,000 to 6,000. It is specialty dependent. Someone who’s assisting in surgery versus someone who’s just doing primary care, there are just different risks there. Or if you’re with an OB-GYN or something like that, then obviously it would be higher as well.

But just a good rule of thumb is somewhere around twice what the annual premium is. You want to find out, alright, what’s the annual premium? Is the employer paying my annual premium? which they should be. And then in the contract, it’s literally going to state who’s responsible to purchase tail insurance. That is a scenario that a PA can negotiate. You can kind of do a math equation if the employer gives the PA the option of getting occurrence coverage or claims-made coverage. If you’re going to be there for a short period, it might make sense to get occurrence insurance. Whereas if you are going to be there for a very long time, doing the math, it could make sense to go for claims made coverage. So, that’s a little primer on what tail insurance is for a physician assistant.

You need to make certain there’s language in the contract that states when the contract ends and if it’s claims made policy who is responsible to pay, and then just a couple more things, the tail policy will need to be purchased prior to the end of the PA’s employment with the employer. Then it’s a one-time payment. You don’t have to pay for tail yearly. You’ll just pay all the amount upfront and then you’re covered for whatever the amount of tail that you decided to purchase was. You can’t purchase shorter tails or unlimited tail at just a matter of cost, really.

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April 26, 2022/by admin
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