What is Tail Insurance for a Physician Assistant? | Medical Malpractice Insurance

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. Suppose a PA works for an extensive hospital network. In that case, generally, the hospital network will be self-insured, and tail insurance won’t be necessary. Maybe if they work for smaller, standalone hospitals, that facility might use claims-made insurance. Still, most of the time, like nine times out of 10, if a hospital or a hospital network employs a PA, they will not have to pay for tail insurance. Suppose they’re working for a smaller physician-owned group. In that case, that’s the setting where it’s most likely claims-made insurance is used, and then the PA would be responsible for paying for tail insurance.

Types of Medical Malpractice Liability Insurance

Let’s kind of break down all these terms. First, in a smaller physician-owned setting, there are two common types of malpractice insurance. One is occurrence-based, and the other is claims-made. In occurrence-based coverage, 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. 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. Therefore, they are saving a third a year on malpractice costs and giving the tail insurance coverage responsibility to the PA. In occurrence-based coverage, you don’t need tail insurance. When you need tail insurance, if there’s a claims-made policy and a claims-made policy means a policy must be in effect when the claim is actually made. 

Now, someone could leave an employer, and then there will be a statute of limitations: the amount of time that somebody can sue the PA. In most states, it’s two years from where you know or should have known of the malpractice incident. There are some exceptions for minors and things like that, but let’s use two years as an example. In that scenario, the PA leaves the employer, and then a year later, somebody sues them. If they have a claims-made policy, that policy ends when they leave the employer.

How Much is Tail Insurance for a Physician Assistant?

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

Who Pays for Tail Insurance for a Physician Assistant?

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 going to state who’s responsible for purchasing tail insurance. That is a scenario that a PA can negotiate. You can do a math equation if the employer gives the PA the option of getting occurrence-based 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. 

Summary

So, that’s a little primer on tail insurance for a physician assistant. You need to make sure there’s language in the contract that states when the contract ends and who is responsible for paying if it’s a claims-made policy. Then just a couple more things, the tail insurance policy will need to be purchased before 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 insurance yearly. You’ll spend all the amount upfront, and then you’re covered for whatever the amount of tail insurance that you decided to purchase was. You can’t purchase shorter tails or unlimited tail insurance at just a matter of cost.

Other Blogs of Interest

• What Benefits Should Go In a Physician Assistant Offer Letter? | PA Offer Letter Benefits
• Is a Non Compete Enforceable Against a Physician Assistant? | Physician Assistant Non Compete
• Should a Physician Assistant Choose Claims Made or Occurrence Insurance? | Choose Occurrence 

Tail Insurance Cost for a Physician Assistant | Medical Liability Insurance

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 will cost if you must pay for it. First, the setting is essential. Suppose a PA is employed by a hospital or hospital network. In that case, usually, they’ll be self-insured or have a claims-made policy, or they’ll cover the cost of tail insurance. Very rarely, if you’re a PA and work for a hospital, will you have to pay for your tail insurance? It just doesn’t happen very often. Now, suppose you’re in private physician-owned practice. In that case, it’s more likely that you will be responsible for paying the tail insurance costs if they have a claims-made policy.

Most private practices use one of two types of insurance. The first is called occurrence-based coverage. Occurrence-based coverage means the policy has to be in effect when the medical malpractice incident occurs; therefore, tail insurance is unnecessary. Now, why would you choose one over the other? An occurrence-based coverage is about a third more expensive, so it’s a math equation. Would you rather pay a third more per year to be insured but not have to pay anything at the end for tail insurance? Or is it better to have a third less per year and then pay the tail insurance 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 means a policy has to be in effect when the claim is made.

When Do You Need to Purchase Medical Malpractice Insurance?

If a PA is employed and the agreement is terminated, there’s still a gap between the last patient that the PA saw at the practice, and the last day somebody sues you. In most states, it’s two years from when you knew or should have known of the medical malpractice incident. There are some exceptions for minors when they become adults. 

But for the most part, two years is a good rule of thumb. In that scenario, if the PA left the employer, didn’t have a tail insurance policy, and was sued two years later, they’d be out of luck. They’d have no backup as far as medical malpractice insurance goes. Almost any employment agreement will dictate that one, tail insurance has to be purchased, and then two, who has to pay for it.

How it would work is in the contract if the PA is responsible for paying for tail insurance. Usually, it states they must purchase the tail insurance policy before the agreement is terminated. Usually, in the last week of their employment, they’d ensure that the tail insurance has been secured. Then they’ll have to provide proof to the employer. 

Tail insurance costs are usually around twice the annual premium for the PA. An annual premium is how much the employer must pay to insure the PA yearly. You multiply that number times two, and then that’s how much the PA would have to pay for tail insurance. It’s a one-time cost. You don’t have to pay it every year, but it does have to be paid upfront.

Tail insurance Malpractice Insurance Cost for Physician Assistants

How much is a regular annual premium for PA because that will dictate how much tail insurance 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 insurance costs would be around 4,000. One thing to consider is that you can negotiate before signing the employment agreement about who must pay for tail insurance.

Ways to Avoid Paying Tail Insurance

If the employer is unwilling to make changes, one thing we’ve had success with is to say. If my agreement’s term is three years, then the employer will forgive a percentage of the tail insurance cost per year. So, if you have a three-year term, then maybe the employer would agree to cover one-third of the price if you stay for one year and two years, and then they’ll pay for all of the tail insurance 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 will be if your new employer pays for your old tail insurance. That’s called nose coverage. And then another way of getting out of paying for tail insurance is if you stay in the state, the new employer you have has the same insurance company. They’ll 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 insurance. 

Is a Physician Assistant Malpractice Insurance Deal-Breaker?

Is this a deal-breaker for most people? Probably not. However, you’ll still have to pay if you’re hopping jobs a lot. And the contract says you will have to pay for tail insurance. You’re going to pay for tail insurance every single time. If you’re going to be long-term with an employer, maybe it will 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 insurance every year, that could add up over time.

And that may be something you want to ensure that the employer covers or even consider. If a hospital employee’s 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 more. It definitely can be negotiated in advance. Deal-breaker? Probably not, but certainly something to take into account. So, that’s a little primer on tail insurance and how much it costs.

Tail Insurance for a Physician Assistant Explained

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 medical malpractice insurance. Suppose a PA works for an extensive hospital network. In that case, generally, the hospital network will be self-insured, and tail insurance won’t be necessary. If they work for smaller, standalone hospitals, that facility might use claims-made insurance. Still, most of the time, like nine times out of 10, if a hospital or a hospital network employs a PA, they will not have to pay for tail insurance. Suppose they’re working for a smaller physician-owned group. In that case, that’s the setting where it’s most likely claims-made insurance is used, and then the PA would be responsible for paying for tail insurance.

Two Types of Professional Liability Insurance for Physician Assistants

Let’s kind of break down all these terms. First, in a smaller physician-owned setting, there are two common types of medical malpractice insurance. One is occurrence-based, and the other is claims-made. An occurrence-based coverage means a policy must be in place when a medical 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. 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, they are saving a third a year on medical malpractice costs and giving the tail insurance coverage responsibility to the PA.

Claims-made vs. Occurrence-Based Policy

In occurrence-based coverage, you don’t need tail insurance. When you need tail insurance, if there’s a claims-made policy and a claims-made policy means a policy must be in effect when the claim is made. Now, someone could leave an employer, and then there will be a statute of limitations: the amount of time somebody can sue the Physician Assistants. In most states, it’s two years from where you know or should have known of the medical malpractice incident. T

here are some exceptions for minors and things like that, but let’s use two years, for example. In that scenario, the Physician assistants leave the employer, and then a year later, somebody sues them. If they have a claims-made policy, that policy ends when they leave the employer. So, they need a gap policy, a tail insurance coverage that covers that gap between when they leave, and the last day somebody can sue the PA. As far as cost goes, a good rule of thumb is that tail insurance is usually about twice the annual premium. 

The yearly premium is the amount the employer pays to insure the PA annually. Usually, somewhere between 1500 to 3000 is an excellent standard amount for medical malpractice coverage for a PA. If they had to pay, it’s somewhere between 3,000 to 6,000. It is specialty-dependent. There are different risks for someone assisting in surgery versus someone just doing primary care. Or if you’re with an OB-GYN or something like that, it would be higher as well.

The Price of a Tail Insurance

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 will state who’s responsible for purchasing tail insurance. That is a scenario that a physician assistant can negotiate. You can do a math equation if the employer gives the physician assistant the option of getting occurrence 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 tail insurance for a physician assistant.

You need to make sure there’s language in the contract that states when the contract ends and who is responsible for paying if it’s a claims-made policy. Then just a couple more things, the tail insurance policy will need to be purchased before 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 insurance yearly. You’ll pay all the amount upfront. Then you’re covered for whatever amount of tail insurance you purchase. You can’t purchase shorter tails or unlimited tail insurance at just a matter of cost.

How Does Tail Insurance Work?

How does tail insurance work? Suppose you are a high-level healthcare professional like physicians, NPs, PAs, and dentists. In that case, you will need medical malpractice insurance while practicing. And then, depending upon what type of coverage you have, you may need tail insurance. I’m just going to break down the common types of medical malpractice insurance. And then when tail insurance is necessary and the details of when it needs to be paid, how long it needs to be paid, how much it costs, that type of thing. The two most common medical malpractice insurance types in private practice are an occurrence-based or a claims-made policy.

When Do You Need Tail Insurance?

An occurrence-based policy must be in effect when a medical malpractice incident occurs. And in that scenario, tail insurance is not necessary. 

Under a claims-made policy, a policy must be in effect when the claim is made. It’s possible if a provider leaves an employer, there’s going to be a gap between their last day at work and then the last day somebody can sue them. It’s called the statute of limitations. For most states, it’s two years. There are some exceptions, but in general, two years is a good rule of thumb in this situation. 

Let’s say for this case. It’s two years. So, if you leave the employer, there will be a two-year gap where someone can still sue you for what you did for that employer. And so, in that scenario, you need a policy that covers that gap, known as tail insurance in the industry. If you have a claims-made policy, you need tail insurance. If you have an occurrence-based policy, you don’t.

Who Should Purchase Tail Coverage?

The employment contract will dictate who pays the underlying premium if you have a claims-made policy. Ninety-nine out of a hundred times that will be the employer if you’re an employee and not an independent contractor. And then, the employment agreement will also cover who pays for tail insurance. Now, this can vary significantly from contract to contract.

Suppose you are working for the private physician-owned practice. I would say, more likely than not, that the provider will be responsible for paying for tail insurance. A physician-owned practice would rarely pay for tail insurance. I’d say maybe 75% versus 25%. So, 75% must pay for their tail insurance. In the contract, it’s going to state, alright, the physician is responsible for paying tail insurance. Let’s kind of break down the details of that.

The tail insurance policy will need to be in place before the end of the employment relationship. So, let’s say the physician gave notice, and there’s a 60-day without-cause termination. They will have to get that policy secured before the end of those 60 days when they leave.

Average Tail Coverage Cost

Tail insurance generally costs about twice what your annual premium is. This varies based upon specialty. So, if maybe your primary care, it could be around 5,000 to 6,000. Whereas if you’re an OB-GYN, it could be 40,000 or 50,000 yearly. A good rule of thumb is twice the annual premium, which you will have to pay for tail insurance. It’s a one-time cost.

You’re not going to have to pay it every year. Still, you will have to pay all the money upfront to purchase the tail insurance before the end of the employment relationship.

How Long is the Duration of a Tail Insurance?

Now, how long does tail insurance last? Well, it depends on what type of policy you bought. You can purchase one-year tail insurance, two-year tail insurance, five-year tail insurance, and unlimited tail insurance.

In my opinion, it seems shortsighted to purchase short tail insurance. Why would people do that? Well, it’s just a cost. Now, I said two times is the average. Still, it can range anywhere from 1.5 to 3 times the annual premium based on how long the tail insurance is. And then also, how long you’ve been with the employer and that type of thing.

Determining how long you should get should be easy. It should be unlimited tail insurance; it should go on forever. You don’t want a scenario where you are not covered when a claim is made. And that could be financially crippling for a physician or healthcare provider if they’re ultimately found guilty or must reach a settlement. 

Add Tail Coverage to Negotiations With Your New Employer

Now, you can negotiate who pays for tail insurance coverage in the employment agreement. If you go to the employer and say, hey, I’d like you to purchase my tail insurance, they may say no.

One strategy we’ve successfully asked the employer to forgive a portion of the tail insurance cost based on how long the provider has been with the employer. For instance, let’s say the physician has a three-year initial term. And complete the three years of negotiating with the employer is one way of getting out of having to pay for tail insurance.

Another will be if your new employer pays for your old tail insurance. That’s called nose insurance. Or this doesn’t work if you’re employed in the hospital network. Still, suppose you are with a private-owned practice and leave for another private-owned practice within that state. In that case, they use the same insurance carrier. Generally, the insurance carrier will roll over your old policy into your new one. Then you won’t have to purchase tail insurance.

Now, there’s no way you’re going to know. Okay, in my next job, when I leave this one, whether they have the same insurance or not, that’s another way of getting out of having to pay for tail insurance coverage.

So, that’s how tail insurance works. It just covers the gap between when you leave an employer. Then the last day somebody can sue you, it’s around twice the annual premium. And then, you can negotiate who ultimately is responsible for covering the expenses associated with it.