Despite Tax Credits, Short Term Disability Insurance for Doctors Still Falls Short, Warns Set for Life Insurance
Even with new federal incentives, many doctors risk losing most of their income if disabled.
Denver, CO, Sept. 02, 2025 (GLOBE NEWSWIRE) -- Despite the new federal tax incentives created under the One Big Beautiful Bill Act, employer sponsored, short-term disability insurance for doctors remains woefully insufficient for medical professionals, warns Set for Life Insurance.
While the new requirements provide important relief for many American workers by incentivizing employers to expand short term disability insurance benefits, the required coverage levels do not meet the specialized income protection needs of physicians and medical residents whose earning potential is uniquely vulnerable to disability.
The One Big Beautiful Bill Act (Public Law 119-21), enacted on July 4, 2025, permanently extended employer tax credits for paid family and medical leave and broadened their application to include short-term disability insurance premiums. In an announcement, the Internal Revenue Service said the expansion was intended to “unlock broader access to paid leave and disability programs by reducing cost barriers for employers.”
In an official statement from the U.S. Department of the Treasury, Secretary Scott Bessent addressed the measure’s broader impact on the economy, noting that the bill “locks in permanent, pro-growth tax cuts for families, workers, and job creators."
While Jamie K. Fleischner, CLU, ChFC, LUTCF, and president of Set for Life Insurance applauds the federal effort, she also urges doctors to resist being lulled into a false sense of security. “This legislation is an important step that makes disability coverage more accessible for many Americans,” said Fleischner, who has been quoting physician disability insurance for over 30 years. “But physicians, medical residents, and other speciality specific high-income earners should know that employer-based plans, even under this new law, protects only a fraction of their income. For medical professionals, these income protection measures still fall short.”
Employer-sponsored disability insurance usually replaces between 60 and 70 percent of wages but rarely accounts for bonuses, incentive pay, or the higher salaries that typically do not cover medical specialization. Monthly caps often range from a $10,000 to $20,000 per month benefit, leaving a significant shortfall for specialists whose monthly earned incomes can exceed $30,000. In addition, group disability plans commonly use restrictive definitions of disability and elimination periods, which delay and may cut off monthly benefits if a physician is able to perform any other job due to partial disability, even if it is outside their trained medical specialty. By contrast, individual specialty specific, own-occupation policies continue paying coverage benefits if a doctor cannot perform the exact duties of their medical specialty.
“Doctors train for years to practice in a particular field, and their earning capacity depends entirely on that specialized ability,” Fleischner said. “If a surgeon can no longer operate, an anesthesiologist can no longer administer anesthesia, or an orthopedic surgeon can no longer perform musculoskeletal surgeries, their careers are effectively over. Own-occupation, non-cancelable physician disability insurance is still the only way to ensure their income is protected, even if they’re able to work in another role.”
Impact on Disability Insurance for Medical Residents
Medical residents and fellows face an even more precarious situation. Group coverage during training provides some short-term and long term protection, but once they graduate from their medical school or fellowship, disability insurance premiums rise sharply and coverage availability may narrow, particularly if their health changes. Furthermore, most group policies are not portable and can’t go with medical residents when they leave training. Fleischner stressed that securing long-term coverage during residency can make a lifelong difference. “Residents who lock in individual, non-cancelable disability insurance before they graduate get lower, discounted premiums and true own occupation coverage that protects them for their entire careers,” she said. “Waiting until later often means forgoing resident discounts, a possible guaranteed standard issue policy, paying more, and settling for longer waiting periods, fewer benefits, and less comprehensive terms.”
Although the new tax credits may encourage more employers to offer short-term disability coverage, Fleischner warns that physicians should not assume these benefits are sufficient. “It’s easy to assume that because Congress is strengthening employer disability benefits, the problem is solved,” she said. “In reality, these protections were never designed for people with physician-level incomes. That’s why doctors and residents must still supplement employer coverage with specialty-specific, own-occupation disability insurance policies.”
The IRS has emphasized the broad worker protections embedded in the law, and the Treasury Department highlights its value for the economy as a whole. But for high-income specialists, the gap remains. Fleischner concluded, “Physicians should certainly welcome this legislation as progress for working families, but they should also recognize its limits. The safeguards that matter most to their livelihoods still depend on individual, long-term, own-occupation disability insurance.”
Set for Life Insurance, headquartered in Denver, CO has specialized for more than three decades in helping physicians, surgeons, and medical residents nationwide secure disability and life insurance that aligns with their income, career stage, and professional risks.
About Set for Life Insurance
Set for Life Insurance (https://setforlifeinsurance.com), based in Denver, Colorado, is a nationally recognized insurance agency specializing in disability insurance for physicians, surgeons, residents, and high-income professionals. With expertise in structuring own-occupation, specialty-specific, non-cancelable coverage, the firm helps clients safeguard their careers and income against the risk of disability. Led by Jamie Fleischner, CLU, ChFC, LUTCF, the brokerage is recognized for its contractual guarantees, personalized support, and exclusive access to disability insurance discounts and non-cancelable, guaranteed renewable policies.
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Attachment
Empty operating room, symbolizing the impact of physicians experiencing disability and the importance of securing physician disability insurance and disability insurance for doctors to protect their careers and income.
Even with new federal incentives, many doctors risk losing most of their income if disabled.
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