Professional overhead expense insurance

Today's typical veterinary student may spend upward of $30,000 every year toward his or her training, making a veterinarian's education a truly valuable asset. Education and training are only the first steps in establishing oneself as a veterinarian. Many veterinarians will invest their time to establish a practice. The practice, of course, generates revenue—along with monthly overhead expenses.

Disruption to a practice caused by injury or illness happens more often than most people might think. According to the U.S. Census Bureau, 1 in 5 Americans experiences a short- or long-term disability at some point during their lives. Established veterinarians should thoughtfully plan for the impact on their business if they are unable to work because of a disability. Younger veterinarians, often with heavy student loans and lower earning power, also need protection.

One veterinarian who could testify to this need is Dr. M.B. Jones of Versailles Veterinary Clinic in rural Missouri. Dr. Jones established his own practice in 1973. From the start, he was prudent about protecting himself and his practice with health insurance, disability insurance, and professional overhead expense insurance. Dr. Jones was guilty, perhaps, of one small oversight—he had not reviewed his coverage in several years.

In 2004, his AVMA Group Health and Life Insurance Trust agent made an appointment to review Dr. Jones' coverage.

"Our new AVMA GHLIT insurance agent called on me last summer," Dr. Jones recalls. "I was busy, but he was a nice guy, so I sat and listened to him. He recommended we raise our POE. We had originally purchased POE 15 years ago and never looked at it again."

Agent Wes Hentges of Missouri says, "Dr. Jones was one of the first veterinarians I called on. His POE and disability coverages were out of date."

Within a year, the wisdom of reviewing and repositioning Dr. Jones' insurance was validated.

In February 2005, Dr. Jones began experiencing what he thought was heartburn and was treated for gastroesophageal reflux disease. Because he wasn't experiencing any other classic cardiac symptoms, he was not alarmed. Even a trip to the emergency room during a bad episode was falsely reassuring, when his radiographs and ECG results seemed normal. The ER physician advised him to follow up with a stress test, which Dr. Jones put off.

Finally, after a day working with a herd of dairy cattle left him totally worn out, he heeded the advice of the ER physician and got his stress test.

"I failed it big-time," Dr. Jones recalls.

Open-heart surgery to correct serious blockages was scheduled, and Dr. Jones was suddenly facing a short-term disability.

"I had not missed more than 10 days of work in 30 years," Dr. Jones says. "All of a sudden, I'm off six weeks."

Hentges points out how difficult it is to predict who will need this kind of coverage, and when it will be needed.

"When we met, Dr. Jones was apparently quite healthy. A year later, you're looking at a guy with a completely different health situation.

"Things change. It makes sense to sit down and review your plans on a regular basis."

Hentges encourages all veterinarians to take the time to review their coverage to see if any adjustment is warranted.

"We're here to help you make wise insurance decisions," Hentges says. "I encourage every veterinarian to sit down face to face with his or her agent. As an agent, I make sure I understand your business, because every practice is different. Each veterinarian needs to consider what they want to happen in the future. Do you want to eventually sell your business? Transition it to a partner? Do you have a son or daughter who plans to take over your practice?

"My job is to help make whatever you want to happen, happen."

The AVMA GHLIT is so convinced of the value of protecting the investment veterinarians have made in their education that health, life, accidental death and dismemberment, long-term disability, and POE insurance are guaranteed issue (without an underwriting review) to AVMA student chapter members at graduation. The plans are underwritten by New York Life Insurance Company (New York, NY 10010).

Professional overhead expense plans from GHLIT are designed to meet the needs of veterinarians. AVMA members under age 70 who regularly and actively work full time (at least 20 hours per week) are eligible to apply for coverage.

Members can choose a POE plan that begins paying benefits on the 16th consecutive day of a covered disability, with payments continuing for up to 12 months of covered disability, or a plan that begins paying benefits on the 31st day, with up to 24 months of payments provided while the member is disabled.

Members can apply for monthly POE benefits ranging from $300 to $20,000—in $100 increments—up to 100 percent of office overhead expenses. Covered expenses include rent, principal and interest on outstanding debts, utilities, employee salaries, postage and stationery, equipment maintenance, and the monthly average of taxes on the premises.

Sole practitioners can purchase coverage to help sustain the viability of their practice in the event of a covered disability. Partners and principals of a professional corporation can purchase the protection to help cover their share of the overhead of the business. The member's own salary is not covered by POE insurance. To cover the member's salary, AVMA GHLIT provides disability insurance to protect earning power and help guard against personal debt, depleted savings, and disruption of a family's standard of living.

Hentges is of the opinion that POE insurance is especially critical for short-term disabilities.

"In a long-term disability," he points out, "you may have the option of selling the business. But short term, you want to have a business to come back to."

Dr. Jones agrees.

"For a sole practitioner like me, the biggest worry is what happens if you're not there. My health issue pointed out the value of the insurance. Just one time of something going wrong pays for a heck of a lot of premiums."

For more information on the AVMA GHLIT professional overhead expense plans—including exclusions, limitations, rates, eligibility, and renewal provisions—call the Trust office at (800) 621-6360.