The Starter Guide to Doctor Benefits: 401(k)s and Much More

Competitive benefits are necessary to attract top talent, and employers in the medical field understand this. What’s more, medical practice owners know that making employees feel valued can ensure retention and job satisfaction.

The first step towards meeting this target is to offer a generous yet flexible benefits package.

As you’re interviewing for your next job, watch for perks like paid time off, health insurance, and retirement pensions. These extras can add up to more than your annual income.

When comparing offers, consider the cost and value of each benefit. You may discover that a lower salary, with a better doctor benefits package, is actually the more lucrative offer!

If this is your first time evaluating a physician’s contract, it can be easy to overlook what’s missing. Our starter guide to doctor benefits will keep you on track as you learn how to negotiate a great first contract.

Paid Time Off/Flexible Scheduling

Finding a healthy work/life balance can be challenging as a new physician.

While some medical facilities will try to work you as much as possible, others recognize the importance of avoiding physician burnout.

Recognizing which type of employer you’re interviewing for in your next career path isn’t always obvious. Still, if they offer competitive paid time off and flexible schedules, it’s a good sign that they know family and wellness come first.

Know Your Worth As You Weigh the Best Benefits for Your Future

No matter where you go, as long as you’re a knowledgeable doctor with a good reputation, you’ll have job security. According to the Bureau of Labor and Statistics, physician and surgeon employment growth is projected to increase by 3% over the next decade (2022-2032), with over 24,000 openings annually — a number comparable to the amount of medical professional graduates in the US.

With these statistics in mind, if you’re not determined to work in a specific town or facility, you can be choosy about your employer and apply to a range of openings.

As you do, check the PTO times, vacation days, and your schedule. Think about any life changes on the horizon you might expect, such as marriages, children, home buying, or other major events, and how flexible your contract would be for those situations. Verify that you’ll be content with the terms throughout the contract before you sign.

Related: Asset Protection for Doctors

Health, Vision, and Dental Insurance

Healthcare plans are a typical part of the standard doctor benefit package. As someone who sees the impact of insurance on patient care, you know that having the wrong coverage is almost the same as not having a policy at all, so it’s crucial to check the plans offered by potential employers.

Health Insurance Policies

Standard employer health insurance policies are often PPOs — preferred provider organizations. In a PPO plan, you pay a higher premium, but you have more options regarding the types of treatments covered and the doctors who will see you.

The other kind of insurance plan is an HMO, or health maintenance organization. These policies are less expensive, but that cost savings comes with less flexibility in coverage, fewer authorized treatments, and a small network of providers who will take your insurance. They often focus more on wellness programs and overall well-being.

Check the insurance coverage and verify it meets the needs of you and your family members.

Note that if you work for a large company, the plans may not be flexible, so you may be stuck with a high deductible. However, you can request additional options for supplemental coverage, such as hospital indemnity plans. These are inexpensive “add-ons” in the form of a separate policy through an outside insurer that pays you in the event of a covered circumstance, like a hospital visit, ambulance ride, or catastrophic event.

Dental and Vision Insurance

Not all employers offer dental and vision coverage, but that doesn’t have to be a deal-breaker. Whether you get these policies through your workplace or individually, they are usually inexpensive, but they have limited benefits.

The typical dental coverage plan includes a maximum number of annual x-rays, cleanings, and exams, as well as a cap on treatment of $1,000-$2,000. Read the benefits for your plan and look for the list of covered services so you know what to expect the insurance to pay and what your responsibility would be.

Vision coverage is also inexpensive. It is provided for routine eye exams and usually pays a percentage of prescription glasses or contacts. It does not cover any vision issues related to medical problems, such as:

• Allergies
• Infections
• Vision loss
• Eye disease
• Diabetic eye exams

The Acronyms: COBRA, FSA, HSA, and LSAs

The insurance system offers many optional programs under the umbrella of general healthcare. Some medical groups offer these “acronym” policies.

Within your package, you might see something called COBRA. Short for Consolidated Omnibus Budget Reconciliation Act, this extra policy is legally mandated for employers and group health plans that include 20 or more employees. COBRA allows employees and their families to keep their insurance policy for a short time after their job ends or they otherwise lose coverage.

Employer-sponsored benefits like flexible spending accounts (FSAs), health savings accounts (HSAs), and lifestyle spending accounts (LSAs) are optional perks provided at the company’s discretion.

These extra benefits are designed to help you with your medical expenses using pre- or post-tax dollars. Each account has its own pros and cons, making it important to know what you’re paying for and receiving in return.

Flexible Spending Accounts

FSAs are funded with pre-tax money out of your paycheck, which is often matched by the employer. Restrictions imposed by the government limit how you can spend the funds in an FSA.

Only qualified medical expenses are covered.

If you want to use your FSA money to pay for an uncovered expense, you submit the claim to the FSA company with a statement that shows that your insurance doesn’t cover the cost. Any unspent dollars in your FSA account earn interest but do not roll over into the next year.

Health Savings Accounts

HSAs are also funded with pre-tax money and governed by similar restrictions that require them to be used for covered medical expenses.

However, an HSA provides higher contribution limits and allows you to roll funds over into the next year. The downside is you can only have an HSA account if you’re enrolled in an HSA-eligible health plan with a high deductible.

Lifestyle Spending Accounts

LSAs are the newer acronym in the benefits list. These are funded with post-tax dollars and allow for more flexibility than an FSA or HSA, giving you more control over where you spend your money.

Funds in an LSA can be used for anything related to your physical, mental, or financial health, including things like:

• Gym memberships
• Counseling
• Remote work expenses
• Emergency funds

Your employer funds the LSA and determines what is considered an eligible expense. When you leave the company, you lose access to those funds.

Life and Disability Insurance

Another common part of a benefits package is the life and disability insurance policies. However, what’s included in each of these coverages may look distinctly different from employer to employer.

Term Versus Permanent Life Insurance

There are two main categories of life insurance: term and whole.

Term insurance is basic coverage that is generally more affordable, but it is only good for the policy’s “term” period. You can’t take the coverage with you when you leave the job. Term insurance also does not accrue any cash value.

Permanent (or “cash value”) insurance refers to coverage that lasts the lifetime of the insured and accrues cash value over the years. It’s considered an asset rather than an expense, but since employment is only for a period of your life, employers use term insurance.

You can add permanent coverage or a variation of it to fill in the gaps in your term policy.

Disability Coverage

Disability insurance is another area where the coverage types offered by employers aren’t always enough to meet your financial needs.

Most employers offer group disability insurance, which provides a regular income replacement to you if you become disabled due to an illness or injury while employed with that company.

Check the terms of the coverage to see if it’s short-term or long-term.

In short-term insurance, the income replacement lasts up to six months. Long-term insurance only kicks in if the illness or injury lasts 2-10 years or more. But, if you don’t have this coverage in your plan, your policy won’t pay beyond the short-term limits.

Also, look for the percentage of your paycheck covered by the insurance. This varies by plan but is usually between 50% and 80% of your pre-disability earnings. If that isn’t enough to cover your expenses in the event of an illness or injury, you may want to add another disability plan to your financial portfolio.

Malpractice Coverage

Malpractice insurance is crucial if you want to keep your medical license, but some employers will provide this for you.

The cost of this insurance varies by factors like:

• Specialty
• Time in practice
• Type of policy
• State

For instance, California’s rates for obstetrics physicians were the highest in the nation in 2020 at almost $50,000 per year, and the state continued to have the highest costs for other specialties.

How much your insurance costs will depend on how high your malpractice risk is considered by the insurer. Pediatrics and primary care doctors are ranked on the lower end of the risk spectrum, while those in surgical specialties are at the higher end.

These significant costs are often a deterrent to those who would prefer to work in a private practice; the carrot of having your insurance paid for you is an impressive perk.

However, review the type of malpractice coverage before agreeing, looking for things like claims-made versus occurrence provisions. You’ll want to invest in tail coverage before leaving this employer and your malpractice insurance behind.

Read more: Protecting Against Malpractice Liability

Qualified Plans

Qualified plans include defined benefits or contribution plans that are funded by employee contributions and matched — or partially matched — by the employer. These plans must meet federal ERISA guidelines and are only offered by employers.

These types of perks include popular retirement plans you’re likely familiar with, such as the 401(k) and 403(b). The 401(k) is offered by for-profit companies, while the 403(b) is provided by tax-exempt organizations like hospitals, schools, or churches.

You may also encounter profit-sharing benefits in which the employer is the sole contributor, and the contribution is tied to the company’s profit. These plans incentivize workers to improve their performance and can help employers attract and keep top talent.

Money-purchase plans (MPPs) are another qualified retirement perk. In an MPP, the employer contributes a fixed amount, such as 5% of your salary, to your account.

Keep in mind that when you leave a job, you can take with you a percentage of your MPP account balance if it has been vested. Partial vesting usually starts in the second year, and 100% vesting often occurs within six years of employment with the same company.

Non-Qualified Plans

While qualified plans must meet federal ERISA guidelines, non-qualified plans are any investments that offer physicians more flexibility and long-term tax benefits.

Examples of non-qualified plans include:

• IRAs (traditional and Roth)
• Executive bonus plans
• Split-dollar life insurance plans
• Deferred compensation plans

Continuing Education and Student Loans

In addition to malpractice insurance, student loans from years of medical school and continuing education credits are another hefty expense. Some employers offer to pay your travel and CEU expenses or pay off your student loan payments while you’re working for them.

Having these costs covered during employment can be a substantial financial benefit. For employers in the public health sector who are limited in how much salary they can offer, this option can attract a wider range of candidates who might otherwise reject a lower income.

If your potential employer offers repayment or reimbursement of your expenses for your student loans and CEUs, add this to the salary they offer and consider it as an impressive financial advantage.

Conclusion

From primary care physicians to orthopedic surgeons, the doctor benefits in a contract can make or break whether you accept a job or look elsewhere.

But if you’re unsure what to look for, you might accept a contract that doesn’t provide the value you’re worth. This starter guide to doctor benefits gives you the foundational knowledge you need to review the terms of each contract you’re offered.

Working with a financial advisor like OJM Group makes this process seamless and highly efficient.