Physician’s Disability Insurance (PDI)

The British Columbia Medical Association (BCMA) administers five major benefit programs that are available to practicing BC physicians and surgeons.  This post is the fourth in a series of five describing the various benefit programs. In previous posts I have discussed the Continuing Medical Education (CME) benefit , the Contributory Professional Retirement Savings Plan (CPRSP) and the Canadian Medical Protective Association (CMPA) rebate.

As its name suggests, the Physician’s Disability Insurance (PDI) Program provides disability insurance to qualifying BC physicians. The annual premium is paid by the provincial government and is considered personal income to the physician. Any payments received from a claim under the plan are not considered taxable.

Coverage under PDI is not automatic. Each physician must apply to be enrolled in the program. To apply for PDI coverage, a physician must be under the age of 65 and receive eligible income. Unlike the CPRSP, CME and CPRSP rebate programs, non-members of the BCMA are entitled to receive the benefit without payment of administration fees.

Eligible income is fee-for-service income paid by the Medical Services Plan (MSP), sessional income and non-salaried earnings under a service contract with a government agency. It is my understanding that billings to ICBC and WorksafeBC are not eligible.

The benefit amount is a function of eligible income received in the previous calendar year and practice type. A physician must earn $150,000 of eligible income net of overhead at the appropriate factor to obtain the maximum coverage of $6,100 per month.  There are over 50 different practice types and overhead factors.

If more coverage is required, additional disability insurance can be obtained from the BCMA (Disability Income Insurance Plan) or other private insurers. The monthly PDI benefit is reduced if disability income from all sources exceeds 60% of net pre-disability earnings, and is also reduced by 50% of any Canada Pension Plan (CPP) disability benefit. 

Benefits are payable up to the earlier of the point no longer being disabled and age 65. If an insured physician becomes totally disabled between the ages of 64 and 70, the monthly benefit is payable for up to 12 months for each period of total disability. No benefit for partial disability is paid after reaching age 65, and no benefit for total disability is paid after age 71.

Total disability means that a physician, as a result of sickness or injury, is unable to perform the substantial duties of his regular occupation in the field of medicine, is under the regular care of a physician, and is not engaged in any other gainful occupation. Partial disability means that a physician, as a result of sickness or injury, is under the regular care of a physician, has lost at least 20% of his average monthly income, and is unable to perform one or more duties of his regular occupation or is unable to perform the duties of his regular occupation for as much time as those duties usually require or is engaged in another gainful occupation.

PDI coverage is provided on a regular occupation basis. Regular occupation considers a person disabled if they are unable to perform the essential duties of their regular occupation at the time of disability and not otherwise gainfully employed. If a physician cannot perform his occupation and chooses not to take up another occupation, total disability payments will be paid. If the physician chooses to work in another occupation, a loss of income will usually result in the payment of partial disability benefits.

Other plans can provide coverage on an own occupation basis. If the physician is able to work in another occupation and chooses to do so, total disability benefits will continue to be paid. Physicians most likely to be able to claim would be surgeons and other specialists who depend primarily on their physical abilities. Least likely to be able to claim under an own occupation rider would be family physicians and psychiatrists.

More information on PDI is available from the BCMA PDI web page.

It is very important to review your insurance requirements on a regular basis with your accountant or insurance advisor. As your life changes, so do your insurance needs.

 My next post will address the remaining benefit program, the Parental Leave Program (PLP).

John Moore, accountant for doctors, dentists, lawyers and other business professionals, Vancouver, British Columbia

About John Moore

I am a Chartered Professional Accountant (CPA,CA) based in Vancouver, BC who helps doctors, dentists, lawyers and other business professionals keep more of what they earn. I provide tax, accounting and financial planning services for professionals and business owners.
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