There’s lots of work to do before you retire
According to the last AAOS census (2006), more than half of all orthopaedic surgeons in practice today are older than age 50. Although many of these surgeons may continue in practice for several more years, concerns about decreasing reimbursements and increasing practice and liability insurance costs may cause others to consider cutting back on their practices or retiring at an early age.
Even in retirement, however, medical liability insurance remains a concern. Other issues that should be considered are health insurance coverage, patient follow-up and records retention, impact on employees, and personal lifestyle after retirement.
The tail wagging the dog
The issue of “tail” coverage under a medical liability policy must be faced by any physician who is preparing to retire. Although some insurance companies may offer “free” tail coverage to policyholders who retire, they may also require that the physician meet certain restrictions. Some companies require that the doctor be older than a certain age and be with the company for a specific period of time. Speak with your insurance representative about the requirements under your particular policy.
A particularly onerous requirement might be that the doctor signs “an affidavit” that he or she is “permanently retiring.” The definition of retirement is usually quite rigid and could preclude the performance of even short-term activities such as some simple reviews of medical records or locum tenens work.
The good news, however, is that you can usually continue your medical liability coverage at a relatively low rate (perhaps $2,000 or $3,000 per year) if you desire to do some of these other activities in “retirement.” If you must purchase tail coverage, expect to pay about 1.5 to 2 times the last premium paid, assuming that you are paying a mature premium and have been with the company for at least 5 years.
Doctors in a group practice should consider the issue of tail coverage several years in advance of retirement to avoid any controversy over who should pay for the tail coverage once the doctor retires. The employment contract should address this issue as well as the question of who receives the refund if coverage is paid beyond the retirement date. Waiting until the last minute to resolve these issues can cause hard feelings on all sides.
Slowing down rather than skipping out
Rather than suddenly retiring from a busy practice, some doctors may decide to “cut back” gradually, shifting from an active surgical practice to an office-based practice, for example. This can have a significant impact on medical liability insurance premiums. A surgeon who goes from an active surgical practice to an office-based practice, but continues to do closed reductions, might be charged a premium equivalent to only about 35 percent of the original premium. Giving up closed reductions as well could result in an 80 percent lowering of the original medical liability premium.
Some insurance carriers will allow the doctor to do “part-time” surgery, basing premiums on the number of hours that the doctor works. I’m aware of one company that offers a “part-time” designation. Full-time is defined as working more than 80 hours per month. If the doctor works 50 to 80 hours per month, the rate drops by a third; at fewer than 50 hours per month, it drops again.
Take care of your health
If you want to retire before age 65, you will have to obtain either a group or an individual health insurance policy. Group policies may be available through your state medical society or another membership organization. If you are able to find individual health insurance, check for preexisting condition clauses and evaluate them closely.
Although the Health Insurance Portability and Accountability Act (HIPAA) may cause problems while you are practicing, it does provide some protections for you as a patient preparing for retirement. Under HIPAA, the only preexisting conditions that can be excluded in group insurance coverage are those for which medical advice, diagnosis, treatment, or care was recommended or received within the 6-month period ending on your enrollment date. If you had a medical condition in the past, but you have not received any advice, diagnosis, treatment, or care within the 6 months prior to your enrollment date, the condition is not considered “preexisting.”
HIPAA also includes protections for individual policies. If you are not able to gain access to a new group health insurance plan, you are guaranteed access to individual policies under HIPAA if you meet the following definition of an “eligible individual”:
- You had coverage for at least 18 months under a group health plan.
- Your group coverage was not terminated due to nonpayment of premiums or fraud.
- You are ineligible for coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA) or have exhausted your COBRA benefits.
- You are not eligible for coverage under another group health plan, Medicare, or Medicaid.
The types of coverage available differ by state so check with your state’s insurance commissioner’s office for assistance. The maximum preexisting condition exclusion period is normally 12 months after your enrollment date.
Don’t forget your patients
All of your active patients should be notified of your impending retirement. “Active” patients can be defined as any patients you have seen during the previous 2 years. You can send a letter directly to your patients, put a notice in the local newspaper, or do both. Be sure to include your expected retirement date, a referral to another physician for follow-up, instructions on how and where patients can obtain copies of their medical records, and any other information that may be pertinent to their care.
In addition, you should expect to maintain your patients’ medical records for up to 10 years after your retirement. Some states have specific laws so check with your attorney. You may have to pay a record maintenance facility to store the records; the facility may also charge an access fee if record retrieval is required. Converting patient charts to electronic records may greatly reduce that expense. Simply scan the records onto a computer’s hard drive with a high-speed scanner so that the records can be maintained securely and accessed easily.
Help those who helped you
As you prepare to close your practice, be sure to give your employees adequate notification of your retirement date. Some of your employees may find other jobs before you retire, so be prepared to use temporary employees if necessary.
Reaching the finish line
Once you retire, you will likely be happier if you have something to do. In addition, people who are actively engaged in activities tend to live longer and are healthier.
As you approach your retirement, develop hobbies or volunteer activities that give you some enjoyment. Consider second careers such as teaching to occupy your time. Past surveys of orthopaedists have shown that we commonly enjoy reading for pleasure, traveling, gardening, woodworking, fishing, computer work, and myriad other activities.
The important part is to plan ahead and to enjoy your retirement. You have spent your life helping others and have earned a good retirement. With some simple planning, you can make your retired years some of the best years of your life.
Frank M. Griffin, MD, has served as a member of the Practice Management Committee and is in private practice in Van Buren, Ark. He can be reached at email@example.com
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