Author: Joel Schofer, MD, MBA, CPE
Guest Post from DI4MDs – An Update on Disability Insurance for Military Physicians and Dentists
(Note: I receive no compensation if you use DI4MDs for your insurance needs. I continue to lose $99 per year on this blog.)
Disability insurance which protects military physicians and dentist’s greatest asset continues to be a very limited market with few insurance companies and agents providing this critical protection. The available plan options depend on which stage of your medical/dental career you are in.
For military physicians and dentists at any stage of their medical career, MassMutual will provide the recommended specialty specific / own occupation disability coverage. MassMutual continues to be the only company that offers a non-cancelable and guaranteed renewable policy to age 65 and is the first policy we recommend. This policy is now available in all states.
For military physicians and dentists who have completed training, Lloyd’s is also available and can work well as a supplement to MassMutual coverage or if there is a medical issue. However, the policy does not contain the same premium and renewability guarantees as MassMutual’s policy.
If you are a resident or fellow and are at least 60 days away from graduating, in addition to MassMutual another option is a policy with Ameritas. However, you should be aware that Ameritas does not cover disabilities resulting from military service when scheduled active duty is more than 3 months. You do have the option of suspending the policy. Suspending the policy locks in your current insurability but does not provide any coverage during the suspension (though no premiums would be due either).
If you are in medical school and more than 180 days away from starting a military residency, in addition to MassMutual and Ameritas you will be able to apply for a policy with Standard. However, Standard will not cover disabilities resulting from military training, action, or conflict. Like Ameritas, you have the option of suspending the policy. Principal and Guardian may also be available if you are still in medical school. However, unlike the voluntary suspension option with Ameritas and Standard, Principal and Guardian require that your policy be suspended once you enter active duty. All medical students can obtain disability coverage without income qualification.
One crucial fact to be aware of when obtaining disability coverage is the medical underwriting requirement. Since military medical exams are extremely thorough and document any medical condition it is important to establish coverage early in your medical career before any conditions or ailments appear. Depending on the medical condition you may be declined coverage, issued a policy with a waiver/exclusion for the pre-existing condition(s) or issued with an increased premium. Even a combination of the latter two is possible. This can be avoided if you apply now so you can have the protection you need later. A policy with an option that will allow you to purchase additional coverage in the future regardless of health can be established to fit any budget. A graded premium structure can also be used to reduce the initial premium outlay for residents and medical students.
There is no better time than now to establish the type of policy you need to protect your medical or dental career in the event of disability. Please contact us below to begin:
DI4MDS – Andy Borgia, CLU and D.K. Unger – www.DI4MDS.com
10505 Sorrento Valley Rd., #250
San Diego, CA 92121
888-934-4637
858-523-7511 or 858-523-7529 after 5pm PT
New Navy HPSP FAQ and Information Booklet
Here is a new booklet that answers frequently asked questions about the Navy Health Professions Scholarship Program (HPSP). It should be useful to anyone helping us recruit or for anyone interested in the program:
Thanks to CDR Brett Chamberlin for developing it!
7th Step to Financial Freedom – Saving for Future College Expenses
The 7th (and optional) step to financial freedom is to save for future college expenses.
Only a small percentage of students get enough financial aid to cover their tuition, housing, books, and fees. As a result, saving for college is a major financial goal for many people. Luckily, it is as easy as 3 numbers…5-2-9, as in using a 529 plan. 529 plans allow parents or grandparents to put money aside in a tax advantaged way that can later be used for college. In addition, those of us in the military who are willing to serve a little longer can transfer our GI Bill to our children, which can help with college costs, sometimes covering them completely. That’s my plan, as I’ve got two kids and two GI Bills.
How Expensive is College?
According to the National Center for Education Statistics, for the 2016–17 academic year, annual current dollar prices for undergraduate tuition, fees, room, and board were estimated to be $17,237 at public institutions, $44,551 at private nonprofit institutions, and $25,431 at private for-profit institutions. If that wasn’t enough, educational costs are increasing at a 6% rate annually.
How Can You Limit Costs?
Get your kids to go to a state or public school. Once you’ve got your degree and are working, no one really cares where you went to school. Work ethic, intelligence, creativity, and other characteristics make or break your success, not an Ivy League pedigree. State schools are just fine.
One other strategy is to have your kids go to a community college for the first 1-2 years of their education, later transferring to a four year college or university and getting their degree.
529 Plans
The money in 529 plans can be invested in stock and bond funds. As long as the withdrawals are used for qualified higher educational expenses, the investment gains are free from federal taxation.
As of 2020, you can contribute as much as $15,000/year to each child without incurring the federal gift tax. In addition, you can pre-fund up to 5 years of these contributions, or $75,000 in 1 year. Couples can give $150,000.
Sound too good to be true? Well, it is true, which is why 529 plans have come to dominate the college saving game.
Downsides of a 529 Plan
If you don’t use the proceeds of your 529 plan for educational expenses, your gains are subject to income tax and a 10% penalty. In addition, colleges will consider 529 assets when determining need-based financial aid. If you believe you’ll be eligible for financial aid, you might be better off keeping the assets in your name or the names of the grandparents.
That said, the amount you’ve saved for college has much less of an impact on your financial aid than your overall income does. In other words, families with high incomes will be expected to pay for at least part of college regardless of whether they saved for college.
As Usual, Taxes and Costs Matter
Not all 529 plans are perfect. Each state offers a plan, and you can use the plan from any state. You are not limited to the one you live in.
There may be some state tax benefits if you use your state’s plan, but just like with all investments you have to see if those tax benefits outweigh the other features of the plan. Some states have high fees and expenses or have less than optimal investment options. Some states give you tax benefits no matter which states’ plan you use.
Which 529 plan do I use? Regular readers would guess that I use whichever state’s plan is run by Vanguard, and they’d be correct! Vanguard administers the Nevada plan, which is what I use. They also provide management and services in the Colorado, Iowa, Missouri, and New York plans. Many states, though, offer Vanguard and other low cost investment options.
You find a lot of good information on 529 plans at:
http://www.savingforcollege.com/
Other Types of Accounts
Here is a great table from the Vanguard website that compares benefits offered by 529 plans against various other types of accounts people use to save for college:
| 529 Plan | Uniform Gifts/Transfers to Minors Act (UGMA/UTMA) | General Investment Account | Education Savings Account (ESA) | |
| State tax breaks | X | |||
| Federal tax breaks | X | X | ||
| Low financial aid impact | X | X | X | |
| High contribution limits | X | X | X | |
| Earning potential | X | X | X | X |
| Access to your money | X | X | X | |
| Age-based options | X | |||
| Total flexibility | X | X | ||
| Account control | X | X | X |
(Source: https://investor.vanguard.com/college-savings-plans/which-account)
As you can see, while there are other options, the 529 offers the most benefits. Some people advocate using Roth IRAs, whole life insurance, or ultra-conservative investments like certificates of deposit (CDs) or savings accounts, but this is generally a bad idea.
You need your IRAs to save for retirement, not college. Saving for retirement is your top priority, even over funding the college education of your children. You can borrow money to pay for college, but you can’t borrow money to retire.
Life insurance is expensive and generally offers very low investment returns. CDs and savings accounts aren’t expensive, but their investment returns are just as anemic. With educational inflation at 6% annually, it will be hard enough for stocks and bonds to keep up let alone life insurance or CDs/savings accounts.
The GI Bill
If you have served in the military after September 11, 2001, you are eligible for the Post-911 GI Bill. It covers four academic years, including tuition and fees, housing, and books up to 100% of the cost of the most expensive public school in your state. For private schools in 2019-2020, it will cover up to $24,476.79 of costs. Some more expensive schools participate in the Yellow Ribbon Program to bring their tuition down closer to what the government will pay. In some situations, you can transfer the GI Bill to your spouse or children.
You can find a ton of information on the GI Bill at this website:
http://www.military.com/education/gi-bill
Specific information about transferring your GI Bill is here:
http://www.military.com/education/gi-bill/post-911-gi-bill-transferability-fact-sheet.html
What’s the Bottom Line?
529 plans have become the go-to account for most people saving for college. Go to SavingForCollege.com to find out which state’s plan is right for you. If you have a GI Bill and are willing to transfer it to your children for their future college expenses, check out the link above for all the details
Finance Friday Articles
This one from Forbes is certainly interesting:
Valentine’s Day Massacre: U.S. Navy Eliminating $40 Billion In 6 Weeks
Here are my favorites this week:
Fiology: The Study of Financial Independence (FI)
High Earner Not Rich Yet – How to Avoid Becoming a HENRY
The Benefits of a Fixed Asset Allocation Portfolio
Here are the rest of the articles:
8 Perks of Being a Side Hustle Business Owner
Adding Up the Costs of Your Investments
Dealing With the Guilt of Early Retirement
Disability Insurance: Your Plan B to Passive Income
FarmTogether Review: A New Investment Platform
How to prepare your portfolio for the coronavirus outbreak
Inflation-Adjusted Annuities No Longer Available: Now What?
Losing My Balance – Should You Still Invest in Bonds?
ONE PORTFOLIO RISK TO RULE THEM ALL
Some Lessons From 92 Years of Market Return Data
Student Loan Refinance Ladder: A Case Study
The Biggest Problem in Finance?
The Biggest Risk in Crypto Today
The Courage To Be Disliked: Change Your Life Because You Can
The Importance of a Legacy Binder: The “ICE” Binder
Top 5 Ways to Spot (and Avoid) Investment Scams
When You Were Born > Everything Else
NDAA 2017 Section 703 Report on MTF Restructuring
There is no classic post on Thursday because the DHA just released its National Defense Authorization Act (NDAA) 2017 Section 703 report on the Military Treatment Facility (MTF) restructuring. There has been a lot of press and info sent out, so here is what I’ve got:
Health.mil articles:
- Careful, deliberate changes ahead for select MTFs
- DoD to restructure 50 hospitals, clinics to improve readiness
Military Times article:
Health.mil page that has the entire report to Congress:
Here’s the entire report to Congress:
The February message from the Assistant Secretary of Defense for Health Affairs that discusses it:
Here is General Place’s message about it as well as the summary attachment he sent:
Teammates:
Today marks another milestone in Military Health System reform. This morning, the Department delivered a report to Congress outlining results from the MHS’s review of military medical treatment facilities (MTFs) and their contributions to military readiness. The extensive analysis was initiated in response to Section 703(d) of the FY17 National Defense Authorization Act. You can find the report here: www.health.mil/MTFrestructuring.
The report is the culmination of nearly three years of analysis that identified the MTFs critical to maintaining medical and force readiness. In other words, the department evaluated how facilities support service members so they are medically ready to train and deploy. Further, it assessed how well the facilities support our military medical personnel to develop and maintain the right clinical skills and experience required to support global military operations.
The report includes plans for changes in the scope of operations at 50 facilities across the United States. (See excerpt attached.) Some facilities will have expanded services while others will scale down. The largest change is the decision to transition more than 30 facilities to providing care for active duty personnel only. Seven of these facilities may continue to enroll active duty family members on a space-available basis.
We know these changes may cause concern because health care is very personal. Requiring our patients to leave a trusted provider at an MTF for another provider in the civilian network may cause anxiety for some. The DHA’s responsibility is to implement the changes the Department determined necessary, ensuring the least possible disruption for our beneficiaries.
It’s important for you to know restructuring changes will not occur immediately. We will only begin implementing these changes after thoroughly collaborating with local communities, MTF Directors, network providers, senior mission commanders, and others. The DHA will work closely with the TRICARE managed care support contractors to support the patients impacted.
In addition to creating implementation plans, the DHA’s next steps include a massive outreach and information effort. We will provide resources to MTF Directors so they can inform patients of what the changes mean for them. The process will take time and we will not transition any patients until we are confident the applicable local markets have providers available.
I’m committed to maximum transparency at every step so all stakeholders understand how these changes may affect them, and so those who rely on us retain uninterrupted access to health care. Above all, our focus must remain on producing great outcomes. That’s why the Military Health System exists. Together, we can adapt and strengthen the military medical enterprise so it is even more effective for the 9.5 million people depending on us.
rjp
Ronald J. Place, MD
LTG, US Army
Director, Defense Health Agency
Twitter: @DHADirector
Facebook: https://www.facebook.com/DefenseHealthAgency
LinkedIn: https://www.linkedin.com/company/defense-health-agency/
Web: https://health.mil/
MHS Minute: https://www.youtube.com/watch?v=IN4tgyAgWUY
Deadline is Friday for the 149th Medical Corps Birthday Ball – 7 MAR in Coronado, CA
The Medical Corps Ball will be held on the evening of 7 MAR 2020 on North Island in Coronado, CA in celebration of our 149th birthday. The details and registration info are available here:
Please disseminate this as widely as possible to all MC officers. We’re looking for an excellent turnout!
Also note that although uniforms are strongly encouraged, formal civilian attire is permissible as an alternative to dress uniforms for ALL Ranks ALL Services at this event.
Multiple Director Positions Available at NMC/NMRTC Portsmouth in 2020
Please read the below announcements of upcoming Director position vacancies at NMC/NMRTC Portsmouth:
- Director of Strategy & Operations (DSO) Vacancy Announcement June 2020
- Director of Primary Care (DPC) Vacancy Annoucement June-July 2020
- Director of Expeditionary Medicine (DEM) Vacancy Announcement June 2020
The timeline for the selection process is below:
- All applications for DEM, DPC, DSO due by 13 March. Any applicants would need to either be at NMRTC Portsmouth, already have inbound orders, or have Detailer clearance to apply.
- 16 March – 1 April – 1st Round interviews – Directorate Level board
- Week of 6 April – 2nd Round Interviews – top 3 selections for DEM, DPC and DSO will interview with XO, CO, PXO
Please direct any questions to the POCs for each position (contact info in the global):
CDR James M. Nogle, MSC, USN
Director, Expeditionary Medicine, Navy Medicine Readiness and Training
Command, Portsmouth
CAPT Jose G. Pedroza, DC, USN
Director, Primary Care and Branch Clinics, Naval Medical Center, Portsmouth/
Navy Medicine Readiness and Training Units, Portsmouth
CDR Shauna O’Sullivan
Director, Strategy and Operations, Naval Medical Center, Portsmouth
Occupational Medicine Fundamentals Provider Course – April 20-24 – NMC Portsmouth
The info is in this document:
Joel Schofer's Career Planning Blog 