Unfortunately, tail coverage is costly, which is why some doctors opt not to use it. Of course, lawsuits are far more expensive, so not having tail coverage is a significant financial risk.
How much does PA tail coverage cost?
Professional liability insurance, often known as malpractice insurance, should be carried by all clinically practicing PAs for the duration of their practice. However, the complexities of malpractice insurance might be perplexing how much coverage do I require? What if my company already has a policy in place? We’ve got the answers to nine of your most common queries.
Liability limitations are a personal judgment based on a variety of variables. CM&F offers coverage limits up to $2 million per claim, however they normally recommend $1 million per claim for liability protection. However, there are still a number of factors that influence this decision, including cost and state regulations. Calling CM&F Group to explore your alternatives will help you better understand the type of coverage you require.
The cost of PA liability insurance varies greatly, with coverage ranging from $1,000 for a part-time family practice PA to nearly $8,000 for a full-time surgical PA. There is no one-size-fits-all cost because the actual cost is tailored to specific needs. When determining costs, certain elements come into play, such as:
Getting a free estimate from CM&F Group, Inc. is the best method to figure out how much something will cost. It takes less than five minutes to get an estimate, and you can view your payment options, which include monthly installments.
While there is a pricing difference in liability insurance between PAs and NPs, it has nothing to do with experience or training.
As registered nurses (RNs), nurse practitioners (NPs) have generally purchased liability insurance early in their careers. The average annual cost of liability insurance for a registered nurse is around $100.00. The cost is minimal since approximately one million RNs in the United States (out of a total of 4 million) purchase liability insurance in addition to what their employers and hospitals supply. As a result, there is a large pool of premium dollars from which to pay claims. The lower the cost of insurance is the more insurance premiums you have since the risk is spread out. RNs who advance in their jobs and return to school to become nurse practitioners (NPs) are still included in this pool of RNs. As a result, this serves to counteract the claims of NPs. Their NP malpractice premiums are effectively financed by their RN coworkers.
PAs purchase insurance in substantially lower numbers than NPs and RNs combined, with only 140,000 practicing.
One of the leading insurers of both PAs and NPs, CM&F Group, is changing the way they price NP liability insurance. They’re making NP’s loss/profit stand on its own, rather than relying on the RN program for support. This has drove NP rates up considerably over the last five years, and CM&F forecasts the premiums paid by NPs and PAs to be much more in line in the coming years.
There’s also a shift in the market, where NPs and PAs are increasingly working independently, and insurance actuaries are attempting to price policies to account for this new risk. It will take some time, but when NPs and PAs are working and performing equal activities, they will most likely pay the same premium.
Most employers give malpractice insurance to their employees, but the only way to be sure is to request a certificate of insurance every year to show that you are covered “Insured by name.”
Millions of medical professionals carry personal professional liability insurance to avoid coverage gaps and assure adequate coverage when changing employers. Personal coverage that is portable from job to job and protects your license, personal possessions, and financial future is critical.
Liability insurance arrangements frequently deprive the insured individual the right to choose whether a claim is paid or fought. The majority of policies do not allow PAs to choose which method to take. The PA can choose between settlement and defense under CM&F’s policies.
When a claim is lodged, another common occurrence is a lack of coverage. Many PAs have told CM&F about taking new employment only to be sued years later. Remember that it takes an average of 1824 months from the time of the incidence to the filing of a malpractice case. When a claim is filed, the PA may learn that when they left the practice, their employer did not obtain tail coverage for them, leaving them uninsured.
Yes, and this is one of the primary advantages of obtaining personal malpractice insurance. The CM&F policy is transferable from one employer to the next. You’re covered no matter where you practice.
In a state where Optimal Team Practice (OTP) is in effect, how does malpractice insurance work?
As more states continue to adopt features of OTP into state PA practice acts, such as eliminating the legal necessity to have a specific physician relationship, and as PAs gain greater autonomy, malpractice insurance companies may mandate that PAs carry an individual policy. This is still unfolding, and CM&F is keeping an eye on the issue. It’s worth noting that as NPs have grown more self-sufficient, they’ve raised the rate at which they buy individual policies.
Can a malpractice insurance case really affect my wealth and personal assets?
The short answer is yes; if you do not have appropriate insurance, your personal assets and fortune are at risk. Without malpractice insurance, you risk being held personally liable for lawsuits, losing financial assets, and jeopardizing your established career.
An undesirable occurrence or consequence (even if it’s just an allegation) may be reported to your state licensure board, which might suspend or revoke your license. Alternatively, if the employer or your malpractice insurance company pays any sums on your behalf, you can be reported to the National Practitioner Databank (NPDB), a federal databank of malpractice payouts that employers can access when hiring healthcare practitioners.
Professional liability insurance protects you in the event that a patient accuses you of causing a harm. This could be due to a misdiagnosis, an adverse drug reaction, or a violation of HIPAA privacy regulations. If something goes wrong, malpractice insurance will cover the cost of the verdict rather than draining your funds, and it will also defend you against allegations.
When researching alternative insurance companies, keep in mind that they are all regulated differently. The most crucial criterion is to assess the carrier’s financial strength. A.M. Best (Best) is an independent financial strength rating agency that awards “Excellent,” “Good,” and other ratings to insurance companies. Avoid any organization that does not have a BBB rating “Best ratings A++ (the highest), A+, A, or A- indicate a “excellent” rating. If a business does not have a Best rating, it is not cooperating with the rating process and should be avoided.
Who typically pays tail coverage?
The vast majority of professional liability insurance available to physicians today is provided on a voluntary basis “A claim is only covered if I the claim arose out of professional services rendered during the term of the professional liability policy, and (ii) the insured provides notice of the claim during the term of the policy. (This contrasts with “occurrence coverage,” in which a claim is covered if it is related to professional services supplied during the policy’s term, regardless of when the insured provides notice of the claim.) There may be an interruption or gap in coverage if the physician’s employment ends with the termination of the claims-made professional liability insurance policy, depending on the new professional liability coverage put in place with the physician’s new employer. Specifically:
- Since the physician’s prior coverage expired, he or she would no longer be protected; any claim brought against the physician in the future for professional services given while an employee would be claimed outside of the insurance period.
- In contrast, if the physician’s new coverage is a claims-made policy, it will only cover professional services rendered while an employee under the new employment arrangement; it will not cover claims arising from services rendered under the previous employment arrangement, even if asserted while the new policy was in effect.
In some cases, this gap or break in coverage can be addressed without the use of “tail coverage” or, in more formal terms, a “extended reporting endorsement,” which extends the time during which a claim can be filed under the old malpractice policy for an additional period, ranging from one year to indefinitely, depending on the additional premium paid. For example, some insurers are willing to provide “nose coverage,” which entails the new insurer agreeing to look backwards and cover the physician for claims arising prior to the start of the new coverage if the claim is asserted while the new policy is in effect in exchange for a relatively small premium increase. Alternatively, some insurers will agree to utilize the physician’s original “retroactive date” the date on which the physician’s previous coverage began as the agreed-upon start date for coverage under the new policy. (This is most common among new doctors who haven’t had enough time to build up a claims history.) Finally, some insurers offer free “tail coverage” to physicians who retire or practice for a set number of years while still covered by the same insurance.
However, in the absence of one of these exceptional circumstances, the physician will require “tail coverage” to be fully protected against malpractice liability.
(Note that the employer will want this coverage in place as well, as the lack of it could expose the company to further risk if it is sued as a result of the professional services provided by its former physician employee.)
However, this might be a costly prospect, since “tail coverage” premiums can be equal to or even quadruple the annual premium on a mature claims-made policy.
Who, under the terms of the physician’s employment agreement, is responsible for that coverage after the physician’s employment is terminated?
In some situations, regardless of the reason for termination, the employer may demand the physician employee to pay.
However, as physician recruiting gets more competitive and the cost of hiring a new physician employee rises, this is becoming less likely.
In contrast, regardless of the reason for termination, the employer may agree to pay the expense of “tail coverage.”
This is a somewhat uncommon occurrence.
In the interim, the physician’s employment agreement may include a variety of “fault based” or “no fault” provisions to deal with payment for essential “tail coverage”:
- If either party ends the agreement without cause, the other party is accountable for the expense of the agreement “covering of the tail.”
- If either party is terminated for cause, the other is accountable for the cost of the termination “covering of the tail.”
- In most circumstances, the medical employee pays, but not if he or she is fired without cause or retires.
- A phase-in agreement can be implemented, in which the employer pays a higher proportion of the premium cost as the physician employee stays with the practice for longer periods of time.
The Bottom Line:There is a lot of misunderstanding concerning “tail coverage” out there. It should be evident from this article that “tail coverage” is only required to cover a break or gap in coverage, and only when no other option (such as “nose coverage” or the use of a previous “retroactive date”) is available. When “tail coverage” is required, however, it should be addressed directly in the physician’s employment agreement, with terms defining who is responsible for covering the costs and what happens if the responsible party fails to do so.
What is a tail coverage in malpractice insurance?
Physicians are shifting practice sites more frequently than ever before in today’s developing healthcare system. Any job transition can result in a change in medical malpractice insurance, whether it’s leaving private practice for hospital work, merging practices, joining a group practice, or moving to a different state. Physicians considering canceling a claims-made insurance policy for any reason, including a career change, should be cognizant of the necessity of tail malpractice coverage.
Insurance coverage for claims brought after a claims-made insurance policy has been terminated is known as tail malpractice coverage. Claims-made policies (the most prevalent type of medical malpractice insurance policy) cover claims made against a physician for services rendered while the claims-made policy was in existence.
This means that a claim filed after a claims-made insurance has been terminated or not renewed is not covered. This issue is solved by tail malpractice coverage.
The problem of tail malpractice coverage must be addressed if a physician cancels a medical malpractice claims-made insurance policy for whatever reason. Following are some common scenarios that physicians may encounter while canceling a claims-made policy:
Medical malpractice insurance is usually provided by hospitals for the physicians they employ. If a physician was previously insured under a claims-made policy, hospitals may frequently require the physician to obtain tail malpractice coverage to cover any claims that may emerge from his or her earlier practice.
When negotiating hospital employment, a physician may be able to have the hospital pay for tail malpractice coverage or allow the physician to keep their present coverage, eliminating the need for tail malpractice coverage. Furthermore, the hospital may be ready to provide past actions coverage under its own insurance policy. It’s critical to address these choices with the hospital early on in the bargaining process.
combining a solo or group exercise with another solitary practice.
How much does tail malpractice insurance cost?
Tail coverage for physicians normally costs 200 percent of the annual premium at the end of your malpractice policy’s term. This varies from company to firm, but it’s a good starting point. This is why we always advise doctors to contact a malpractice insurance provider with access to all of the major malpractice insurance carriers in their jurisdiction.
Can I pay for my tail malpractice insurance coverage in installments?
Normally, no. You may be able to pay in installments with some malpractice insurance companies, but the majority will need full payment.
Can I buy malpractice tail coverage early or ahead of time?
No. Because there are so many variables that can arise during your practice (claims, licensing concerns, etc. ), the carriers only allow you to obtain tail malpractice coverage at the end of the policy so they can adequately assess the risk. Consider occurrence coverage as another possibility.
Will my employer provide tail malpractice coverage for me?
Normally, no. While your company will cover your malpractice insurance premiums while you are employed with them, you will be responsible for the tail at the end of your employment. Make sure you choose an agent who has access to all of your state’s main medical malpractice insurance firms to ensure you obtain the best price and terms.
Do I have to buy tail malpractice coverage before I leave my current position?
No. You have between 30 and 60 days after the policy’s conclusion to obtain tail coverage. However, we recommend purchasing it as near to the conclusion of your policy as feasible. This is because if you file a claim within the 30-60 day window, your current carrier may still cover it (you have a grace period), but your tail malpractice insurance premiums will go up because you will have an outstanding claim on your record.
Is purchasing tail malpractice coverage required?
No, however it is strongly suggested. You know your patients better than anybody else, and it’s up to you whether or not you choose to accept that risk. Most conventional malpractice insurance companies, on the other hand, require tail malpractice coverage on all past policies in order to provide coverage. By avoiding tail coverage, you may be limiting insurance options and incurring higher premiums in the future.
How do I get a Malpractice Tail Coverage Quote?
Fill out our form to learn about all of your options and receive rates from every major malpractice insurance carrier in your state. One of our veteran agents who specialized in your state will guide you through the process.
Do I need tail coverage?
Yes, tail coverage is essential for guaranteeing that your work is covered after your insurance policy expires. It’s vital to remember that if you don’t get tail coverage after a claims-made policy (the most popular type of policy) expires, you won’t be covered if someone files a claim while the claims-made policy was active. This means you’re responsible for defending the claim, which can be very costly.
How long should tail coverage last?
While shorter tail coverage alternatives, such as two or three years, are available, most tail coverage policies last a lifetime. We recommend that physicians buy lifelong tail coverage because malpractice cases can take years to file.
Who should pay for tail coverage?
Unless the doctor negotiated it as a perk with their employer prior to taking a position, the physician is usually responsible for purchasing their tail coverage policy. Always make an effort to get tail coverage negotiated into your employment contract. When you leave that employment or the coverage expires, you can save a lot of money.
How is tail coverage calculated?
The expiry premium is usually doubled to compute the tail. The cost of your insurance for the year it was cancelled is usually the expiration premium. For example, a plastic surgeon in California who paid $35,000 for their policy last year may anticipate to pay around $70,000 for a tail policy.
When should I buy tail coverage?
You should purchase tail coverage on the same day or shortly after your current policy expires. Most insurance companies will give you a 30-day grace period after your policy expires to purchase tail coverage. To reduce the possibility of claims being disputed during the grace period, we recommend purchasing tail coverage as near to the policy’s termination date as possible.
Is prior acts coverage the same as tail coverage?
No. When you renew your policy, you’ll have prior-acts coverage. It covers both previous years (prior acts) and your new policy in the future. At some time during their career, every physician will be required to obtain a tail coverage policy.
Which doctors pay the most for tail coverage?
Typically, surgeons and obstetricians are the ones who spend the most for tail coverage. Because they are higher-risk specialty, their annual premiums are greater.
How do I get tail coverage?
In most cases, company owners can add tail coverage to their claim-made insurance. They can add this coverage after terminating their insurance or if their policy is not renewed by an insurer. ** Tail coverage is regulated in several states. As a result, some insurance policies may include a tail duration.
How long is tail coverage?
Some doctors strive to keep the expense of the tail down by restricting the length of the tail. You can purchase tails that only cover claims made within 1 to 5 years of the incident, rather than indefinitely. These time constraints are similar to the standard statute of limitations, which is the time limit in each state for filing a claim. In some states, this limit is as low as two years, while in others, it can be as high as six years.
Can a PA be sued for malpractice?
Malpractice by physician assistantsAs medical doctors and hospitals in Arizona want to boost revenues, they’re turning to physician assistants “Mid-level practitioners” are increasingly being used to help treat patients and bill for services as if they were conducted by a medical doctor. A Physician Assistant, or PA, is an example of a mid-level practitioner “The state of Pennsylvania.” A physician assistant (PA) is a licensed professional who, while lacking the medical education and training of a doctor, can still diagnose, treat, and prescribe most medications. In a medical practice, having a Physician Assistant helps doctors to serve more patients per day, which boosts billable services. This might put a strain on the medical practice’s support staff, resulting in blunders. These errors can result in significant, life-threatening injuries, as well as death. A PA can be sued and held liable for your damage, as well as the supervising physician for any carelessness. This article addresses some of the most frequently asked topics about physician assistant malpractice.
Why is malpractice coverage so extremely expensive today?
“There is an underlying cost pressure,” said J. Robert Hunter, the Consumer Federation of America’s director of insurance and a former Texas insurance commissioner. “However, there hasn’t been an uptick in large jury verdicts or settlements. Every year, it’s the same trickle, drip, drip.”
Experts argue that lawsuits against doctors are just one of several factors driving up the cost of malpractice insurance. The diminishing investment earnings of insurance companies and the changing nature of competition in the business appear to be the most important issues recently.
The recent increase in premiums, which is already beginning to level out, speaks more about the insurance industry than it does about the legal system.
“You get these jolts in insurance premiums from time to time, and they receive a lot of attention,” said Frank A. Sloan, a Duke University economist who has studied medical malpractice patterns for nearly 20 years. “They’re the product of a lot of things coming together.”
After adjusting for inflation, expenses for insurance firms have risen gradually over the previous decade at an average yearly rate of approximately 3%, according to data provided by both the federal government and insurance associations. During most of that time, doctor premiums climbed slowly, if at all, as insurance firms competed for market share in order to collect more money to invest in robust bond and stock markets. However, as the markets deteriorated and insurers’ reserves shrank, firms began to double and triple the costs of doctors.
Is nose coverage cheaper than tail?
It may seem like a relief to many new physicians when the practice or system they want to join offers a contract that includes paying for their malpractice insurance. Isn’t that one less thing to be concerned about?
Unfortunately, when those physicians depart for another practice opportunity a few years down the road, they may experience sticker shock. That’s because they weren’t aware of, or didn’t fully evaluate, the significance of, or the high cost of, tail coverage when making a practice modification. However, if negotiated into an employment contract before signing, this is an expense that can be avoided.
Claims-made malpractice insurance and tail coverage
Claims-made malpractice insurance is the most prevalent and commonly used malpractice insurance. Claims-made insurance covers a physician for any alleged act of malpractice that occurs while the policy is in existence and is filed with the insurance company.
Because of the pricing model, this sort of malpractice insurance is very popular among physicians who are just starting out in practice.
“All malpractice insurance carriers offer a new-to-practice discount,” explains Andrew Hawkins, a medical malpractice insurance broker with nearly 30 years of experience, “which reduces the premium significantly in the first, second, and third year a new physician is with the carrier as they build their patient load.” Premiums level out after five or six years of practice.
However, because malpractice claims are frequently filed years after the alleged malpractice occurred, if a physician with claims-made coverage switches insurance carriers due to a practice change (or for any other reason), the physician will be uninsured if a claim is filed against his or her previous carrier, leaving a gap.
Purchasing tail coverage or transferring “previous acts” to a new policy are the two alternatives for filling this insurance gap. Tail coverage is often obtained from the carrier a physician is departing and costs 200 to 300 percent of the underlying rate. Prior acts (also known as “nose coverage”) that are covered by the carrier to which a physician is switching is usually the better option.
“Having earlier acts moved to a new insurance and avoiding the cost of tail is always a cheaper alternative,” Hawkins explains. “Physicians should check with their group’s contract to see if such transfer is permitted.” Occasionally, group employment contracts dictate that if a physician leaves the practice, he or she must obtain tail coverage; this is something physicians should try to avoid negotiating in favor of a transfer.
When it comes to claims-made insurance, the best solution is to include it into the employment contract so that the practice will cover the cost of tail coverage if you leave.
Other types of malpractice coverage
Another alternative is occurrence-based malpractice insurance, which is similar to claims-made malpractice insurance. There is no need for tail or prior actions coverage because occurrence-based insurance protects a physician whenever the alleged act of malpractice happened, regardless of when the claim is actually filed. “Occurrence has a built-in tail policy,” adds Hawkins, “but it’s far more expensive and only offered in a few areas.”
Some medical trusts offer claims-paid malpractice insurance, which charges premiums based on previous year’s malpractice claim settlements and expected payouts in the coming year. When terminating a claims-paid policy, tail coverage is required – and frequently prohibitively expensive – just as it is when terminating a claims-made policy. Premiums that change unpredictably, rigid limitations on what is and is not covered, and difficulty transferring to a new carrier are all disadvantages of this type of coverage.
A plan of action
Every practice scenario is unique. When negotiating your employment contract, make sure you have an answer to the question of who pays for malpractice insurance premiums while you’re working for the firm and who pays for tail coverage if you leave.
The ideal situation for a single physician is, of course, for the practice to foot the bill. While the fact that the practice does not pay for that coverage should not be a deal breaker, recognizing that tail or past acts malpractice coverage would be required is the first step in budgeting for a virtually definite large expense in every modern physician’s career.