Coverage for Overhead
When dentists “cannot work due to injury or illness,” their clinics continue their operations, but dentists must worry about their overhead (Samaras 2008). Insurance for overhead could pay for its costs until the dentists return (Samaras 2008). Coverage for overhead, which is a significant part of the clinic’s finances, would benefit dentists so that their clinics could remain financially stable in their absence.
Overhead may be costly for some clinics. Overhead includes “employee salaries, rent, practice and/or student loans, a replacement dentist, and more” (Biesterfelt 2011). Even though clinics may be earning a lot of money, overhead costs may fluctuate (Goodman 2016). Cancelled or unattended appointments of patients lead to reduced revenue “because much of the overhead associated with the time [of the appointments] is still incurred. Therefore, when production is lost, employee wages, rent, utilities, and other fixed costs inflate overhead percentage” (Goodman 2016). Other ways that could impact overhead include increased employee’s wages, rent, and utility expenses (Goodman 2016).
Based on these costs, clinics should consider enrolling into overhead insurance policies. According to the web page, “Business Overhead Insurance for Dentists,” of Doctor Disability Insurance, Inc., “an innovative, one-stop service that makes disability insurance shopping quick, affordable, and easy to understand,” “BOE [Business overhead expense] insurance is a great idea for small practices with several physicians” because it pays for overhead related to the ill or injured physician while the others continue to work in the clinic. If dentists buy this insurance early, “Not only will [they] get lower rates when [they] are younger and generally in better health, but additional coverage can be purchased later without providing further evidence of medical insurability” (“Business Overhead Insurance for Dentists”). Regarding coverage for overhead, “BOE insurance policies offer a maximum monthly benefit, but only pay the actual overhead expenses if they are less than the maximum benefit” (“Business Overhead Insurance for Dentists”). These policies commonly cover overhead for at most two years, letting clinics continue functioning and, “[in] the case of a long-term disability,” giving dentists time “to make a business decision, such as whether to shut down or liquidate [their] practice, without worrying about accruing debt from business expenses” (“Business Overhead Insurance for Dentists”). Additionally, clinics pay for “relatively inexpensive” “[premiums] for office overhead expense insurance… and when paid by the practice are typically tax deductible as a business expense” (Biesterfelt 2011). Jim Biesterfelt, “vice president of Group Special Accounts at Great-West Life & Annuity Insurance Company,” advises “[insisting] on an ‘own’ occupation’ definition of disability that allows you to collect benefits even if you become gainfully employed in a different occupation,” “[looking] for coverage that pays benefits whether you are partially or totally disabled,” and “[making] sure that student and practice loans are covered as eligible expenses; not all office overhead expense insurance policies cover professional or practice-related debt” (2011).
Dentists should be prepared in the event of disabilities or illnesses. Coverage for overhead may help their practices remain open.