Integration of PDI with other disability insurance

Physicians practising in British Columbia benefit from having access to the government-funded Physicians’ Disability Insurance (PDI) Plan. However, many physicians also have a second policy of disability insurance that they pay for, such as the BCMA Disability Income Insurance Plan (DIIP) or another individual plan. We are frequently asked how the PDI Plan is coordinated with these other policies. We hope the following explanation will help clarify this.

The PDI policy states that your monthly PDI benefit may be reduced at the time of claim if your total disability benefits from all sources exceed 60% of your net predisability income. This means that if you become disabled and your claim is approved, the insurer (Sun Life) will first calculate your predisability net income (income remaining after the deduction of expenses but before deduction of income taxes). If you are incorporated, this calculation will include any salary paid to you by your corporation. Next, the insurer will determine your disability benefits from all sources, which consist of benefits from PDI, any private disability policies you own, and government sources. If your benefits total more than 60% of your predisability net income, your PDI benefit will be reduced. An example of this calculation is as follows:

Example:

Predisability net monthly income from all sources                                  $12500

BCMA DIIP monthly benefit                                                                        $6500

PDI monthly benefit (based on earnings from MSP)                                  $4015

Benefits from all sources                                                                         $10515

60% of predisability net income ($12500 X 0.60) =                                   $7500

In this example, according to the PDI contract, $7500 is the most that can be collected in benefit payments from all sources. As the physician in this example is insured for $10 515, the PDI benefit will be reduced as follows:

PDI monthly benefit                                                                                            $4015

Total benefits from all sources ($10 515) less maximum available ($7500) = $3015

Adjusted PDI monthly benefit                                                                             $1000

Although your PDI benefit may be subject to reduction at the time of claim if you have other disability insurance, this example demonstrates that by having both coverages you will enjoy a higher combined benefit ($7500) than by having either one on its own.

If you can estimate your net monthly income, you can use the above formula to calculate the adjusted benefit you could qualify for under the PDI Plan combined with your other disability insurance. You should discuss this calculation with your financial advisor when you meet to review your insurance plan and your needs.

If you have any questions regarding integration of your PDI benefit with other disability plans, please contact a BCMA insurance administrator.

—Sandie Braid, CEBS, BCMA Insurance