The Top 5 Disability Insurance Trends to Watch for in 2024

Focusing on the Healthcare Market and Disability Insurance

In the ever-changing world of disability insurance, staying current on trends and innovations can be a challenge. As an insurance advisor, you must anticipate your clients’ risks and find solutions. For those focusing on disability insurance within the healthcare market, it’s critical to stay on top of movements in the marketplace.

The healthcare market has evolved rapidly in recent years, and certain trends are shaping the industry. By understanding the top 5 disability insurance trends of 2024, you’ll be able to better protect your clients and stay ahead of your competition.

Here are several disability insurance trends to watch out for:

1. Rise in non-physician services
2. Increase in wages
3. Doctor shortage
4. Burnout and mental health
5. Lingering effects of COVID

Rise in non-physician services

Medical care provided by advanced practice clinicians (APCs), including nurse practitioners and physician assistants, is expected to rise at a faster pace than the care provided by doctors. In fact, visits delivered by APCs now accounts for a quarter of all healthcare visits in the United States. What’s more, from 2013 to 2019 the share of health care visits delivered by non-physicians increased from 14 to 26 percent. Look for this new generation of APCs to grow more quickly than the number of doctors, potentially helping to ease a doctor shortage.

This shift requires the disability insurance industry to better understand and manage this growing segment of the healthcare workforce. Carriers will need to analyze the risk and pricing models that will be required to support this growing class of workers, and to design the appropriate coverage. Importantly, this rise provides an opportunity to provide critical income protection to more occupations.

Increase in wages

Many industries have witnessed a rise in pay growth in the last year (although in most cases that growth failed to outpace inflation, dampening any positive impacts for workers). The healthcare market in particular has seen growth in wages, especially in healthcare, highlighting continued demand for doctors and a limited supply. The 2023 Review of Physician and Advanced Practitioner Recruiting Incentives indicates that average starting salaries are up 19% year-over-year for psychiatrists, up 16% for dermatologists, up 12.5% for anesthesiologists and up 12% for orthopedic surgeons, with various other types of doctors also seeing starting salary increases.

Doctors, dentists, and other healthcare professionals, including APCs, with specialized incomes are particularly exposed and will require the right kind and right type of income protection as incomes grow. To illustrate this point, as a (male) doctor progresses in his career, he gains respect and experience, and the demand for his services increases. Because of this, he now earns more money than when he began. While his IDI protected 60% of his income right out of medical school, he now has a severe coverage gap. His income has grown, and if he became disabled, he could face severe financial hardship. 

As an advisor, it’s critical to ensure that employers are offering group coverage that offers adequate disability protection, and for doctors, coverage that is built specifically for their income (based on procedure codes or own-occupation definition of disability). 

Doctor shortage

Workforce demographics have shifted in the post-COVID era, and the healthcare market has been hit especially hard. With long hours and burnout prevalent, the doctor shortage has continued and will likely continue into 2024.  20% of doctors considered leaving their job and pursuing a career outside of clinical work according to a report by The Medscape Physician Nonclinical Careers Report 2021.

Let’s look more closely at the numbers. According to a study conducted by the Association of American Medical Colleges, over the next decade, the demand for doctors is looking to outpace its supply, leading to a shortage of between 37,800 and 124,000 doctors. Demographics (specifically, population growth and aging) continue to be the primary driver of increasing demand. A large portion of the doctor workforce is nearing retirement, with more than two of five currently active doctors becoming age 65 or older within the next decade.

According to the American Medical Association, the cost of losing one doctor can range from $500,000 to more than $1,000,000 — when including recruitment, sign-on incentives, lost revenue, and onboarding. So, in a market of short supply and high demand, how can doctor employers recruit and retain doctors? The right disability insurance benefit offering can help.

Burnout and mental health

Many doctors and healthcare workers are burned out, and that burnout is leading to an exodus. About one in five health-care workers has left their job since the pandemic started, and that number does not look to be letting up much, if at all. As previously noted, work overload has led to burnout and disillusionment. Going into 2024, this will force healthcare employers to reevaluate workforce models and offer flexibility and support that is so critically necessary to employees. 

For insurers, providing the right type of coverage to support doctors and healthcare workers who may be suffering is tantamount. Of note, mental and nervous & drug and alcohol (MNDA) benefits that allow for relapses and recurring claims (especially for conditions like doctor burnout and stress) are important. With a per-occurrence provision, if an insured suffers from an MNDA disability, fully recovers, but then relapses six months after the recovery date, they will be eligible for another defined number of months of MNDA benefits, based on the plan contract. 

It’s incumbent upon insurance brokers to look for disability coverage solutions that are built to support this need for added support.      

Lingering effects of COVID

Doctors, insurance carriers and employers alike are continuing to learn more about the lingering effects of COVID, chronic conditions stemming from Long COVID, and the effects they’re having on the workforce. Research on the effects of COVID will undoubtedly continue into 2024. These conditions can last weeks, months or years, and treatment can be complicated, as it is a complex of multiple symptoms and is generally not diagnosed as one illness. At claim time, doctors and carriers generally consider the impact of the illness on each affected body system.

As the prevalence of chronic conditions increases, so does the need for disability insurance. That’s because people with chronic conditions are more likely to face a disability that prevents them from working. As chronic conditions become more widespread, disability insurance claims may also become more frequent, and claims experience will need to be monitored by the industry closely in 2024. 

Looking to 2024

The disability insurance landscape is constantly changing, and staying up to date on the latest trends can be tough. But by being aware of the top trends for 2024, you’ll be able to give your clients the best possible coverage – and stay one step ahead of your competition.