Evaluating
Loyalty Programs
The truth is, retirement loyalty programs
aren't usually guaranteed.
Here are a few things to look for in the fine print:
- An annual board decision required to continue funding the loyalty program. This type of clause generally means the carrier has an annually scheduled meeting, or takes action annually, to decide whether to continue their loyalty program.
- Funding is contingent upon the company's financial health. This clause typically gives the carrier the right to end the program if the company has any financial struggles.
- If you are non-renewed for any reason, you are disqualified from participation. This clause indicates that if your policy is not renewed by the company for any reason, benefits – up to and including the entire loyalty benefit – may be forfeited.
- Board must approve every payout at retirement. Once you have fulfilled your obligations and are ready to retire, this clause may require a board meeting or other board action to decide whether or not the company will fulfill its obligation to make a payout.
- Retirement restrictions. Some loyalty programs restrict payments by requiring you to be insured by the company for a specific number of years before retirement and/or being of a certain age (usually 55) before retirement. Some programs may even require repayment of the benefits paid if you decide to exit retirement and return to work.
- No breaks in coverage. Generally, loyalty programs do not take into consideration routine absences from the practice of medicine for reasons such as maternity leave, a medical mission trip, medical leave or other extenuating circumstances. Some loyalty programs may even terminate your right to benefits in these circumstances, thus requiring you to compromise your decision to take extended time away from your practice in order to remain eligible for the program.
- Remaining with the medical group that is insured by the carrier that offers the loyalty program. If your practice is purchased, or if you join a new employer or group, your new practice may have coverage through an insurer other than your existing carrier. This could cause a termination of your loyalty program benefits because your prior carrier's loyalty program may not allow for such changes in practice.
- No interest accrued on loyalty balances. Your other investments will accumulate interest between now and retirement. Generally, loyalty programs do not accumulate, or pay out, interest on the money accrued in a loyalty account.
- 1099-MISC form – you'll likely receive one at retirement when the loyalty award is paid out because loyalty programs are typically considered taxable income.
