The Responsible Resident
The Responsible Resident Podcast is a short-form educational series designed for medical students, residents, and fellows who want clarity around financial decisions during training, without pressure, sales, or noise.
Hosted by Amber Stitt, co-owner of MD Disability Quotes and a 15-year specialist in physician income protection, this podcast focuses on what truly matters during medical training: timing, underwriting, and protecting future earning power.
Most residents believe financial decisions can simply be handled later. What this series explains, calmly and clearly, is that some decisions are influenced by health history and timing. Flexibility exists during training, but it does not last forever.
You don’t need to take action immediately. The goal is competence first, so when decisions matter, you’re prepared.
If you’re in training and want to understand your options before they narrow, this podcast is for you.
The Responsible Resident
Physician Disability Insurance Hidden Tax Trap: Why Deducting Premiums Could Cost You Later - RR Ep 18
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Should doctors deduct disability insurance premiums, or protect tax-free benefits later? In this bonus episode of The Responsible Resident Podcast, Amber Stitt breaks down one of the most misunderstood physician disability insurance planning decisions: the tax treatment of disability insurance premiums and how it affects benefits at claim time.
This episode is designed for medical residents and fellows, attending physicians, other medical professionals such as CRNAs, and any self-employed doctors transitioning into private practice, partnership, 1099 work, locums, or independent contractor roles.
Amber explains the difference between paying disability insurance premiums with after-tax dollars versus deducting premiums as a business expense, and why that choice can determine whether your disability insurance benefits are tax-free or taxable.
Learn how disability insurance taxation impacts monthly income replacement, why physicians often overlook this hidden tax trap, and when Business Overhead Expense (BOE) insurance may be treated differently.
If you’re evaluating physician disability insurance, own-occupation disability coverage, or planning for private practice ownership, this episode will help you think more strategically about protecting your future income.
Because disability insurance isn’t about saving taxes in a good year, it’s about preserving options in a hard one.
📻 Thank you for tuning in to The Responsible Resident!
To Download the FREE Medical Professionals Blueprint:
If you would like a free quote, please contact us at:
mddisabilityquotes.com/responsible-resident
Amber Stitt is a disability insurance specialist with over 15 years of experience helping physicians protect their income and make informed financial decisions.
As the host of The Responsible Resident, she brings a structured, education-first approach to topics like disability insurance, underwriting, and income protection, areas often overlooked during medical training.
🔗 Connect with host, Amber Stitt, on Social Media:
📲 Be sure to visit the Stitt Strategies website:
🎬 And remember, let's take action today!!!
Amber Stitt [00:00:00]:
Welcome to The Responsible Resident. I'm Amber Stitt. This podcast takes a common sense approach to financial decisions for physicians, breaking down complex topics into something clear, practical, and usable. Because you shouldn't have to have a finance degree to build financial freedom. Welcome back to The Responsible Resident podcast. I'm Amber Stitt and if you've been following the series, you know our goal is simple: to help residents, fellows, and early-career physicians better understand disability insurance, underwriting, and the financial decisions that can shape your future. And as we continue building out this series, we're adding in bonus episodes covering important concepts, the kinds of details that can make a major difference in how your benefits actually work when claim time comes. Because understanding disability insurance isn't just about buying a policy, it's about understanding how benefits are actually paid when you need them most.
Amber Stitt [00:00:51]:
And today we're tackling a question that often comes up as residents transition into practice. Especially if you're moving into private practice, partnership, 1099 work, locums, independent contractor roles, or eventually self-employment. The question is: "Should doctors deduct their disability insurance premiums?" And even more importantly, "What happens to your benefit if you do?" Now, before we begin, an important disclaimer: this episode is for educational purposes only. Tax laws can vary depending on your state, business entity, and personal financial situation. You should always defer to your CPA or tax advisor for individualized tax advice. But in general, this is how the tax treatment often works. At first glance, deducting your disability premium sounds like a smart move; lower taxable income, potential tax savings, another write-off. Sounds efficient, but with disability insurance there's a trade-off and many physicians don't fully understand it until much later.
Amber Stitt [00:01:55]:
Here's the general rule, if you pay your disability insurance premiums with after tax dollars, your disability benefits are generally received tax free. But if you deduct those premiums as a business expense, or if they're paid using pre tax dollars, your benefits are generally taxable. If you ever go on claim, that sounds like a small detail. It's not. Because disability insurance is not purchased for your healthy years, it's purchased for the years where everything changes. Think about it. Your income supports a lot: mortgage, student loans, childcare, retirement contributions, lifestyle expenses, family support, maybe future practice obligations. The policy exists to replace income if illness or injury interrupts your ability to work.
Amber Stitt [00:02:44]:
But this is where many physicians make the mistake. They focus on saving taxes now instead of protecting usable income later. I'd like to take a second to tell you about a FREE Medical Professionals Blueprint that I created with you in mind. At some point in your career, you realize it's not just about making more money, it's about making decisions that actually support your life. That's exactly why I created "The Pathways Perspective for Physicians." It's a simple, non-technical framework to help you think through your career, your money, your risk, and how everything connects as your life evolves. You shouldn't have to have a finance degree to build financial freedom. You don't need to have everything figured out, you just need a place to start.
Amber Stitt [00:03:30]:
You can download the FREE Medical Professionals Blueprint at: StittStrategies.com/Blueprint. So lets walk through an example. Let's say you're paying $3,000 per year for an individual disability insurance policy. That policy pays an $8,000 monthly benefit and if you deduct the premium today, maybe you save a few hundred dollars this year. Feels good. But what happens if you become disabled later? And that $8,000 benefit is taxable at a 24% tax bracket, you could lose almost $2,000 every month to taxes. That leaves you with around $6,000, not $8,000. And that's important because disability insurance already replaces only part of your income, not all of it. So if taxes reduce that benefit further, the gap can become much bigger than expected. That difference may affect housing, debt payments, childcare, savings, lifestyle, and recovery time.
Amber Stitt [00:04:31]:
This becomes especially important as physicians move from W2 income into self-employment. Because suddenly everything starts to look deductible: licensing, malpractice insurance, CME, office expenses, technology, professional dues, and business travel. But disability insurance is different because it protects you, not your business. That distinction matters. And this is often where physicians heading into private practice, or partnership, start asking better questions. Not, "Can I deduct this?" But, "What leaves me with the most real income if I can't work?" That's the better question. Now there is one important exception here, and that's business overhead expense insurance, often called BOE.
Amber Stitt [00:05:18]:
BOE is designed to reimburse business expenses if you become disabled. Things like rent, payroll, utilities, equipment leases, and office overhead. Because BOE protects the business itself, those premiums are often deductible. Different purpose, different tax treatment. But your personal disability policy, that's designed to protect your earned income. And that's why the tax treatment becomes so important. For many physicians, preserving tax free benefits often creates the stronger long-term outcome. It may feel less efficient in the short term, but much more protective in the years that matter most.
Amber Stitt [00:05:58]:
And remember, a disability contract isn't about creating tax savings in a good year, it's about preserving options during a hard year. Your ability to keep your home, support your family, protect your years of education and training, maintain financial stability, and buy yourself time to heal. That's what this planning is really about. And as your career evolves, especially if you're moving into ownership, partnership, or independent income, these details matter more. Because once your income structure becomes more complex, the planning needs to become more intentional. And understanding how benefits are taxed at claim time is part of being a responsible physician. That's why we're adding these bonus episodes, because sometimes the small details in a contract make the biggest difference when life changes.
Amber Stitt [00:06:46]:
Thanks for joining me for this bonus episode. If you're transitioning into practice and want help reviewing your disability insurance, understanding how benefits may be taxed, or evaluating your options as a future self-employed physician, our team at MD Disability Quotes is always here to help. And if you want to build your education first, financial foundation, visit StittStrategies.com/Blueprint. Until next time, stay informed, stay protected, and stay responsible. If this episode helped you think a little more clearly about your next step, that's the goal. You don't need to have everything figured out, but you do need to take ownership and take a meaningful step forward today. Thanks for listening to The Responsible Resident. As a reminder, this podcast is for general educational purposes only.
Amber Stitt [00:07:48]:
It is not legal, tax, or individualized financial advice and coverage options will vary based on your personal situation.