The last few years have seen a rise in office co-pays, with some going as high as $40. Patients silently express their frustration with this by bucking the system and self-diagnosing their illnesses. They take the $40 in healthcare dollars that they would have spent at a physician’s office and hand it over to Walgreen’s and other drugstores with the hopes that the over-the-counter “weekly special” will cure them.

How can you get your patients to transfer those dollars back to you?

We all know that the funding for the freshly passed healthcare reform bill has to come from somewhere. If you have a successful medical practice, some of that money may come out of your pocket. The 3.8% Medicare Part A tax impacts individuals who make in excess of $200,000 per year. At this time, it looks like 2013 is the year when you will start seeing this additional tax impact your earnings.

However, that’s not the only option available if you want to maintain your standard of living and ensure your future financial wellbeing. The new tax will be assessed on “unearned income”. That includes things like capital gains on investments as well as dividend and annuity payments. Notably, the tax does not apply to the earnings accumulating in your IRA, 401(k), or other tax deferred retirement accounts.

Start Planning Now

If you aren’t taking full advantage of the opportunity to divert as much money as possible into these tax sheltered accounts, now is the time to start. If you are self-employed (and your spouse does not participate in an employer-sponsored retirement plan), you can generally make tax deductible contributions to a traditional IRA. Even better, 2010 is the year that you can convert a traditional IRA to a Roth IRA where money will grow tax free – not just tax deferred – if you wait until retirement age to take distributions.

Of course non-deductible IRAs and other retirement vehicles offer protection from other forms of taxation and are always well worth investigating. You could even consider branching out and adding real estate holdings to an IRA. Any income you make from leasing the property could be protected in the retirement account rather than being exposed to capital gains taxes.

Increase Your Retirement Contribution Limits

As a small business owner and/or a self-employed individual there are other options available as well. With such a low cap on annual contributions to an IRA ($5000 or $10,000 for couples), you might benefit from setting up a plan with higher limits. This could be a Simplified Employee Pension (SEP), Keogh plan, or Solo 401(k). These offer the potential for you to set aside as much as $49,000 per year in a retirement account.

With the plans listed above, you will need additional financial, legal, and HR related advice. Setting up a pension plan through your business is complicated and can have unintended consequences such as affecting the deductibility status of contributions to an IRA. In addition, you may be required to cut your employees in on the deal. That’s not a bad thing if you are looking to retain highly skilled workers by offering a better total compensation plan.

Are you going to sit down with your financial planner and re-evaluate your retirement planning this year? Do you have some ideas for maximizing your income while minimizing your tax exposure?

 

It’s no secret that widespread dissatisfaction with insurance practices is driving practitioners toward alternative ways of being paid for their services. With the devastating 21% cut to Medicare reimbursement rates, many physicians are even less sure that they can continue to do business as usual.

Restoring profitability to private practices is going to be a challenge. Physicians will have to become thought leaders in creating a patchwork of solutions.

Question: How could Facebook or Twitter affect your clinical outcomes?

A quick update on the type of things that the OIG is going after that are very easy for your office fall victim to. Do not let these violations happen to you!

Surveys are indicating some pretty strong shifts in patient attitudes toward doctors and healthcare in general. Will doctors be able to respond to their needs or will they require the patient to conform to their outdated ways?