The case for investing in life insurance
Medical Economics
Two years ago, presidential candidate John McCain secured initial campaign financing by using his $3 million life insurance policy as collateral.
In 1980, Doris Christopher used a life insurance loan to launch her struggling kitchen gadget company. In 2002, she sold that company—the Pampered Chef—to Warren Buffett for a reported $900 million.
Even in the midst of the Great Depression, J.C. Penney used a loan against his $3 million life insurance policy to resuscitate his retail stores after the 1929 crash.
By this point in our nation's recession, it is clear that there is no such thing as a perfect investment strategy. As the Dow Jones Industrial Average sits at about 65 percent of its value from 18 months ago, now is an ideal time to learn about the proven benefits, strengths, and versatility of life insurance and annuity investing.
IF IT'S GOOD ENOUGH FOR BANKERS . . .
According to government disclosures, Federal Reserve Chairman Ben Bernanke has a majority of his liquid wealth—between $1 million and $2 million—invested in fixed and variable annuities, which are contracts issued exclusively by life insurance companies that promise guaranteed rates of interest.
What's more, the 401(k) Thrift Plan for Employees of the Federal Reserve System, according to a 2009 first-quarter Fed report covering 22,000 Fed employees, has 75 percent of its assets—that's $3.2 billion—invested in its fixed-income fund, which is invested exclusively in annuity contracts underwritten by major U.S. life insurance companies guaranteeing principal and an interest rate of 5.8 percent.
And this is not a new trend. A Deloitte audit affirms that in 2007 and 2006, Fed employees overwhelmingly chose fixed-income annuity funds over volatile mutual funds.
The nation's large banks invest immense sums of their Tier 1 capital reserves—a bank's most important asset and a key measure of its strength—into permanent life insurance underwritten by major life insurance companies.
Why do banks look to insurance companies for sound investment? Unlike banks, life insurance companies do not use excessive leverage. If a bank has $1 million on deposit, it can lend out up to $10 million to the public. This leverage is called "fractional reserve lending," and it can lead to instability. Indeed, excessive leverage is a major reason why banks are failing today and have throughout history.
However, if a life insurance company has $1 million on deposit, that company may loan no more than $920,000, and usually only a fraction of that. As such, life insurers are 100 percent reserve-based lenders, which makes them stable institutions in down economies.
July 3, 2009 in Personal Finance | Permalink | Comments (0) | TrackBack (0)
2010 CMS physician fee schedule
MGMA Government Affairs yesterday posted an alert regarding the 2010 CMS physician fee schedule. The alert includes the press release, which outlines some of CMS' proposals to decrease payments in some areas while increasing payments to primary care providers, and a fact sheet which discusses the 2010 PQRI updates. Unfortunately the 2010 fee schedule still follows the SGR, which has negatively impacted Medicare payments since 2002 though Congress has done "Band-Aid" patches since 2003.
We have seen the battle lines being drawn recently regarding healthcare reform, and we can only hope that a more comprehensive measure comes out before December 31, 2009.
Below is the alert from MGMA:
The Centers for Medicare & Medicaid Services (CMS) just released the 2010 Medicare proposed physician fee schedule and a related press release and fact sheet. The regulation includes provisions that confirm a 21.5 percent reduction in 2010 Medicare physician payments unless Congress enacts legislation to reverse this cut. Long advocated for by the Medical Group Management Association (MGMA), the regulation also proposes to "remove physician-administered drugs from the definition of "physician services" for purposes of computing the physician update formula in anticipation of enactment of legislation to provide fundamental reforms to Medicare physician payments."
MGMA will analyze the regulation's impact on medical group practices, post this analysis online as a member benefit and send formal comments to the agency detailing Association concerns. Look for updates in MGMA Washington Connexion and on the MGMA Public Policy website as the Association reviews this 1128 page document.
July 2, 2009 in Medicare | Permalink | Comments (0) | TrackBack (0)
5 star customer service is a MUST
It’s essential to keep your patients happy. Studies show that satisfied patients recover faster, stay with your practice longer, and give your practice a competitive advantage. On the other hand, communication failures and service lapses can drive patients away and lead to malpractice claims.
You owe it to your practice to check out the valuable risk-management system described in the book and CD-ROM set, Five-Star Customer Service: A Step-by-Step Guide for Physician Practices, by James W. Saxton, Esq.
What can you do to protect yourself? It's just common sense. By developing and maintaining a culture of five-star customer service that focuses on improving your relationship with your patients, you can reduce your risk of being sued and promote better health outcomes.
Customer service excellence and good communication skills are the keys to reducing unnecessary litigation and keeping your patients satisfied. That's why Five-Star Customer Service is a must-have resource for every physician practice.
At 100 pages, this easy-to-read, conversational guide provides a step-by-step program to develop, promote, and maintain a five-star customer service culture at your office.
July 1, 2009 in Practice Management | Permalink | Comments (0) | TrackBack (0)
IRS Addresses Student FICA Exception for Medical Residents
Date: March 25, 2009
Refer Reply To: CC:TEGE:EOEG:ET2 - CONEX-111532-09
The Honorable Mr. David Obey
U.S. House of Representatives
Washington, DC 20515
Dear Mr. Obey:
I am responding to your January 28, 2009, letter on behalf of your constituent, * * *, whose wife is a * * * graduate of the University of Minnesota medical residency program. * * * asked why the IRS continues to pursue the issue of whether stipends received by medical residents for their services are subject to taxes under the Federal Insurance Contributions Act (FICA).
Services students perform are excepted from FICA taxes [section 3121(b)(10) of the Internal Revenue Code]. The Code defines a student as an individual employed by a school, college, or university at which he or she is enrolled and regularly attends classes. The student FICA exception applies only to services performed in the employ of an organization that has the status of a school, college, or university (SCU); and only if the student who performs the services is enrolled and regularly attends classes at that school, college or university.
Our longstanding position is that medical residents are not students within the meaning of section 3121(b)(10); they are full-time employees. Therefore, they are ineligible for the student FICA exception. However, in State of Minnesota v. Apfel, 151 F. 3d 742 (8th Cir. 1998) the Eighth Circuit held that medical residents the University of Minnesota employed in its residency programs were students as defined by the Social Security Act. Therefore, they did not need to pay FICA taxes on their wages.
In 2004, the IRS issued regulations to clarify the student FICA exception. The regulations provide more detailed standards for determining what is a SCU and who is a student within the meaning of section 3121(b)(10) of the Code. These regulations make it clear that a medical resident by virtue of being a full-time employee is ineligible for the student FICA exception. This regulation applies to services performed on or after April 1, 2005.
These regulations provide that any stipends * * * wife received for services provided as a medical resident on or after April 1, 2005 are subject to FICA tax. However, in Regents of the University of Minnesota v. United States, 2008 WL 906799 (D.Minn.2008), the district court for Minnesota held that the part of the regulation stating that a full-time employee is ineligible for the student FICA exception is invalid. The United States appealed this decision because the IRS and the Department of Justice believe the regulations are valid, and accordingly stipends the University of Minnesota pays to its medical residents for services performed on or after April 1, 2005 are subject to FICA tax. The Court system has not yet resolved this issue; therefore issuing any refunds of tax is premature.
I hope this information is helpful. If you have any questions, please contact me at * * * or * * * at * * *.
Sincerely,
Nancy J. Marks
Division Counsel/Associate Chief
Counsel
(Tax Exempt & Government Entities)
June 30, 2009 in Taxes | Permalink | Comments (0) | TrackBack (0)
10 lessons you need to know before investing in EMR
1. Think of EMR as a power tool – it should help to improve patient care and practice efficiency.
2. Selection & implementation requires a substantial amount of time, planning, and support.
3. Don’t try to implement if current system is in a state of chaos.
4. Train, train, train, train, and train again.
5. Change is hard – very hard.
6. Any implementation plan should be group based, not vendor based.
7. Pay close attention to data conversion.
8. Plan and allow enough time.
9. Get buy-in from key players.
10. Don’t confuse wants and needs. You don’t know what you don’t know.
June 30, 2009 in Practice Management | Permalink | Comments (0) | TrackBack (0)
IRS COBRA Q and A
The IRS has added 19 new questions and answers explaining the COBRA continuation premium subsidy by employers for severed employees. The questions cover eligibility, form preparation, reporting and documentation, and taxability.
http://www.irs.gov/newsroom/article/0,,id=205364,00.html
June 29, 2009 in Taxes | Permalink | Comments (0) | TrackBack (0)
Turning up the heat on Medicare fraud
According to a statement by Secretary of HHS Catherine Sebelius in a June 24 HHS Press Release, "the Obama Administration is committed to turning up the heat on Medicare fraud..." As evidence of this commitment, the Press Release announced the indictment of 53 individuals, including physicians and health care executives, accused of various Medicare fraud offenses ranging from conspiracy to defraud the Medicare program, false claims anti-kickback statute violations. Among other things, the indictments allege that the individuals conspired to submit claims for medically unnecessary services and services not rendered as well as to pay kickbacks to beneficiaries to attest that they received the services. The Press Release can be viewed here.
June 26, 2009 in Medicare | Permalink | Comments (0) | TrackBack (0)
Laundry list of merger issues
As predicted, more and more physician practices are exploring the merger option. Many have found a merger is a very viable strategic option for moving a practice in to the future. However, to be successful, a merger must be done right. Here is another laundry list of merger issues to consider if you are ever involved in merger discussions:
· How will call be distributed
· Treatment of part time physicians
· Equalization of benefits
· Treatment of nonphysician providers
· Compensation for administrative duties
· Distribution of ancillary income
· Treatment of overhead
· Treatment of owners vs. employed physicians
· Inclusion of non-productivity incentives
June 25, 2009 in Practice Mergers | Permalink | Comments (0) | TrackBack (0)
Medicare Scam Alert
CMS has become aware of a scam where perpetrators are sending faxes to physician offices posing as the Medicare carrier or Medicare Administrative Contractor (MAC). The fax instructs physician staff to respond to a questionnaire to provide an account information update within 48 hours in order to prevent a gap in Medicare payments. The fax may have the CMS logo and/or the contractor logo to enhance the appearance of authenticity.
Medicare fee-for-service providers, including physicians and non-physician practitioners, should be wary of this type of request. If you receive a request for information in the manner described above, please check with your contractor before submitting any information. Medicare providers should only send information to a Medicare contractor using the address found in the “Downloads” section of the CMS Web site at one of the following links:
http://www.cms.hhs.gov/MLNGenInfo/
http://www.cms.hhs.gov/MedicareProviderSupEnroll
June 24, 2009 in Medicare | Permalink | Comments (0) | TrackBack (0)
Dependency Exemption in Divorce
In chief counsel advice, the IRS concludes that for divorce decrees or separation agreements executed before July 3, 2008, a noncustodial parent may claim a dependency exemption without using Form 8332, when (1) the appropriate pages from the divorce decree or separation agreement which unconditionally allows the exemption claim are attached to the return, and (2) when the attached pages constitute a statement substantially similar to requirements of Form 8332. For tax years beginning after July 2, 2008, a custodial parent must release a claim of dependency exemption on Form 8332 or on a separate release document that has as its only purpose the release of a claim to exemption.
June 23, 2009 in Taxes | Permalink | Comments (0) | TrackBack (0)
