March 2017 | Physician Magazine

CHARTING THE COURSE | GUSTAVO FRIEDERICHSEN’S FIRST YEAR AS LACMA CEO

TAXES New Series Healthy Financial Planning for Doctors

P RES IDEN T ’S LET T ER | VIT O IM B AS C IANI, M D

Staying Au Courant in Medicine So many things we say every day instantly peg us to the generation we were born into, even if we feel that we are au courant as we happily adapt to the rapidly changing technologies that infuse our personal and professional lives. Take, for instance, references to TV series of the ‘70s, ‘60s, or even the ‘50s, or using outmoded terms such as “you sound like a broken record” or “you are a carbon copy of your father.”

The same is true of medical science. Medicine has either led or followed every advance in biology, chemistry and physics to the betterment of the profession, but the rate of change itself seems to be accelerating (unless that perception itself is a misapprehension that comes to all late-career physicians). In spite of Hippocrates’ admonition never to cut for stone, that is precisely what I have done for a living these last 30 years. I learned the art as a resident in Urology at Yale-New Haven hospital: how to remove impacted ureteric stones by (shudder!) opening the ureter; how to bivalve the kidney safely to remove a complete staghorn. Now, most residents have never even seen open stone surgery except as an aberration from the surgical norms. Open surgery gave way in the space of a single decade to hand-assisted then pure laparoscopic surgery. It took only seven years from graduating residency to reach the point where 50% of the drugs I was prescribing were not known when I was in medical school (Class of 1985). The practice environment has changed along with the science and the technology.

“It took only seven years from graduating residency to reach the point where 50% of the drugs I was prescribing were not known when I was in medical school (Class of 1985).”

How do you keep up with change in your profession?

Maintenance of certification (MOC) is one attempt of academe to ensure that physicians and surgeons keep up with the times. In addition, most people attend meetings of their specialty societies or “themed” gatherings to earn CME. (How tempting to study barotrauma on ships cruising the Caribbean. Or to study HAPE while skiing Aspen.) Others keep abreast of advances in knowledge by reading medical journals and taking the attached quizzes. Many hospital departments offer rigorous and timely updates in addition to more general Grand Rounds. Almost every academic medicine center in the nation offers specialty review courses, often in enticing venues. Here in Los Angeles, many physicians are fortunate to belong to an ethnic medical society where CME presentations are routinely served alongside native cuisines.

The opportunities abound, but one must take advantage of them. The onus remains on the physician to keep current, and the burden seems to grow, not shrink, with time. Even (or especially) the physician who has found a well-defined niche—be it hand surgery, men’s health, or the oncologic treatment of prostate cancer—and that is the entire spectrum of his or her practice, can find that practice eclipsed in a heartbeat by evolving science, thus threatening the physician’s entire professional life.

The Medical Board does require a minimum of 25 CME hours each year, but it is up to each physician to decide where to apply the effort, along with deciding if that number is even sufficient to meet the need. So, get out the journal, the pencils or the cruise directory, and keep current.

ON THE INSIDE

President’s Letter | Vito Imbasciani, MD

2 The Power of Partnerships

Gustavo Friederichsen

4 Charting the Course Gustavo’s First Year at LACMA

6 Is MACRA Actually a Good Idea?

4

8

8 Healthy Financial Planning | TAXES

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M ARC H 2 0 1 7 | TAB LE OF C ON T EN T S

Volume 148 Issue 3

The Power of Partnerships MARCH MARKS ONE YEAR AS CEO OF LACMA and I want

to extend a heartfelt thanks to board members, district presidents, committee chairs and staff for a successful year.

There have been quite a few milestone moments thanks to everyone’s hard work, but for this column I want to focus on the revitalization of our member benefit and services platform. LACMA now provides more consultative, tailored solutions for physicians, practices and groups who face day-today challenges on a variety of levels. Because every physician’s need is as unique as his/her specialty, LACMA offers a diversified portfolio of support. This always starts with a conversation with me or any member of my staff.

“I’m excited to announce that LACMA is exploring a new discount drug program. Through this program LACMA members will receive savings of up to 75% at more than 68,000 national and regional pharmacies. ”

We’ve balanced our budget and are investing smarter when it comes to outlining specific, measurable goals. Target 270 is just one example – this campaign helps us to focus on what’s important: value for members and attracting new ones. We have renewed alliances with several key medical groups, from Allied Pacific IPA to City of Hope and Los Angeles County to Seoul Medical Group and Facey Medical Group, to name a few. We are excited to continue making strides with USC Keck, and I’m confident we will find common ground soon. We are exploring a medical tourism model for Beverly Hills and District 7, and in June we will unveil our Private Practice Consortium Series to be held in each region of Los Angeles County to make membership participation convenient.

One of the most exciting outcomes to share with membership is our innovative Preferred Partner program. After I assumed leadership last year, I witnessed several events that did not deliver value for our members or vendors. In the first quarter of this year we have groundbreaking partnerships with JNT Tek IT Solutions, and Computer Science Corporation (CSC), both “early adopters” of the program. I encourage any physician to let me know if they are dealing with IT challenges or need assistance when it comes to their IT infrastructure or chronic disease management and population health strategies. We’re grateful to Taylor Digital not only for the launch of our new website and their support of LACMA, but for the services they offer to our members as well. They are experts at search strategy, digital marketing and developing custom web applications. CAP (Cooperative of American Physicians) has been a loyal partner of LACMA’s for

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years and continues to help members with managing liability. New York Life has joined us to provide members exceptional, individualized assistance when it comes to personal and practice-related financial strength. United Networks of America has joined as well. UNA is one of the largest providers of value-added managed care products and services in the United States. UNA has more than 240,000 participating providers serving more than 120 million members. In 2015 UNA saved members an estimated $1.58 billion.

I’m excited to announce that LACMA is exploring a new discount drug program. Through this program LACMA members will receive savings of up to 75% at more than 68,000 national and regional pharmacies. We are also in conversations with Bay Club, one of the country’s most revolutionary health, wellness, nutrition and fitness brands, to provide our members (particularly those in Districts 5 and 9) an exclusive offer. MedPro Medical Disposal, Best Practice Management (billing and coding), CompuGroup Medical and Practice Fusion (EHRs) and Corevita Health (ancillary provider network) are all quality companies we are in active discussions with to deliver additional cost-conscious value to members. I will continue to provide essential updates on our partners, their services, discounts and value. I look forward to a great 2017 and I hope members share this optimism.

Gustavo Friederichsen Chief Executive Officer

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CHARTING THE COURSE

In Recognition of Gustavo’s First Year at LACMA LAST MARCH, GUSTAVO FRIEDERICHSEN came to LACMA with a plan to reinvigorate the membership base, attract new members and clarify both the mission and vision of the organization. He initiated new programs and partnerships. He’s also shared his belief in the importance of building new traditions into the culture of LACMA. As part of that effort, we wanted to recognize the first-year anniversary of Gustavo’s work at LACMA. We asked a few physicians to share their impressions of working with him and changes they’re seeing. Congratulations, Gustavo, on a wonderful, productive and inspiring first year!

Gustavo is the best thing that has happened at LACMA in years! He brings a fresh perspective and enthusiasm for the organization and its partners that I have never previously seen. He has rebuilt relationships with the professional staff at CMA as well as all the component medical societies throughout the state. He has developed new relationships with various business partners that others had not even conceived. He pursues membership recruitment with groups and individual physicians relentlessly. He is available to anyone who calls and wants to speak with him. He has reinvigorated the staff culture at LACMA. He exudes positive energy. I could go on and on, but prior to his arrival I was totally pessimistic about the future of LACMA and the direction in which it was heading. Now, I feel the future is incredibly bright and the potential for success, membership growth, effective advocacy and organizational rebirth is unlimited!

DAVID H. AIZUSS, MD, FACS, Ophthalmology Associates of the Valley

Chair, Board of Trustees, California Medical Association

Gustavo Friederichsen needs to become a common, city-wide name in all healthcare circles because he uniquely has the potential to launch the physician institution in an entirely new direction. In the past year, he has done more with less than one could have hoped at the outset. I cannot wait to see what is in store for us in the future with the excitement and enthusiasm of our fearless leader pushing us all along.

I am humbled to be of service as a physician thanks to the support I’ve received from Gustavo.

EMIL AVANES, MD Primary Care Physician, Harmony Health

I think that Gustavo is the best CEO that LACMA has ever had. He is completely focused on growing the organization, and gives 120% — always. He is the best at networking that I have ever met — is there anyone in healthcare that he doesn’t know? LACMA is fortunate to have him at our helm!

SAM FINK, MD, Past President, LACMA

Gustavo has made a really positive impact on the culture at LACMA with his infectious enthusiasm, commitment, hard work, and forwardlooking vision. I’ve truly enjoyed working closely with him over the past year and have never been more optimistic about the future of LACMA. SION ROY, MD, Harbor UCLA, Cardiology

It has been a delight personally to me to have Gustavo at the helm of LACMA for the last year. But much more importantly, it is a boon to the organization that a man of such conviction, energy and vision take over the day-to-day management of our Association. We have already in this short number of months reversed the downward trend of our balance in our treasury, and stimulated the long-stagnant membership roll to a sudden and impressive growth spurt. He is doing this not by some miracle or fluke of the calendar, but by developing a logical approach to each of our members: What is it you need from LACMA that you cannot get from anyone else? He has a tailored approach to addressing the needs of physicians in all modes of practice. Everyone should benefit by joining forces in a forwardthinking, responsive collaborative effort which is our county Medical Association.

VITO IMBASCIANI, MD, PhD, President, LA County Medical Association Secretary, California Department of Veterans Affairs

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Since becoming LACMA’s new CEO last year Gustavo has been a breath of fresh air. His intellect, energy, commitment are something to behold.

Gustavo has come into the organization asking the members, “What does LACMA need to do to make the organization relevant to you?” He is constantly showing our current members, also past and potential ones, why YOU need to be part of LACMA because “these are the things we can do with and for you that can make a significant difference in your professional life.” Gustavo is always thinking out of the box for new strategies to accomplish this goal. One example was the “African-American Physicians: The Searing Journey Summit” that was thought of by Gustavo and became what many say was one of the best summits ever held at LACMA. In these very difficult times in the healthcare world today it is really comforting to know you have someone like Gustavo on your side.

I would like to say that Gustavo has brought ceaseless energy and passion to his position. He really listens to doctors and administrators in trying to see how LACMA can help them; he continually focuses on membership and thinks of innovative ways to increase our numbers, which just makes LACMA a stronger organization. He also works really well with other leaders in medicine, specifically CMA, which creates a team atmosphere and a sense of working toward mutually beneficial goals. He leads by example, and his strong work ethic is contagious. These are all wonderful qualities but, most importantly, he gets results. It’s been a great first year.

TROY ELANDER, MD Elander Eye Care, Past President, LACMA

LEMMON MCMILLAN, MD, LACMA, African-American Physicians Advisory Committee; LACMA, Medi-Cal Committee

When Gustavo joined LACMA, he brought with him incredible energy, vision, and passion. And in the short course of one year, he has helped to take the organization to an entirely new level of community and physician engagement in Los Angeles.

It is exciting to see how bright the future of LACMA is under Gustavo, and it is an absolute privilege to be a part of his transformative leadership team.

DIANA R. SHIBA, MD Director of Government Relations, Southern California Permanente Medical Group Board Trustee, California Medical Association; Board Member, CAPG Board Member, OPHTHPAC, American Academy of Ophthalmology

Breath of fresh air for LACMA!! His motivation to get things done is impressive.

His breadth of knowledge and connections in other industries to bring value to LACMA are something we have not seen, ever, to my recollection. Polish and positivity—rather than pandering to complainers— are refreshing.

FREDRICK RUSSO, MD, FACP President, Facey Medical Group

I appreciated that Gustavo’s first priority upon joining LACMA was to go on a “listening tour” with LACMA member physicians and non-members as a way of making LACMA relevant to its existing constituency and potential new recruits. He has been appropriately methodical in setting priorities for membership growth, support of practicing physicians, and being the advocate for LACMA throughout the state. As our advocate, he has worked with our Board of Directors and consultants to facilitate strategic partnerships, value-added services for members, and meetings with key elected officials. Finally, his tireless efforts have breathed new life into important Advisory Committees such as the African-American, Latino, and Asian/Pacific Islander physician groups, Young Physicians and our Medi-Cal Committee. I can’t wait for the encore!

HECTOR FLORES, MD Board of Directors, The California Endowment; Medical Director, Family Care Specialists Medical Group; Chair, LACMA Latino Physicians Advisory Committee

Working with Gustavo often gives me goose bumps. He is so energetic and enthusiastic that it is contagious. Once he has a plan, he sets it in motion and is relentless until he has accomplished his goal or certainly has given it his best try. When people are talking, I can see that the gears of his brain are in rapid motion, processing information in a way that helps him quickly identify a problem and offer a solution. He continues to do great work every day. The excitement at and about LACMA can primarily be attributed to Gustavo.

I really love him being on the LACMA team.

C. FREEMAN, MD, MBA, FAPA EMOS Representative, Board of Trustees, California Medical Association; Treasurer, Los Angeles County Medical Association; Chief Psychiatrist, O.A.S.I.S. Clinic/SPECTRUM Community Services and Research Charles R. Drew University of Medicine and Science

“Gustavo has worked tirelessly to improve and enhance the important work of LACMA. He’s an incredible physician advocate, and I thoroughly enjoy working with him on behalf of our members.”

DUSTIN CORCORAN CEO of the California Medical Association

Healthcare 2017 Healthcare 2017

MACRA

Is Actually a Good Idea?

By Sierra Hersek

The implementation of MACRA (Medicare Access and CHIP Reauthorization Act of 2015) is under way, and the California Medical Association (CMA) and experts across the country agree that MACRA is the number one reimbursement issue facing physicians in 2017. Physicians are concerned not only about how MACRA will impact their practice but also how it will be tied to their patients’ outcomes. But could it actually be the best solution to the complex issue of reimbursement?

“MACRA replaces the old, unsustainable program and substitutes it with a payment formula that physicians can decide how and what they will do to impact their payment,” Lisa Esch, chief population health innovation officer for technology solutions company DXC Technology, told Physician Magazine. “Physicians actually have a real opportunity to thrive under MIPS [Merit-based Incentive Payment System], with the help of established incentive programs such as Chronic Care Management (CCM). CCM provides reimbursement for consistent and effective communication with high-risk Medicare patients outside of the clinical setting. Implementing a comprehensive care coordination process through consistent patient engagement not only improves patients’ well-being but also offers a financial upside, if done at scale.”

“Furthermore,” Esch added, “this population health strategy also checks off many of the clinical and quality measures MIPS requires, helps you succeed under MACRA starting year one, and positions the provider on the positive side of the competitive peer compensation spectrum.”

Esch added that, with 2017 under way, “getting started does not need to feel ominous.

Flexibility incentives, positive standings, and performance bonuses are all pretty attainable.

Whether leveraging the tools already in possession or working with a partner to walk alongside during these changing times, it’s imperative to do something today that can help both the practice and the patients on the journey to value-based care.”

To that end, Physician Magazine asked Cheryl Bradley, CMA’s Medicare reimbursement specialist, what physicians can do to stay informed.

“A great resource for physicians trying to understand MACRA is CMS’ Quality Payment Program website [qpp.cms.gov],” according to Bradley. “The website is very user-friendly, offering great information and clear instructions in one place. It takes a complicated, 2,400page rule and makes it easier for physicians to understand.”

In addition Bradley recommended that physicians explore the noridianmedicare.com website, which offers a variety of resources and information, including a fee schedule to better understand what physicians are reimbursed for, as well as medical review options and required documentation checklists.

“These tools will help physicians avoid timely appeals that often happen when reimbursement requirements are not understood. That slows their revenue and diverts office staff to the appeals process,” said Bradley.

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Healthcare 2017 Healthcare 2017 MACRA Options The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) ends the sustainable growth rate formula and transitions physicians to the Quality Payment Program.

According to the Centers for Medicare and Medicaid Services (CMS), this change offers new tools, models and resources to help physicians give patients the best possible care.

The Quality Payment Program offers two participation options that physicians can choose based on their practice size, specialty, location or patient population.

The first option, Advanced Alternative Payment Models (APMs), is meant for physicians who bill Medicare more than $30,000 a year and provide care for more than 100 Medicare patients a year. Both requirements must be met to participate in the program. This is a change in the original proposed rule; CMS raised the minimum billing requirement from $10,000 to $30,000, relieving nearly a third of Medicare physicians from participating in an effort to ease reporting requirements for rural and smaller practices.

With the second option, MIPS, MACRA’s Merit-Based Incentive Payment System, which is anticipated to initially apply to more than 90% of eligible clinicians, participants earn a payment adjustment based on evidence-based and practice-specific quality data composed of four components: • Quality • Clinical Practice Improvement Activities • Advancing Care Information • Resource Use The use of electronic health records (EHRs) is required for participation and reporting.

As of 2018, physicians must use EHR technology that is certified for 2015. This forces physicians to upgrade EHR systems that, according to the Office of the National Coordinator for Health Information Technology, which establishes the certification criteria, more than 75% of providers participating in the Medicare EHR Incentive Program as of July 2016 had 2014-certified edition technology, which is now out of date.

If you’re considering purchasing or upgrading your existing EHR, you should discuss the EHR certification timeline with your vendor, according to Matt Reid, senior health IT consultant, in an AMA podcast. For example, he explained, ask your vendor: • How they plan on transitioning your EHR from 2014 to 2015 edition • What system downtime the transition might include • Whether your staff will require new or additional training following the transition • What costs are associated with upgrading the EHR to the 2015 edition • What new or enhanced features you will receive with the upgrade • How 2015 edition EHRs will change your current workflow • With Meaningful Use being replaced, how different will your dashboards look • What CPIAs [Clinical Performance Improvement Activities] will the EHR help you more easily accomplish • What steps and costs are associated with connecting your EHR to both a clinical registry and a health information exchange.

CMA offers several webinars on MACRA implementation.

These webinars are free to CMA members and $99 for non-members.

CMA webinars: • Medicare Changes: 2017 and Beyond (Recorded 1/25/17) • MACRA: The Final Rule and How to Get Ready (Recorded 12/7/16) • MACRA Implementation: A Review of CMS Final Rule (Recorded 11/30/16) The AMA also offers a MACRA assessment tool, the Payment Model Evaluator, for physicians to determine which program fits them best, MIPS or APMs.

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TAXES New Series Healthy Financial Planning for Doctors

BY W. BEN UTLEY, CFP, PRESIDENT OF PHYSICIAN FAMILY FINANCIAL ADVISORS

IN THIS NEW SERIES, Physician Magazine will provide expert insight into a variety of financial planning topics extensively and specifically researched and written for physicians. We begin this month with the timely topic of taxes and will dive into other financial planning topics, including retirement and investing, in coming months.

Tax planning for doctors helps hardworking physicians take advantage of all the tax deductions, tax credits and tax exemptions that Congress and the Internal Revenue Service (IRS) will allow. These tax breaks and tax strategies offer ways physicians can reduce their taxable income.

PHYSICIAN TAX DEDUCTIONS One way physicians can pay less tax is by careful tax planning to reduce the amount of taxable income, taking all the allowed deductions and protecting those deductions from being phased out. Common deductions include: • Pre-tax contributions to retirement plans such as a 401(k), 403(b), 457 plan or, in certain cases, tax-deductible contributions to Traditional IRAs. Many physicians will not be able to deduct their IRA contributions and should consider a “backdoor Roth IRA contribution” strategy.

8 P H Y S I C I A N M A G A Z I N E | M A RC H 2017

• Charitable donations of cash or used items can save taxes but most physicians forget that they can also donate securities from their taxable accounts. By donating appreciated securities, physicians gain a double tax benefit by getting the tax deduction for the gift and by sidestepping the capital gain on the sale.

• Tax-loss harvesting is the act of selling a losing investment in a taxable account to intentionally realize the loss. While this may not sound so good, physicians can use the first $3,000 of losses to offset ordinary income, saving the average physician $1,000 to $1,500.

• Home mortgage interest is a common tax deduction for physicians, especially those with large homes and larger mortgages. Physicians can also deduct the interest on up to $100,000 worth of a home equity line of credit (HELOC).

Healthy FINANCIAL PLANNING

• Student loan interest is not deductible for most physicians since high incomes cause this deduction to be disallowed.

However, physicians can use a HELOC (above) or a cashout refinance to get cash to pay down student loans, thereby converting the interest into a tax deduction. This works for consumer debt too.

All of these deductions are subject to limits, so physicians should consult their tax specialist.

SELF-EMPLOYED DOCTORS TAX DEDUCTIONS

TAX STRATEGIES FOR DOCTORS WITH FAMILIES Physicians who own their own business, even a nonmedical one — including a sole proprietorship, partnership, or working as a contractor to another business — can add their children to the payroll in order to shift income out of their own high tax brackets and onto their child’s tax return, where the standard deduction can zero out the tax liability.

For example, a physician who hires her three children can pay each child up to $6,300 in wages, an amount equal to the standard deduction amount, and that deduction will shelter all of these earnings from taxes. So if that physician is in the 39.6% federal income tax rate, the total tax savings can amount to $7,484 each year.

Wages must be reasonable given the child’s age and skill level, and this tax move must be fully documented so that it will survive an audit.

Physicians who have children who are employed by them (see above) or who have W-2 earnings from a summer job or

It seems like most of the tax code is written to benefit doctors who own their practices. For example, self-employed physicians receive a virtually unlimited tax deduction for business-driven expenses like travel, lodging, airfare, computers and mobile phones, office equipment, office supplies, medical equipment, board exam fees, licensing fees, continuing medical education expense and membership dues.

Doctors who are not self-employed can still deduct these expenses, but they are allowed to deduct only the portion that exceeds 2% of their adjusted gross income, a limitation that means most employee physicians get no tax benefit at all.

To gain these same tax benefits, physicians who are not self-employed can easily form a small business (sole proprietorship or LLC, for example) to receive MEDICAL PRACTICE PURCHASES, SALES AND MERGERS income from their locum tenens work as well as payments received from drug companies and medical device manufacturers in exchange for research, teaching and other services rendered to healthcare organizations as contractors. For rules about deducting business expenses, see IRS Publication 535.

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All of these deductions are subject to limits, so physicians should consult their tax specialist.

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M A RC H 2017 | W W W. P H Y S I C I A N S N E W S N E T W O R K .C O M 9

Healthy FINANCIAL PLANNING

any other source can contribute to a Roth IRA. Contributions can grow tax-deferred, and the account can grow tax-free with no required minimum distributions and no taxes due on qualified distributions under the current tax laws. Over time, the tax-free compound growth can help the children of physician families get a great start on retirement with no taxes due.

The Uniform Transfer to Minors Account (known as a Uniform Gift to Minors Account in some states), UTMA accounts or UTMA/UGMA, is an investment reduce taxes on account that a physician can establish investments for as the custodian of a minor child. If physicians with the child has only unearned income children. (such as interest, dividends and capital gains) and that income is less than $1,050, those earnings can be received without the need to file an income tax return or pay federal income tax, according to IRS Publication 929.

While the tax savings might be small, physicians may find these accounts to be ideal when teaching kids how to save, particularly when the account balance does not exceed $10,000.

ADVANCED TAX STRATEGIES While these strategies can save physicians thousands in taxes, they require advanced tax planning, special documentation, complex legal documentation or the involvement of tax experts including tax attorneys or Certified Public Accountants who specialize in these areas. Seek legal and/or tax advice before proceeding.

• Tax-free rental income is permitted by U.S. Tax Code Doctors who are Section 280A(g), allowing self-employed can physicians to rent out their rent all or part of homes tax-free for up to 14 their homes to days each calendar year. For their business. example, physician families in Eugene, Ore., sometimes rent out their homes when sports events (like the Olympic Trials) come to town. Doctors who are self-employed can rent all or part of their homes to their business (board meetings, for example), giving them a business tax deduction and tax-free income. This tax-saving strategy requires both a business purpose for the rental and careful documentation.

• Conservation easements offer tax deductions to physicians who donate the right to develop their land to a special charity known as a “land trust.” While most doctors will not want to do this with their primary residence or vacation home, they can purchase shares of a partnership that holds

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property and donates those development rights to the Doctors who are not selfcharity. Section 170(a) and employed can still deduct (h) of the Internal Revenue these expenses, but they Code contains rules about are allowed to deduct only the income tax deduction, the portion that exceeds while Sections 2031(c) and 2% of their adjusted gross 2055(f) contain the estate income, a limitation that tax benefits. California, means most employee Colorado, Connecticut, physicians get no tax Delaware, South Carolina, benefit at all.

Virginia and other states offer tax benefits for physicians who donate conservation easements, and some of these tax credits may be transferable. While this strategy is complex, it has the potential to save doctors two dollars in taxes for every dollar applied to the strategy.

• Defined benefit retirement plans (also known as “pension plans” This tax strategy or cash balance plans) allow requires careful self-employed physicians and business planning doctors who are shareholders in and often involves their medical practices to deduct the services of a contributions to these plans and pension actuary. defer income tax to a later date.

In addition to contributions to 401(k) plans, younger physicians might contribute an additional $30,000 to a defined benefit plan, while doctors approaching retirement might contribute up to $180,000 per year, deferring somewhere between $12,000 and $72,000 in federal income taxes (assuming the 39.6% tax bracket). This tax strategy requires careful business planning and often involves the services of a pension actuary or “third party administrator,” ERISA attorney and a registered investment advisor.

We hope that our Guide to Tax Strategies for Doctors can help you make sense of the personal finance issues that affect doctors while helping you avoid mistakes and seize opportunities as you and your family plan for financial security that can last a lifetime.

W. Ben Utley, CFP, is president of Physician Family Financial Advisors, a fee-only firm helping doctors save taxes and time while managing student loans, financing a home, saving for college and investing for retirement.

To learn more, call (541) 463-0899 or visit www.physicianfamily.com.

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