For those docs who are versed in malpractice tail coverage, what do you think about a hospital employed contract with claims-made malpractice insurance, where the hospital will pay the tail but the tail payment is considered income to the physician? Is that something common in contracts? I have heard of occurrence and claims made in private practices where the physician either has no tail due to occurrence or claims made, the physician pays 2.5-3x/ yearly premium for the tail. But I'm not familiar with the hospital employed contract where let's say $40-60K is paid for the claims made tail for the physician who leaves a hospital employed practice but this $40-60K is considered taxable income to the physician. Is this a bad deal for the physician?
Advice on malpractice tail
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Yeah. That’s pretty bad to have to pay taxes on that 40k-60k tail paid for by employer.
I guess that’s better than paying ur own tail out of pocket
It’s a bad deal in this market. Something shady going on with hospital accounting department if they are taxing you on that “benefit”. I’d ask them
But to answer your question. No I’ve never heard of any such taxes owed on tail being paid.
I’ve had my tail paid for but that was part of the amc taking over the private anesthesia group and it dissolving. No taxes owed.
I guess that’s better than paying ur own tail out of pocket
It’s a bad deal in this market. Something shady going on with hospital accounting department if they are taxing you on that “benefit”. I’d ask them
But to answer your question. No I’ve never heard of any such taxes owed on tail being paid.
I’ve had my tail paid for but that was part of the amc taking over the private anesthesia group and it dissolving. No taxes owed.
I found it odd. Hospital employees either don't have to pay a tail after X amount of years service or the hospital is self-insured and it's occurrence mp is what I've heard of. But if as a hospital employee W2, you are given $40-60K for tail coverage but that's considered "taxable income"? How is that taxable income when the physician had to use it to pay the mp tail? I mean, it's not like the physician used the $40-60K to buy a new car. Plus it's W2 "taxable income" which doesn't get as much tax write-off as 1099. Didn't sound kosher to me
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Sounds like BS to me. Your basic malpractice premiums that the hospital already pays are not counted as taxable income I presume? Don't see why they couldn't just pay the tail directly to the insurance company and leave you out of it. If they insist on it being taxable income, maybe you insist they pay you 30% more than the tail insurance to cover all the taxes.
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Is it a for-profit hospital? Just wild guess but if it was considered an operational expense it's possible the hospital would amortize the tail coverage over several years instead of expensing it all immediately.
But if they pay it as a benefit, they can expense it all this year and reduce their taxes this year.
But if they pay it as a benefit, they can expense it all this year and reduce their taxes this year.
No, it's a non-for-profit hospital system. Maybe that's what their accounting team is doing; I'm not sure. I've never heard of taxing a benefit of malpractice tail payment (giving the doctor an X amount for mp and then having that count as taxable income for the doctor). I have had contracts myself where the hospital employer will give you a "sign-on" bonus which is given to you as an initial payment and that is taxed at ordinary income but the sign-on bonus, you can do what you want with that money. If the malpractice tail payment, you can only pay the tail, and also get taxed 30-40% of that (fed & state rates) then that doesn't benefit you much. I don't know why they just don't just pay the mp tail coverage and not include that as income for the physician, like most contracts I've seen. Makes me have concerns about this place
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My mind kept reading this as the drug. Anesthesia brain…
Anyway yes that sounds very weird. The hospital paying for a tail is a business expense related to their employment of you in that contex. But I don’t know the complete answer to this - all I know is I’ve never been charged or owed for a tail, nor did anyone suggest I pay tax on it.
Luckily they laid off. A giant chunk of the IRS? So chaos will ensue anyway.
I saw on Whitecoat Investor forum a post a few years ago where a surgeon had a situation similar to this. An accountant on WCI chimed in and wrote that the hospital pays the surgeon's tail as income and the hospital gets to deduct that tail amount from their balance sheet and the surgeon doesn't have to pay the whole tail out of pocket but does pay the taxes on the income benefit of the tail, so they both (the surgeon and the hospital) don't have to pay the full cost of the tail on their own. Which I guess benefits the hospital some since they don't have to pay the taxes on the tail. But as most commenters on this idea of having the cost of the tail taxed as income to the physician is not something that seems common for hospital employed
I didn't sign the contract. This job is one of the full time jobs I am considering. But after discovering that the malpractice tail is paid as a benefit in a lump sum but the physician has to pay the taxes on the mp tail benefit, that raises some concerns for me. Seems like not a great deal for the employed physician
Ask for an additional 15k-20k sign on….than it becomes a zero sum game FOR YOU
That zeroes out ur tax obligations
All about you. Not the employer. Remember that.
No.
Say that you can do 1099 (make them convert your w2 into 1099 and include all benefits plus employer portion of fica, all match, etc)
For instance I made my employer do this and my 475k w2 income was calculated to be 522k 1099.
I then purchased malpractice from that so I can obviously write off.
You’re getting played here.
Say that you can do 1099 (make them convert your w2 into 1099 and include all benefits plus employer portion of fica, all match, etc)
For instance I made my employer do this and my 475k w2 income was calculated to be 522k 1099.
I then purchased malpractice from that so I can obviously write off.
You’re getting played here.
And getting your own malpractice and working as 1099 opens up a whole world of opportunities for you for working at other places.
You can get credentialing and medical staff privs independently if you have your own malpractice and work at open anesthesia staff places. Once youre credentialed, you can either bill yourself or directly negotiate with the facility or work through (subcontract) with another group for coverage.
Make sure that there’s no non compete though
You can get credentialing and medical staff privs independently if you have your own malpractice and work at open anesthesia staff places. Once youre credentialed, you can either bill yourself or directly negotiate with the facility or work through (subcontract) with another group for coverage.
Make sure that there’s no non compete though
