The Self-Employment Advantage: Personalized Benefits
Dec 01, 2023
The Self-Employment Advantage: Personalized Benefits
Being a self-employed doctor offers numerous advantages, including the flexibility to design your career path and practice on your own terms. Part of this autonomy involves crafting your own benefit plans, allowing you to tailor your coverage to your unique family needs. Today I want to explore how self-employed doctors can personalize and source their benefit plans while leveraging small business tax advantages to make these benefits a smart business expense.
The following are 11 areas for you to consider as you self-source your benefits:
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Assess Your Needs
The first step in personalizing your benefit plans is to assess your needs and those of your family. Consider factors such as your current health, family size, anticipated medical expenses, and your long-term financial goals. This evaluation will help you determine which benefits are most critical to your well-being. I suggest using my free Dare to Dream Guide to help you look at your big picture and establish personal and professional goals that will help you thrive.
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Health Insurance
Health insurance is typically the cornerstone of any benefit plan. As a self-employed doctor, you have the flexibility to choose an individual health coverage plan that aligns with your needs. Pay close attention to coverage options, deductibles, copayments, and premiums. Look for plans that include access to your preferred network of healthcare providers. The following are some of my recent posts covering this subject:
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Retirement Plans
Designing a robust retirement plan is vital for long-term financial security. Consider setting up a retirement account, such as a Solo 401(k) or a SEP-IRA, which offers tax advantages while allowing you to contribute significantly to your retirement savings. You can personalize your retirement plan contributions based on your income and savings goals, and I am a big fan of layering in cash balance plans to your Solo 401(K)—but the key is that need to be a professional micro-corporation rather than a sole proprietor. Combined solo 401(K) & Cash Balance plans will allow you to place as much as 3-4x as many dollars in a tax advantaged manner as a solo 401(K) alone. WCI provides a nice list of financial advisors and retirement planners at their website here.
You can read more about retirement planning for self-employed doctors at my post here:
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Malpractice Insurance
As a doctor, acquiring malpractice insurance is an essential step in safeguarding your professional career and protecting yourself from potential legal and financial risks. Malpractice insurance provides coverage for claims that may arise from medical errors, negligence, or omissions during the course of your practice.
When selecting a malpractice insurance policy, it's important to consider factors such as coverage limits, premium costs, reputation of the insurer, and any additional benefits or services offered. Tailoring your policy to meet your specific needs ensures that you have adequate protection tailored to the unique risks faced by doctors. I highly recommend Christian Amabile with Risk Strategies as an excellent resource for managing your malpractice insurance needs. Christian works with doctors all over the country. Just tell him Tod with SimpliMD sent you when you contact him.
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Life and Disability Insurance
Protecting your income and your family's financial future is essential. Self-employed doctors should consider term life insurance policies to provide for their loved ones in the event of their passing. Additionally, disability insurance can replace lost income if you're unable to work due to an illness or injury. I have worked with my tax planning attorney to make sure my life and disability insurance plans arrive at my home in a tax advantaged manner as well. If you are interested in this, you can check out our SimpliMD legal network for a consultation on how to properly incorporate this into your micro-corporation legal documents. A great resource for trusted insurance agents who work with doctors can be found here through the White Coat Investor.
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Professional Development and Continuing Education
Personalize your benefit plan to invest in your professional development. Dedicate a portion of your income to attend conferences, workshops, and continuing education courses. Not only will this enhance your skills, but it can also be tax-deductible as a business expense. I love this element of being self-employed because I can make the choice spend as much as I want on professional development
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Many you love international and exotic CME experiences, check out my blog post Is That Deductible? "Navigating International CME" on this subject.
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Every product available on SimpliMD would qualify as a professional development business expense—which is partly why I developed this exclusive physician community—the costs are all deductible. I suggest starting with a SimpliMD membership because it will unlock $2500 in savings on other products.
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Business Expense Deductions
Keep meticulous records of your business-related expenses, as many of them can be tax-deductible. This includes expenses like office rent, medical equipment, supplies, marketing efforts, and even a home office if you have one. Consult with a tax professional to ensure you're maximizing these deductions. I rec Mike Jesowshek, CPA resource that you will likely find helpful: The Ultimate Guide to Maximizing Business Deductions and Write-Offs.
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Flexible Spending Accounts (FSAs) and Health Savings Accounts (HSAs)
Depending on your health insurance plan, consider setting up an FSA or HSA. These accounts allow you to use pre-tax dollars for qualified medical expenses, including deductibles, copayments, and prescription medications. The funds you contribute to these accounts can reduce your taxable income while helping cover healthcare costs. Check out this WCI post that explains HSA’s and FSA’s.
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Additional Benefits
Explore other benefits that align with your personal and professional goals. These might include long-term care insurance to protect your assets in retirement, dental and vision coverage, or even mental health services. Personalize your benefits to ensure they address your specific needs. As an example, I have a Keyman Insurance Policy, Tuition Reimbursement Program, and healthcare benefit plan that covers all out of pocket healthcare expenses.
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Consultation with Experts
Self-employed doctors should work with financial advisors and tax professionals who specialize in self-employment and healthcare. These experts can help you navigate the complexities of sourcing and personalizing your benefit plans while optimizing your tax strategy. I am strong proponent of having a team of professionals who can help guide you. Check out my recommended professional network to look at agencies who work with physicians and are connected to our SimpliMD community.
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Consider Group Benefits
Some self-employed doctors may have the opportunity to access group benefits through professional associations or alliances with other healthcare professionals. These group plans can provide cost-effective and tailored options for coverage. For example I have accessed some benefits through my Indiana State Medical Association.
Conclusion
Personalizing and sourcing your benefit plans as a self-employed doctor is not only possible but highly advisable. By customizing your benefits to align with your needs and financial goals, you can ensure that you have comprehensive coverage while optimizing tax advantages.
Remember to stay informed about tax laws and regulations that pertain to self-employment, and consult with experts who can help you navigate the complexities of benefit planning as a self-employed physician. Your benefits should be a reflection of your unique circumstances and aspirations, ensuring your financial well-being and peace of mind.
In the end, your personalized benefit plans will be maximized when they flow through your micro-corporation. This is one of the best ways for you to retain more of your hard earned income—by maximizing your business expenses. You can learn more about strategies for retaining more income in my free e-book here.
One of the most fundamental components of maximizing your personal benefit plan is to make sure your micro-corporation is structured properly with optimized fringe benefit plans—this requires personalized attention and work with a legal professional who understands doctors. At SimpliMD our legal network is prepared to engage with you to assist you in this work. Check us out here or engage with your legal network here for $2000 that will be well spent with an impressive ROI!
Tod
