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Monthly Archives: June 2019

What is Business Overhead Expense Disability Insurance?

The disability insurance you may have individually can take care of your basic needs, such as your student loan payment and mortgage, but what happens if you own your own practice and become disabled? Your individual policy likely won’t include funds for hiring someone to replace you. That’s where business overhead expense insurance comes in.

Business overhead expense insurance is a disability policy that can be customized to suit your needs. This policy lets you set aside an amount of money to cover a period of time, no longer than two years, intended to cover a period of time needed to either hire a new doctor for your practice or to heal and come back to work.

Some things to look for in business overhead expense insurance is the amount of coverage, whether you can pay for the salary of another doctor, and the termination period for when the policy will begin paying out.

The amount of coverage is self-explanatory: you choose an amount anywhere from $10,000 per month to $30,000 per month. Choose an amount that can cover your needs.

Hiring another doctor is a piece of the policy you need to be sure is included before you buy it. Many policies will include terms to cover costs of running the practice, like your staff, your rent and all other basic expenses but won’t cover costs of hiring new staff. Be careful that the contract states you can use the funds to pay the salary of another doctor.

The termination period is important because if you choose a period that’s too long, like 60 or 90 days, you may run out of income before that date hits, leaving you in a bad situation. Many doctors who own a practice will have accounts receivable coming in for a period of time from past cases, and you need to ensure your business overhead expense insurance will overlap with that money, rather than leaving yourself with a gap.

With these types of policies, you’ll want to make sure there isn’t a significant drop on money coming into the practice, which is why this type of coverage is so important to those who run their own practice.

Do you need to re-evaluate your disability policy to include business overhead expense insurance?

Advisory services offered through Larson Financial Group, LLC, a Registered Investment Advisor.
Securities offered through Larson Financial Securities, LLC, member FINRA/SIPC.
Larson Financial Group, LLC, Larson Financial Securities, LLC and their representatives do not provide legal or tax advice or services.  Please consult the appropriate professional regarding your legal or tax planning needs.

Three Reasons to Consider an HSA

Health Savings Accounts (HSAs) have become increasingly popular in workplace benefit plans in recent years. At the core, an HSA allows you to put money away in an account tax free to use for medical expenses, included prescriptions, office visits and procedures. But an HSA is a lot more than just a medical expense account.

In 2019, an individual with a qualified high deductible health plan can deposit $3,500 into their HSA; an individual with family coverage can deposit up to $7,000. In 2020, however, these amounts will increase slightly to $3,550 individual/$7,100 family, according to the IRS. With the new caps, there’s no better time to contribute to your HSA. Here’s what we mean:

  • Payroll deductions mean contributions are usually pre-tax. If the funds are pre-tax, they’re not included in your gross income and are exempt from federal income taxes; even still, the contributions in some states aren’t subject to state taxes either. If you make contributions with after-tax dollars, you can deduct them on your income taxes.
  • Withdrawals for qualified expenses are tax-free. When you take contributions out for qualified medical expenses, that money isn’t subject to federal (or state, in some cases) taxes. Any earnings or interest in the account also grows tax-free.
  • You get to keep the money year after year, and even if you switch employers or plans. The funds in your HSA are yours to keep, whether you quit your job, move to a different healthcare benefit plan or if you don’t use it that year.

There are a few drawbacks to HSAs, however. Most HSAs are part of a high-deductible health plan, which can result in higher out-of-pocket costs to the patient for care. You’re also subject to taxes and penalties if you use the funds for nonmedical expenses before age 65.

An HSA can be an attractive option for many people. It’s best to talk through the advantages and disadvantages with your financial advisor to see if an HSA is the right call for your situation.

Is an HSA the right solution for you? We can help you decide.

Advisory services offered through Larson Financial Group, LLC, a Registered Investment Advisor.
Securities offered through Larson Financial Securities, LLC, member FINRA/SIPC.
Larson Financial Group, LLC, Larson Financial Securities, LLC and their representatives do not provide legal or tax advice or services.  Please consult the appropriate professional regarding your legal or tax planning needs.