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Author Archives: LarsonFinancial

Solidify Your Financial Foundation with Term-Life Insurance

Recent data released by LIMRA, an international association of life insurance financial planning companies, found that 40% of Americans have no life insurance and half of those who do are underinsured1. This is especially odd considering that life insurance rates are now at all-time lows. In just the past decade, the cost of basic term life insurance has fallen by about 50%.2

Asset Protection for Physicians

Life insurance lessens the financial burdens for surviving family members in the aftermath of an unexpected death by helping cover the cost of final expenses, outstanding debts, planned educational expenses and lost income. Simply put, if you have anyone dependent on you financially, life insurance is basically a necessity. However, it’s easy to feel overwhelmed by the complexity and sheer amount of options available when purchasing life insurance. For doctors currently in residency or fellowship, the time to act is now.

The Right Time to Buy

Many young doctors and dentists stand to earn more than $10-$25 million in income over their working years. Imagine suddenly losing that income stream when a worst case scenario like cancer or a car accident takes away that potential for your family. You can protect against this by acquiring as much inexpensive, convertible term-life insurance as possible.

Term-life insurance is the simplest, least expensive form of life insurance. Term insurance covers you for a set period of time, such as 10 or 20 years during which the premiums remain flat. As your grow older, the cost will increase if you decide to renew the policy for another term. A healthy, non-smoking, 30-something male could pay as little as $500 a year for a 20-year term policy with a million-dollar death benefit.

It can be tempting to eschew the additional cost of life insurance while in training because of your high level of debt and modest income. Besides, life expectancies are longer than they’ve ever been. However, this can be a costly mistake. It’s very likely that you’ll never be younger and healthier than you are today, and one small change in your health can cause a drastic increase to your cost of acquiring new coverage.

Finding the Ideal Fit

Some financial planners say you need insurance to replace seven to 10 years of your salary. If you have young children or significant debt, you should consider bumping up your coverage to replace as much as 15 years of your annual salary. Remember, the sole purpose of life insurance is to replace your income in case you die, so that your dependents can maintain their current lifestyle. So if you make $50,000 during residency, you should shoot for a policy of $500,000 to $750,000.

There are several online tools available that can help give you an idea of how much money you should pay for the policy you need. However, there’s no substitute for the advice of a competent, licensed insurance agent with knowledge of your personal circumstances.

The premiums at a given insurance company are identical whether you apply online, via a toll-free number or with a person. A knowledgeable insurance broker may help you save money by choosing the best carrier for your particular situation. Most companies have a niche where they are most competitive, so you’ll want to obtain quotes from multiple companies to find the best possible fit for your unique circumstances. If you encounter any high-pressure sales tactics, just walk away.

Have Questions?

References

  1. http://www.usatoday.com/story/money/personalfinance/2016/09/15/life-insurance-term-whole-policy/89932376/
  2. https://www.lifehappens.org/press-releases/consumers-overestimate-cost-of-life-insurance-by-nearly-three-times/

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. Insurance services offered through Larson Financial Group, LLC, an insurance agency.

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The Three Documents That No Estate Plan Should Be Without

Many physicians are taking inventory of their life and finances and setting goals with the intention of making this year better than the last. One particular area that many should consider reflecting upon is estate planning. This is the process of deciding for yourself, ahead of time, what you want to happen in the event of an untimely death, disability or health emergency.

Regardless of financial planning status, completing an estate plan should be near the top of the list. In the absence of clearly-stated wishes, assets will be dispersed according to the laws of the state of residence — these may not always line up with one’s most earnest intentions. It is important to create a meaningful legacy rather than inadvertently naming the IRS or creditors as your primary beneficiary because of a lack of planning.

While the nuances of estate planning are beyond the scope of a single article, an estate plan should contain, at minimum, these three integral documents: a will, power of attorney and healthcare directives.

Wills

A will can outlines where property is to go and, most importantly, nominate guardians of minor children in the event of death. However, simple wills cannot outline how, when or for what purposes money should be given to beneficiaries — the distributions will be outright. A will must go through the probate process before distributions can be made.

Physician Financial Advisor

Powers of Attorney

A durable power of attorney allows a spouse or trusted individual to sign your name for you in the event that you are not able to under your own power. This empowers them to handle finances such as taxes, bills, bank accounts and real estate sales while the grantor of the power is incapacitated. In many states, powers of attorney can be “springing” i.e. take effect only in the event of an incapacitation or they can be effective immediately. Some institutions may ask clients to sign internal power of attorney forms for fear of liability

Advanced Directives

Advanced directive and Healthcare Powers of Attorney documents outline how healthcare decisions should be addressed in the event of incapacity. A part of the health care directives is the HIPPA authorization, allowing the release of protected health information to those serving as healthcare powers of attorney. Advanced directives or living wills also provide direction regarding end-of-life decisions so loved ones serving as healthcare power of attorney are aware of wishes and are not left to make this difficult choice alone.

Conclusion

It is highly recommended that you consult with an experienced estate planning attorney with knowledge of your family’s individual circumstances when establishing an estate plan. Make an effort to be prepared and decisive when meeting with an estate planning attorney. Before your first meeting, ask your attorney what documents and information you need to bring to your meeting. The less time your attorney needs to spend gathering information, the less money you’ll ultimately end up spending.

This article has been provided for informational purposes only and is not intended to be, nor should it be considered legal advice. Consult an appropriate legal professional regarding current laws and application to your particular situation. You should not make any decisions about any legal matter without first consulting with an attorney. This article is not intended to create, and receipt does not constitute an attorney-client relationship.

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The Lessons Real World Doctors Can Take from Marvel’s Doctor Strange

Over the weekend, my husband and I saw Marvel’s latest origin story film, Doctor Strange. Though I went to the movie to be entertained, I couldn’t help but be struck by the unfortunate story of the distinguished neurosurgeon, Dr. Stephen Strange, and the tragic circumstances that led him to become Marvel’s newest superhero.

The Story

Physician Disability Insurance

Dr. Steven Strange, portrayed by Benedict Cumberbatch, is a renowned neurosurgeon whose entire life is devoted to his work. The camera pans over a case full of countless distinctions bestowed upon Dr. Strange for his research and his clinical work. He lives in a penthouse condo with a stunning city view, has a collection of probably twenty luxury watches and drives a Lamborghini. A colleague comments that he blows through money “as fast as he can make it.”

On his way to give a speech at a society dinner, Dr. Strange is glancing at his tablet while speeding down a winding and narrow mountain road. In an instant, he hits another car head on and is flipped over the side of the mountain. He is trapped inside a twisted ball of metal, bloody and unconscious, when the first responders reach him.

Dr. Strange wakes up in his hospital with his arms suspended by slings. His hands were completely crushed in the accident and had to be restructured with metal rods and pins. Once he heals, his hands shake constantly. He goes through countless experimental surgeries in a desperate attempt to steady his hands, but to no avail. His medical career is over. This is when he crosses paths with “the ancient one” and begins his journey to become an all-powerful sorcerer in the Marvel Universe.

The Lessons

Obviously serious injury is something that can affect anyone, in any career, but as the daughter of a cardiologist and as a financial advisor who has worked with doctors over the last 6 years, I couldn’t help but wonder what would have become of Dr. Strange in the real world. As soon as he “lost” his hands, he had nothing. He had taken the money and the future earning potential for granted.

Doctors should realize disability is a particular risk for them – the skill set and ability that affords them their lifestyle can be taken in an instant. How would they be positioned to recover financially? Thankfully, we can learn from this fictional doctor’s mistakes and take some lessons with us for the real world:

    1. Consider purchasing good disability insurance. Specialized physicians should seek coverage that will protect their ability to work in their specialized area of medicine, not just their ability to work any job. Unfortunately, I have also encountered many physicians who believe they have this type of coverage, only to read their contracts and find out they do not. It is worth a second opinion to be sure.
    1. Save money early. I have talked to so many physicians that have good intentions to save, but they want to enjoy their hard earned money early on and they push off investing to later in their careers. The earlier you start to save, the easier it will be, and the more flexibility you will give yourself to change paths if life doesn’t play out the way you thought it would. Consider meeting with a financial advisor early in your career to establish a consistent plan for paying yourself first and building your wealth.
    1. Plan for the unknown. Many physicians have not put in place powers of attorney, healthcare directives, living wills or any other documents to protect their wishes in the case of an unfortunate event. A good estate planning attorney will not only help you set up a plan in the case of your death, but also in the case of your severe disability or incapacitation.

Have Questions?

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 tax advice or services. Please consult the appropriate professional regarding your tax planning needs.

How EHR Implementation Can Improve Your Practice

Of the many recent changes in the healthcare, one of the most significant has been the adoption of electronic health records. An electronic health record (EHR) is a digital version of a patient’s paper chart that includes a comprehensive patient history from all providers involved in the patient’s care. As a result, EHRs have vastly improved care coordination and helped with reducing medical errors in the healthcare community at large.1

Healthcare Practice Management

Convenience for the Doctor and Patient

Health information technology makes interactions with healthcare systems more convenient, reliable and less time consuming. EHRs allow physicians to share and receive patient data rapidly. All healthcare providers are able to view an up-to-date version of a patient’s medication list, as well as send prescriptions directly to any pharmacy’s system. EHR’s also provide a secure base for physicians to be able to access patient information. These certified systems allow only the proper professionals to have access to this information.2

Both the patient and the doctor’s time is extremely valuable, and EHRs can help improve overall patient satisfaction by providing reminders for the doctor and patient to follow up from an appointment. With EHRs, physicians don’t have to repetitively write down information from all the years of seeing the same patient. Any previous tests a patient has had done is documented on their electronic health record, so doctors and patients save time and money on repeating examinations.3

Converting to Electronic Health Record Systems

Converting from paper charts to EHRs requires careful coordination. Selection and implementation of training, along with the maintenance that comes with it, are just a few of the challenging decisions a healthcare organization will face in the midst of the transition from paper to electronic.

Historical patient information has to be converted safely and correctly into an EHR system. It is best to limit the conversion to only current patients. Deceased patient records must be stored for the appropriate retention period, but should not be scanned into the new system. During this transition, it is imperative your healthcare organization arranges for the proper disposal of paper records after the conversion is complete.4

Converting the data will vary depending on the kind of medical practice, but finding the method that works best will help make this process go smoothly. Whichever method the practice decides must be cost effective while keeping the patient’s personal information secure. This will all depend on the resources available to the practice, timeframe allowed and the amount of information that needs to be transferred.5

Besides cost, there’s a handful of other considerations you should account for in order to ensure a successful conversion:

  • Hardware: database servers, desktop computers, tablets, laptops, printers and scanners
  • EHR software: application, interface modules and upgrades
  • Implementation assistance: IT contractor, attorney, electrician and consult support
  • Training: medical organizations need to train physicians, nurses and office staff before and during implementation
  • Ongoing network fees and maintenance: hardware, software maintenance agreements, continuous staff education and IT support fees

Electronic health record systems are the first step to transformed healthcare. They help provide overall better healthcare by improving efficiencies and lowering costs while promoting better clinical decision making. In addition to financial incentives, it’s reasonable to anticipate that practice operations will be smoother and more organized as a direct result of a successful implementation.

Have Questions?

References:

  1. Dr. Robert E. Hoyt, “Need for Electronic Health Records (EHR)” (July 2014). http://www.practicefusion.com/health-informatics-practical-guide/
  2. U.S. Department of Health and Human Services, “Advantages of Electronic Health Records” (September 2014). https://www.healthit.gov/providers-professionals/faqs/what-are-advantages-electronic-health-records
  3. Bell, B, Thornton, K, “The Need for Better Improved Care Coordination” (2011). https://www.healthit.gov/providers-professionals/improved-care-coordination
  4. AHIMA. “Migrating from Paper to EHRs in Physician Practices.” Journal of AHIMA 81, no.11 (November–December 2010): 60-64. http://library.ahima.org/doc?oid=103171#.V_VykegrKM_
  5. U.S. Department of Health and Human Services, “Health IT Makes Health Care Convenient” (February 2013). https://www.healthit.gov/patients-families/health-it-makes-health-care-convenient

Advisory Services offered through Larson Financial Group, LLC, a Registered Investment Advisor. Securities offered through Larson Financial Securities, LLC, Member FINRA/SIPC.

Is It More Sensible to Buy or Lease Medical Office Space?

Private practice physicians who are looking to open their own practice face the dilemma of whether to own or lease a medical office space. The decision to lease or buy will depend on your business objectives as a physician, as it will impact your practice finances and possibly affect your relationships with associates.

Buying a building can help physicians build their wealth, but the purchase of a medical space can be risky, and sometimes it’s just not a large enough advantage over renting.1 Three factors are of particular importance when determining whether to lease or buy:

Expenses

Monetary concerns are usually of primary importance when a physician decides to open their own practice. The amount of business expenses you are comfortable incurring will be a primary factor when considering whether to buy or lease.

Forrest Friedow

At an initial comparison, the math is simple – leasing is cheaper in the beginning. To lease, you do not need as much money upfront, as the first payment is typically the building’s first monthly rent check, a security deposit and any extra tenant-improvement dollars over your allowance. However, your monthly rent is a variable cost that could change when the lease expires depending on the climate of the market.

On the other hand, purchasing a practice upfront is a much bigger initial investment. A building purchase could include loan fees, building inspections, an appraisal and several other soft costs. On the upside, purchasing a building means your monthly payments will be fixed, giving you a better understanding of what you’ll pay year after year.2

Tax Advantages

As the owner of a building, you may have the benefit to deduct the depreciative value of real estate, as well as the purchase loan, property taxes and other qualifying expenses. For a lease, most rent and related occupancy costs are deductible currently against taxable income instead of deferred to future periods.3 By and large, the tax advantages of the transaction tend to be a secondary consideration and not a driving factor behind the decision.

Expansion & Location

Every physician wants to be successful in their private practice. What if your business is flourishing and your building is too small to keep up? As an owner, you would have the advantage of adding to your existing space to meet the growing needs of your practice. Unfortunately, if you’re leasing a building, you will likely have to get permission from your landlord for any substantial changes made to the property, depending on the cost of the additional space – if it’s even available at all.

Before deciding to lease or buy, you want to make sure you’re keeping your long-term plans in mind. If you are opening a practice in an area that is not your desired longstanding location, you should consider seeking a rental property and avoid purchasing a building.

The Big Picture

The verdict to lease or buy basically comes down to a financial decision, so it’s important to understand all of the potential costs of both scenarios. Being the owner of a building will require more expenses to maintain your practice, but it will allow you to build equity and spread out the costs of building improvements and operating expenses over a longer period of time. However, if you expect to outgrow your space within the next five to 10 years, leasing a building would probably be the more suitable option. This will allow you to spend more time focusing on building your patient base without having to worry about unexpected building costs and repairs.4

Ownership of a medical space can be a great investment, but it may not be an ideal arrangement for every physician. Do your research and don’t hesitate to get help from commercial brokers, building inspectors, accountants, financial lenders, contractors, etc. for further information. Establish and review your objectives, and run your numbers to guide you toward the most informed final decision.

Have Questions?

References:

  1. Janet Kidd Stewart, “Should You Own Your Building?” (July 2009). http://www.physicianspractice.com/articles/should-you-own-your-building
  2. Leo Griffin, “Buy or Rent Medical Office Space – Consider These Points” (November 2014). https://www.linkedin.com/pulse/20141104123549-36311453-buy-or-rent-medical-office-space-consider-these-points
  3. James B. Calnan, CPA, “Decisions, Decisions Medical Office Space: Buy, Lease or Walkaway” (May 2008). http://healthcarenews.com/decisions-decisions-medical-office-space-buy-lease-or-walk-away/
  4. Marley McMillen, MBA and Jim Arend, MBA, “Before You Sign That Office Lease” (November-December 2010). http://www.aafp.org/fpm/2010/1100/p17.html

The preceding message is an advertisement of Larson Financial Group, LLC.

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 tax advice or services. Please consult the appropriate professional regarding your tax planning needs.