Dentists Should be Aware of a Potential New Healthcare Fee Due July 31, 2013

Our friends at Group Benefit Services (GBS) have alerted us to a new fee generated through the new healthcare act. For more information, contact Kelly Ann Dixon-Nachodsky and/or your CPA.

As part of the Healthcare Affordability Act, sponsors of insurance plans are required to pay a fee each year for the next couple of years for each covered participant.  This is known as the “Patient-Centered Outcomes Research Fee” aka PCORI fee. For employers that offer insurance through a traditional insurance company, the insurance company pays the fee so the employer does not need to do anything.

For employers that offer an HRA (Health Reimbursement Account) plan as a compliment to their high deductible traditional insurance plan , the employer must also pay the fee because the HRA is also treated as an insurance plan.

The Internal Revenue Service (IRS) Releases Revised IRS Form 720 for Reporting PCORI Information

The IRS has released the revised Form 720 to the public and the form is available on the IRS website.

Form 720 now includes a place for the employer to report the number of covered lives. The new section of the form is on the second page and is IRS No. 133 at the very beginning of Part II. The section is labeled Patient-Centered Outcomes Research Fee.

Please click on the links below to access information on the IRS website.

Form 720 as revised April 2013.

Instructions manual for completing Form 720.

For your benefit we are attaching a previous Compliance Alerts and a Chart that were distributed back in May regarding the detail of the PCORI fees.

What Are PCORI (Patient Centered Outcomes Research Institute) Fees and Who Has to Pay?

On December 6, 2012 the IRS issued final regulations regarding the ‘temporary’ annual payment of the PCORI Fees by fully-insured carriers and self-insured plan sponsors of ‘applicable’ health plans, including those covering retirees and COBRA individuals. (Internal Revenue Code Sections 4375 and 4376) Beginning July 2013, the fully insured carriers and most plan sponsors of self-insured health plans will be responsible for paying the annual fees directly to the IRS and are required to report the same on Form 720 as an excise tax.

A few important notes regarding this new Fee:

• ‘Temporary’ as quoted above means this excise tax is to be paid and is applicable for plan years ending on or after October 1, 2012 but stops for plan years ending on or after October 1, 2019.
• ‘Applicable’ health plans as quoted above are defined as a self-insured health plan that provides for accident and health coverage but there are exceptions for excepted benefits.
  • Excepted benefits are defined as separate dental and vision plans, health flexible spending arrangements, hospital indemnity plans, disability income insurance for example.
• HRAs that are integrated with another self-insured health plan are considered part of a single plan and duplication of fees are avoided. However, if the employer sponsors an HRA that is integrated with a fully-insured medical plan, the employer must submit payment for members in the HRA, even though the insurer (carrier) will also be submitting fees for the same individuals enrolled in the associated insured plan.
• Health FSAs are not subject to the PCORI Fee if it meets the requirements of an ‘excepted benefit’ under Code §9832(c). A health FSA is an excepted benefit if:

1. The maximum benefit that is available to a participant in any given year is not more than twice his or her contribution (or, if greater, his or her contribution plus $500) and
2. Major medical coverage is made available that same year.

What are the Fees?

• For Plan Years ending on or after October 1, 2012 and before October 1, 2013 the PCORI fee is $1.00 per covered life.
• For Plan Years ending on or after October 1, 2013 and before October 1, 2014 the PCORI fee is $2.00 per covered life.
• For Plan Years ending on or after October 1, 2014 and before October 1, 2019 the PCORI fee is indexed each Federal fiscal year per covered life (based on the increases of projected per capita amount of National Health Expenditures).
• For Plan Years ending on or after October 1, 2019, there is no fee.

How are Covered Lives Calculated? There are three (j) different ways the covered lives can be counted for the reporting period in order to determine the Fee amount to be paid.

• Actual Count Method – the plan sponsor must add the total number of lives covered (this includes all covered lives, not just enrolled employees) for each day of the plan year and divide that total by the number of days in the plan year.
• Snapshot Method – the plan sponsor must add the total number of lives covered on a specified date (see Snapshot Factor Method and Snapshot Count Method below) during the first, second or third month of each quarter of the plan year and divide the total by the number of dates on which the count was made. Each date used for the second, third or fourth quarter must be within three days of the date used in the first quarter.
  • Snapshot Factor Method – under this method the number of lives covered on a date is equal to the total of:
    • The number of participants with self-only coverage on that date plus
    • The number of participants with coverage other than self-only coverage on that date.
    • The total of the two above is then multiplied by 2.35
  • Snapshot Count Method – under this method the number of lives covered on a date equals the actual number of lives covered on the designated date.
• Form 5500 Method – this method is based on the number of participants reported on the Form 5500. This method can be used only if the Form 5500 is filed no later than the due date of the PCORI Fee (July 31). If an extension is used resulting in Form 5500 being filed later than July 31, this method cannot be used to calculate the average number of covered lives.
  • If the plan sponsor is offering self-only coverage they must add the total participants covered at the beginning and the end of the plan year, as reported on Form 5500, and divide by two.
  • If the plan sponsor is offering more than self-only coverage they must add the total participants covered at the beginning and the end of the plan year as reported on Form 5500 (and do not divide by two).

Transition Rule for the First Year When Calculating the Number of Covered Lives

There is a special transition rule for the first year the fee is required. For a plan year beginning before July 11, 2012 and ending after October 1, 2012, a plan sponsor may determine the average number of lives covered using any reasonable method.

In Summary:

• Fees are paid annually
• Fees are reported and paid by July 31 of the calendar year immediately following the last day of the plan year
• Total due each year is calculated by multiplying the average number of covered lives by the dollar amount for the Federal fiscal year in effect on the last day of the plan year
• Fees are paid using IRS Form 720 – Quarterly Federal Excise Return > Three allowed methods for determining the number of covered lives > The PCORI Fee cannot be paid from Plan Assets
• The PCORI Fee cannot be submitted by a third party on a plan sponsor’s behalf > The PCORI Fee is not tax deductible

PCORI Fees and Reporting Are Due Based on Plan Year

Plan years that end between October 1, 2012 and December 31, 2012	Initial reporting and payment of the PCORI fees must be made by July 31, 2013
Plan years that end January 1, 2013 through December 31, 2013	Report and pay PCORI fees by July 31, 2014

Important Notes Regarding the Fees

1. Final regulations confirm that third parties cannot report or remit the fees on behalf of the plan sponsors.
2. Fully Insured carriers are responsible for paying the PCORI fees and reporting for fully insured health plans.
3. Self Insured plan sponsors are responsible for paying the PCORI fees and reporting on IRS Form 720.
4. Plan Sponsors offering an HRA benefit with their Fully Insured health plan are responsible for paying the PCORI fees and reporting on IRS Form 720 for members enrolled (and their dependents) in the HRA.

Examples of deadlines for paying fees and reporting

Plan year started November 1, 2011 and ends October 31, 2012	Reporting and payment due July 31, 2013
Plan year is a Calendar Year starting January 1, 2013 and ends December 31, 2013	Reporting and payment due July 31, 2014
Plan year started February 1, 2012 and ends January 31, 2013	Reporting and payment due July 31, 2014

Applicable Dollar Amounts for Plan Years Ending

Plan year ending on or after October 1, 2012 and before October 1, 2013	Fee is $1.00 per each covered member (employee and dependents)
Plan year ending on or after October 1, 2013 and before October 1, 2014	Fee is $2.00 per each covered member (employee and dependents)
Plan year ending on or after October 1, 2014 and before October 1, 2019	Fee will be an indexed amount determined each Federal fiscal year
Plan year ending on or after October 1, 2019	No fee

Is Employment Insurance Worthwhile for a Dentist?

Here is a another guest blog from our friend Tim Girard of RK Tongue.

Over the last several months, your hygienist Jennifer, has been difficult employee. She has missed several days of work, has taken unscheduled vacations on short notice, and is late for work more often than not. In addition, her performance has steadily deteriorated and longtime patients have complained about her attitude.

It was also that time a year when you take your staff to a baseball game to foster camaraderie among your staff, and as a team building exercise. When you asked Jennifer to introduce you to her boyfriend, she became indignant, retorting “He’s not my boyfriend. He’s my roommate”. You did nothing more than raise your eyebrows at that comment.

After repeated counseling sessions, you concluded what was inevitable: Jennifer’s employment had to be terminated. Accordingly, her employment was terminated in a businesslike but sympathetic manner.

Several weeks later, you receive a letter from an attorney representing Jennifer. The attorney alleges that you wrongfully terminated Jennifer, alleges “sexual harassment” for referring to her roommate as her “boyfriend”, and claims that you retaliated against her by firing her after she corrected you for referring to her roommate as her “boyfriend”. The damage demand is $200,000.

You retain counsel to respond to these outrageous allegations. The lawyers confer without resolution.

Thirty days later, you receive an EEOC (Equal Employment Opportunity Commission) complaint, and a follow up by your State’s Human Relations Commission.

You refer these matters to your attorney, who investigates by interviewing you and your employees, and takes their affidavits. The attorney then crafts a 25 page “position statement” (60 pages with affidavits and exhibits), which is timely submitted to the EEOC as required by law.

You then receive the first (and hopefully last) bill from your lawyer related to this matter. Legal fees thus far are $32,000!

The foregoing story may seem far- fetched. It is not. It’s crafted from an amalgam of several actual cases. It demonstrates how even the most careful, caring and conservative practice owner can be ensnared in a trap that costs either five figure legal fees or six figure judgments.

There is a solution, or at least a work around.

Many Business Owners Insurance policies, commonly referred to as a BOP, offer some basic Employment Practices Liability Insurance to insured practice owners, with the ability to purchase additional coverage to a maximum limit set by the insurance company. Additionally, stand-alone policies for Employers Practice Liability Insurance are generally available in the marketplace.

Generally, Employment Practices Liability coverage pays legal fees and any judgments associated with discrimination, wrongful termination, sexual harassment, retaliation and other types of employment practice liability claims, subject to a deductible and a maximum limit of liability. The cost of the coverage will vary based on the limits, the deductible, and the broadness of the coverage.

Given the fact that, under the law, discrimination does not have to be intentional to be unlawful, and given the fact that a panoply of laws affect Employment Practices Liability loss exposures (Title VII of the Civil Rights Act of 1964, Civil Rights Act of 1991, Age Discrimination in Employment Act, Americans with Disabilities Act, Family Medical Leave Act, Fair labor Standards Act, to name only a few), it makes great sense to consider transferring most, if not all, this risk to an insurance company in return for fairly nominal premium dollars.

It’s worth thinking about!

Timothy A. Girard is Vice President of R.K. Tongue Co., Inc., the Maryland State Dental Association and District of Columbia Dental Society’s endorsed insurance broker. Tim can be reached at 410.752.4008 ext. 116 or via email at tim_girard@rktongue.com.

For more information, please contact info@dentalcpas.com

Follow us on Twitter, Facebook and Pinterest – sign up for our newsletter

How to Find an Associate Dentist Job

Here is another guest post from Morgan Pace of ETS Dental.

Whether you are a dental student, an exiting resident, or just returning to the job market, the task of finding an associate dentist position can be daunting. This is an attempt to provide a centralized resource to help you land a job. For more updates, tips, and helpful information, follow up on our Facebook fan page, Twitter, or on this blog.

Step 1. Make a Plan.

As outlined in the following blog link, the key is to be flexible. It is best to determine what your options are before narrowing your focus on the best fit. Job Hunt Tips.

Obviously location is important, but don't waste the crucial first years of your career in order to live in the heart of the city. Here is an overview of area limitations on a job market: Where are the Jobs?, and a real-life example is outlined here: The Grass is Always Greener. If you absolutely have to live and work in a saturated market, here are some strategies to help you land a job: Saturated or Difficult Markets.

Step 2. Prepare Your CV and Cover Letter.

Generally speaking, CV/resumes are overrated, as are cover letters. Still, they are a necessary evil when breaking into a job market. It is important to stand out from the crowd, but make sure that it is for the right reasons.
Here is an example of a well-written cover letter: Cover Letter Sample.
And here are instructions on writing your CV/resume: Resume for Dentists.

Step 3. Applying.

Here are several online sources for dentist jobs:

• ETS Dental Job Listings
• Indeed.com Job Listing Aggregator
• Careerbuilder
• DentalTown Classifieds

Step 4. Interviews.

The Telephone Interview:

• Return your phone messages and emails promptly. It speaks to your motivation, interest, and courtesy. Don't let returning phone calls or emails become an issue or an obstacle to getting an interview. Even if you don't think you will be interested in an opportunity, return the call. On more than one occasion we have seen a candidate get a call from Practice B when he was already talking with Practice A. The candidate puts off returning the call to Practice B. Two or three weeks later, the opportunity with Practice A does not work out and now Practice B will not consider the candidate because no calls have been returned.
• Your main goal in a telephone interview is to get a face-to-face interview.
• Ask for the interview. Take the initiative to set a time. Say something like, "From what you have told me, I would be very interested in meeting with you and coming to see your practice. When would be good for you?"
• Smile- even on the phone. You really can tell when someone is smiling.

Here is some additional reading on phone interviews: Tips for Phone Interviews.

The Face-to-Face Interview:

Don't go in blindly. Be sure to prepare in advance. Look over this article the night before:Preparing for the Interview.

• Treat the staff with courtesy and respect. A practice owner often feels like his or her staff is like a family and will listen to their opinions, especially if they are negative. On more than one occasion, we have seen excellent candidates not offered an opportunity because they treated a staff member poorly.
• Smile and show some enthusiasm. More candidates are hired because of their personalities and positive attitudes than because specific clinical skills. One high-end cosmetic practice told us they had interviewed six different dentists. They hired the candidate who smiled and appeared to truly enjoy being a dentist, passing on more experienced candidates with less personality and enthusiasm.
• Show sincere interest in the hiring dentist's situation. Understand that the dentist needs to solve a problem. Maybe the practice just lost a key associate or partner. Maybe the practice is growing and cannot keep up with patient demand. Maybe the dentist needs someone to take over the practice when he or she retires. You need to get a clear understanding of the dentist's true motivation for adding an associate. Once you truly understand the needs of the hiring dentist, you can mutually determine if you are the solution.
• Send a thank you note after the meeting. Here is a great example of a post-interview thank you: Thank You Note.

Still nervous? Here is a full blog post on interviewing: Interview Tips.

Step 5. Reviewing Contracts.

A good overview of contracts may be found here (the most relevant information is on the last page of the article): Compensation Considerations.

Step 6. What Can You Expect to Earn?

• There are several good sources covering realistic dentist earnings. Here is our own: How Much do Dentists Make?
• The Levin Group publishes an annual survey in Dental Economics. The 2012 version can be downloaded here: Levin Group Survey.
• The ADA puts out its own numbers, also: ADA Income and Gross Billings.

Step 7. Plan Your Relocation.

If you need to relocate, be sure to plan it ahead of time. Here are a few key points to ponder as you plan: Relocating Tips.

Finding a job can be an intimidating process. I hope these resources will help make the process easier. Please feel free to call us should you have any questions. We are always happy to help.

Posted by Morgan Pace, Senior Dentist Recruitment Consultant with ETS Dental. To find out more, call Morgan at (540) 491-9102 or email at mpace@etsdental.com.

For more information, please contact info@dentalcpas.com

Follow us on Twitter, Facebook and Pinterest – sign up for our newsletter

Dentist Wants to Know How to Write Off Business Expense of Automobile

My wife travels once or twice a week to our removable lab 185 miles round trip, as well as travels to the nearest large city 85 miles round trip for supplies for the office once or twice a week.  I bought an old beater for 2300 dollars a couple of years ago that just died that we were using. Last week I had to trade my car in due to a wreck. Is there any legal way to write off a portion of this new car?

Absolutely! There's nothing illegal about deducting the business use of one’s automobile.

Here's a link to IRS.gov where you can search for how to deduct auto expenses.

If you have been using your vehicles for business use and not deducting the expenses I wonder what else you're not deducting and could be? I'd also wonder how much you'd be able to get back in taxes by amending some prior year returns.

This first appeared on Dentaltown.

For more information, please contact info@dentalcpas.com

Follow us on Twitter, Facebook and Pinterest – sign up for our newsletter

Mistakes Made --- Lessons Learned in Owning a Dental Practice - Dealing with Isolation

Here is a another guest blog from our client Dr. Lurie.

It seems to me that there is a danger to dentistry that usually is never addressed.  This pertains to isolation and lack of socialization.  Dentistry by its' very nature is singular in that the doctor practices within himself to the very best of his ability.  He reports to his office, usually alone and if he is in solo practice, his interactions are with his patients and staff.  However, his inner thought processes, decision making, and perhaps his business decisions are made in a very narrow environment.  Does this sound like isolation?  To some degree, I think it is.  If he is in a group practice, the isolation is less but still present as regards his talent, self criticism, how he melds with his colleagues and staff.  Is he holding up his end of the workload, does the staff warm to him as much as his associates and so forth? It is difficult to write about this because it requires the same type of introspection that I am trying to bring attention to and perhaps solve.

Other health care professionals are in a different environment with hospital colleagues, much larger staffing, a general air of activity and motion, fellow practitioners available to discuss a case or personal issues and all other social activities that a group situation encompasses. Just being a dentist requires isolation in the field (mouth) that we work in, and the narrowness of our area of expertise (in the good sense) and the necessity to bring a critical eye to our work.  As has been said many times, there is an art to dentistry as well as the science of dentistry.  This might be one of the areas that differentiates us from other areas of health care providers.    When we are in a non-dental atmosphere (party, dining, sports etc), many dentists find it difficult to talk about anything other than dentistry.  How many of us have said that I don't want to go out with a bunch of dentists and talk shop all night? How many wives have said the same thing or that in going out, feel that it is part of the job  and not a fun or relaxing evening?

Over my fifty years, I have had these thoughts and also the arguments with my wife about this type of evening or even the general atmosphere of  "dental isolation"  Fortunately, I confronted this problem early on and discussed it at length with my CPA at one of our many meetings.  By facing the issue I was able to broaden my connections with the "outside world".  Hobbies were a big part.  I am an amateur photographer, and now in my retirement, assist a professional photographer on his many shoots.  My church activities certainly increased my socialization and again, in retirement, I am active and engaged in many outreach programs which require socialization.  It is interesting to note that in these non-professional groups, I am looked to for guidance and expertise.  I think this comes from the education and stature that we all possess but don't realize that we have.  These examples, of which there are many, have helped immensely with the social interaction with my fellow dentists and something I started doing and living long before I retired.  We actually have other things to discuss, question, ponder, and deliberate besides the mouth. 

Dentistry is our center and our love, but it can narrow our scope if we let it.  It should be number one during our work day, during out continuing education time and certainly in our relationships with colleagues.  However, be aware of becoming too narrow and don't be afraid to get advice from those who know you and love you.  These are just some thoughts... it seems to me. 

More mistakes made and lessons learned next time.

Dr. Donald B. Lurie, DDS

donald.lurie@att.net

phone:  717-235-0764

cell:       410-218-2229

For more information, please contact info@dentalcpas.com

Follow us on Twitter, Facebook and Pinterest – sign up for our newsletter

Mistakes Made... Lessons Learned in Owning a Dental Practice

Here is another guest blog from our client Dr. Lurie

It seems to me that each person has a different reason or need to retire.  In my case, retirement came about due to age and illness.  My body told me that it was time to retire. 

As I stated in my in an earlier blog, I had strong convictions about retirement and how to proceed.  However, the illness got to me before I was totally able to implement them.  Because I had such good advisers, the transition into retirement was relatively easy.  Was I totally financially secure? No. I did not sell my practice (solo practitioner of Oral and Maxillofacial Surgery).   There was not enough time to find the buyer and have an agreement but because I had such a good team around me, and with an understanding wife, I was able to transition to retirement with little anxiety.  Looking back upon it, the lesson to be learned is to be prepared for the Health Issue.  Be prepared for the Financial Issue.  Be prepared for the Wife Issue.    As I mentioned in my previous article, The Team for Retirement came to my rescue.  Due to some wonderful real estate investments in previous years, I was able to help my employees get positions, walk out, lock the doors and have peace of mind that I had helped so many people over the 50 years.  It was a profound feeling and a truly good feeling.  

Would I have like to have sold the practice?  Absolutely.  It is well known that in today's dental world, a solo oral surgeon is a dinosaur.  We are in a time of mega-specialty groups.  You can't sell the charts and the patients are all referred (in my case by a swell and dedicated referral base.)  My health issues have improved dramatically and I am now able to look back and reflect on that time of decision making.  This is what motivates me to write these articles and is, in no small part, one of the ways that I can give back to dentistry.  There are other ways of giving back that I am partial to also but I will save them for another article.  In review, I should have partnered with an associate long before retirement (at least 5 years).  This would have taken the stress of those last 6 months to a minimum.  Had I known of impending health issues, I could have explored the transition of the office into one of the mega offices either as a partnership or a private contractor.  The latter is a good means of solving several problems if you look at the logistics--space, rent, manpower, coverage and the like.  I ran out of time and could not complete the negotiation.  As I said, my wife was the rock behind me all the way.  Her prayers and strength were just part of what she extended to me to keep me going and we have been blessed with renewed health and a great life.  We intend to make it count.  More next time of mistakes made and lessons learned

If I can be of help to anyone, please contact me.

Dr. Donald B. Lurie, DDS

email: donald.lurie@att.net

phone:   717-235-0764

cell:       410-218-2228

For more information, please contact info@dentalcpas.com

Follow us on Twitter, Facebook and Pinterest – sign up for our newsletter