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    As a former Dean and appointed University Professor and Endowed Department Chair, Dr. David Edward Marcinko MBA was a NYSE broker and investment banker for a decade who was respected for his unique perspectives, balanced contrarian thinking and measured judgment to influence key decision makers in strategic education, health economics, finance, investing and public policy management.

    Dr. Marcinko is originally from Loyola University MD, Temple University in Philadelphia and the Milton S. Hershey Medical Center in PA; as well as Oglethorpe University and Emory University in Georgia, the Atlanta Hospital & Medical Center; Kellogg-Keller Graduate School of Business and Management in Chicago, and the Aachen City University Hospital, Koln-Germany. He became one of the most innovative global thought leaders in medical business entrepreneurship today by leveraging and adding value with strategies to grow revenues and EBITDA while reducing non-essential expenditures and improving dated operational in-efficiencies.

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    Dr. David E. Marcinko is past Editor-in-Chief of the prestigious “Journal of Health Care Finance”, and a former Certified Financial Planner® who was named “Health Economist of the Year” in 2010. He is a Federal and State court approved expert witness featured in hundreds of peer reviewed medical, business, economics trade journals and publications [AMA, ADA, APMA, AAOS, Physicians Practice, Investment Advisor, Physician’s Money Digest and MD News] etc.

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Insurance Terms and Definitions for Physicians

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A “Need-to-Know” Glossary for all Medical Professionals

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[By Staff Writers]

Attained age: The premium rate charged to an insured at his or her current age on a policy conversion that would be the same as that offered by a company to new insureds who could qualify for standard rates.

Beneficiary: A person or entity named by the policyholder to receive death benefits under a life insurance policy. 

Cash value: The amount available in cash that accumulates in a whole life, universal life, variable life, or universal variable life policy upon voluntary termination of a policy before it becomes payable by death or maturity. 

Death benefit: Gross proceeds payable to a beneficiary from a life insurance policy. This includes the policy face amount and any additional insurance amounts paid by reason of the insured’s death, such as accidental death benefits and the face amount of any paid-up additional insurance or any term rider.

Deficit Reduction Act of 1984 (DEFRA): Act that changed the way life insurance companies are taxed, including a tax law definition of life insurance for purposes of determining whether a policy qualifies for favorable tax treatment. DEFRA made endowment policies obsolete. 

Grace period: A period of 31 days past the payment due date, during which the premium may be paid without penalty. 

Investment yield: Yield calculated after investment-related expenses and before taxes.

Lapse ratio: Percentage of policies that are terminated by the insured or lapse, prior to death.

Life insurance: The transfer to an insurance company of part or all of the risk of financial loss due to the death of an insured person. Upon such death, the insurance company agrees to pay a stated sum or future income to the beneficiaries.

Mortality charges: Charges a company makes against the policy to cover the policy’s share of the cost of death claims, which is the cost of providing the insurance protection.

Nonforfeiture option: Choices available to a policyholder who surrenders a cash value policy before the maturity date based on his or her interest in the contract. 

Period of contestability: A stipulated period of time in which a life insurance company is prevented from voiding a life insurance contract and challenging the coverage because of alleged statements by the insured. When fraud is involved, the period of contestability does not expire. 

Tax and Miscellaneous Revenue Act of 1988 (TAMRA): Act that created a new class of life insurance contracts (modified endowment contracts), which are subject to less favorable taxation rules than those applying to life insurance that failed the TRA 1986 test. 


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Retirement Planning Terms and Definitions for Physicians

A “Need-to-Know” Glossary for all Medical Professionals





  • 5- and 10- year averaging: A special tax treatment for qualified plan lump sums. 
  • Annuity: A distribution of a retirement plan in equal amounts over a physician’s lifetime.
  • Deferred compensation plan: A nonqualified compensation plan, often tied to a physician-executive bonus plan, allowing for payments in the future, such as retirement.
  • Defined benefit plan: The traditional [older] legacy pension plan. The benefit is defined in a formula that is often based on the final years of physician employment. The benefit is paid as a single life annuity for single doctors without dependents. Married physicians must take a 50% or greater survivor annuity unless waived in writing by the spouse.
  • Defined contribution plan: A popular [newer] retirement benefit in recent times. The most popular version of this type of plan is the 401(k) or 403 (b), plan. The amount of contribution is defined, not the final benefit. The final benefit depends on how well a doctor employee’s investments perform. Another important feature is that the physician employee must choose the investments to which to allocate his or her contributions (and often the employer’s contributions). Plans typically offer three or more selections, and the doctor-employee decides on the percentage of money to be invested in each.
  • Employee stock ownership plan (ESOP): A benefit plan that offers company stock to the doctor as the investment. Available plans are leveraged ESOPs, which are highly complex financial arrangements, usually in the form of profit-sharing.
  • Hybrid pension plan: A plan that has features of both a defined contribution plan and a defined benefit plan:

1. Money purchase plan: A plan in which an employer agrees to contribute a specified amount to the plan on behalf of each physician employee. The amount available at any time is determined by the contributions and how well the investments perform.

2. Target benefit plan: A plan in which an employer agrees to contribute a specified amount to the plan. This plan features a formula that sets up a target benefit for each physician employee. The target benefit plan is meant to be similar to a defined benefit plan, but without the actual guarantee of the final benefit. The final benefit ultimately is determined by how well the investments perform.

  • Individual retirement account (IRA): A personal retirement savings plan for individual physicians. Several types are listed below:

1. Regular deductible/nondeductible IRA: Amounts of IRA contributions that is either deductible or non-deductible for individual income tax purposes. Earnings on these IRAs are tax deferred, meaning that taxes on earnings are paid at the time of withdrawal.

2. Roth IRA: Amounts of contributions to Roth IRAs are nondeductible. Earnings on Roth IRAs are never taxable.

3. Educational IRA: Amounts contributed to Educational IRAs are nondeductible; however, earnings are not taxable if withdrawn to pay qualified educational expenses. Anyone can contribute an indexed amount per year to an Educational IRA for a child under age 18, provided the total contributions for a child do not exceed per year limits. The account must be designated as an Educational IRA from its inception.

4. Conduit IRA: A rollover IRA consisting only of a single qualified plan that may be rolled into another qualified pension plan.

5. Inherited IRA: An IRA of a deceased physician.

6. Rollover IRA: An IRA consisting of a qualified plan(s) that has been “rolled over” into it.

  • Keogh plan: A plan for self-employed physicians and partnerships. A Keogh plan can be a defined benefit, a defined contribution, or a hybrid plan. 
  • Lump sum distribution: A distribution of all of the money in a doctor participant’s qualified benefit plan account. This generally occurs at one time or at least in one calendar year. 
  • Pension: An employer retirement plan providing payments at retirement. It is usually based on an employee’s compensation and doctor length of service. 
  • Qualified benefit plan: A specific plan that is qualified by the IRS to receive special tax advantages. Typical plans are defined benefit, defined contribution, ESOP, profit-sharing, and thrift plans.
  • Recalculation / Non-recalculation: Methods of determining the use of life expectancy tables for mandatory withdrawals at age 70½. 
  • Simplified employee plan (SEP): An IRA plan that is simplified and easy to administer for self-employed physicians. These plans are sometimes referred to as SEP-IRAs.
  • Supplemental executive retirement plan (SERP): A nonqualified plan, primarily but not exclusively for executives, that provides for lost qualified pensions due to IRS restrictions.
  • Tax-deferred annuity (TDA) or 403(b) plan: This typically is a defined contribution plan available to teachers, hospitals, nurses, doctors and not-for-profit organizations. An organization must sponsor the plan. Once sponsored, insurance companies offer annuities through the company. Employees then select which insurance company will receive their contributions. The contributions are almost always on a pre-tax basis.

 More related info: http://www.springerpub.com/Search/marcinko

Questionable Insurance Policies for Doctors

Beware the Hype of Superfluous Products

Gary A. Cook; MSFS, CLU, RHU, CFP® CMP™

The following insurance policies should be carefully considered by physicians before purchase, since they may be unnecessary, too expensive, provide only minimal benefits or be duplicated in other insurance policies.

Avoid or Purchase?

These suspect insurance policy types include credit life or home mortgage insurance (decreasing term), life insurance for children, accident policies for students and pets, hospital indemnity policies, dread disease insurance, credit card insurance, pet health insurance, life insurance for the elderly, funeral insurance, flight insurance, pre-paid legal insurance and most extended warranties on automobiles, televisions, stereos, home computers and the like.   

On the other hand, the following types of coverage may be important in selected cases: trip cancellation insurance, termite insurance and flood and earthquake insurance. Regardless, the purchase choice for all of the above is your own – so think carefully. 

The “Perfect” Retirement Insurance Vehicle – Does Not Exist! 

Additionally, according to fee-only life insurance expert Peter C. Katt of Kalamazoo, Michigan, doctors should be on guard against believing in the existence of perfect retirement vehicles funded through “springing” cash value life insurance plans.

These plans reportedly feature payments of very large premiums while the policy is subject to favorable tax treatment, and then transferring the policy to the insured doctor when it appears to have no taxable value, after which the cash value springs to life. 

Assessment – Beware the VEBA

Unfortunately, in the real world, tax deductible contributions and tax-free benefits do not exist without resorting to fraud or deception.

Particularly notorious are the so-called continuous group insurance and VEBA (Voluntary Employee Benefit Association) pre-paid retiree plans, despite the fact that the later have been mistakenly endorsed by state medical societies – in certain cases.  


Always remember that no matter how professional and sincere marketers appear, there are no life insurance that can legitimately provide tax-deductible insurance with tax-free retirement benefits.  

Therefore, you should always consult a qualified professional for further information regarding your specific needs. And so, have you ever been “burned” or benefited by any of the above insurance policy types? 

More information: ttp://www.jbpub.com/catalog/9780763733421   

About insurance agents: https://healthcarefinancials.wordpress.com/2007/12/18/insurance-agents-raising-the-bar

Fiduciary education: http://www.CertifiedMedicalPlanner.org



Celebrating a Physician’s Financial Windfall

Controlling the Euphoria of Newly Acquired Wealth

Staff Writers fp-book2

A physician’s spending patterns can be drastically altered with the receipt of a financial windfall. Caught up in the euphoria of sudden riches, newly wealthy doctors, as with most people, often purchase new homes and buy flashy sport cars, boats, airplanes and jewelry, etc.

Some may even be driven to fulfill the message of a common bumper sticker: “He who dies with the most toys wins.” 

Cash Flow Management is Key

For these medical professionals, current cash flow management takes on a new importance.  Adequate resources must be set aside to fund future needs, or else fewer resources will be available in the future to fund an affluent lifestyle. If resources are depleted, the doctor may be forced to reduce spending to the pre-wealth level.

The lucky physician and his/her health economist – or physician focused financial advisor – should construct projections of expected net worth accumulations to contrast the long-term impact of current consumption with saving and reinvestment at various levels. These models can be used to educate the newly rich about the implications of drastically changing their lifestyles.

Consider a “Spending-Hiatus”

The physician should also consider a “spending-hiatus” on major expenditures or changes in lifestyle. It is a good suggestion that the newly wealthy make no changes in employment – medical practice – housing, or make major acquisitions for twelve months.

Such a “cooling off” period allows the physician to make long-term plans before consuming a large portion of the wealth. 


Dr. Mary Jones recently won the lottery and hired a health economist for advice. As a jackpot winner, she will receive $150,000 each year for the next 20 years.

The economist suggested that in the first year she use not more than $35,000 to purchase new “things” and that she should not change her employment until after twelve months. She should not purchase a new home until she receives the lottery proceeds for the second year. Loans and gifts to family members should be kept within the $35,000 “things” budget until the proceeds for the third year are received.


By keeping a deliberate and controlled attitude toward spending, Mary has time to develop a new attitude toward money. This includes developing a long-term plan for dealing with the wealth, while avoiding immediate decisions that cannot be easily reversed. 

 Don’t Forget Tax Planning

The newly wealthy doctor also must plan for a potentially large income tax obligation in the first year. Depending on the source of the wealth, the new wealth can create the first significant tax liabilities that the physician has ever incurred. The newly wealthy often overlook the tax burden that comes with their new assets.  

For example, when a medical practice owner – or physician executive – sells a closely held clinic valued at $5 million, the true resource available to the owner is only half that after taking into account the related federal and state tax burden. A stock portfolio with a trading value of $1 million is actually worth less when the related taxes are subtracted on liquidation. 

Developing a short-term budget for disbursements can also help the newly wealthy maintain control over his/her personal, real and financial assets?

Although it may no longer be necessary to strictly watch each dollar that is spent, it is important to implement total preset levels of spending within specific categories. 

Practice Employment 

For a newly wealthy doctor, continuing to work after receiving a windfall is more than just a financial decision; it may be a life-goal. After developing a long-term net worth and cash disbursement model, he or she can make an informed financial decision regarding continuing to practice. A purely financial decision, however, does not take into account the emotional and psychological ramifications of significantly altering one’s professional standing and social lifestyle by quitting the profession.

The advantages of continuing to practice include the social support of involvement with one’s professional or vocational peers, self-fulfillment and the full utilization of available time, experience and prior education. Medicine after all, is still a noble professional that is highly regarded.

The advantages of not practicing include having time available to pursue non-income-producing activities, such as spending time with family members, traveling, volunteering for nonprofit healthcare organizations, practicing pro-bono and teaching; etc.


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NOTE: 8 Things your Financial Planner Won’t Tell You: http://articles.moneycentral.msn.com/RetirementandWills/CreateaPlan/8ThingsYourFinancialPlannerWontTellYou

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