Physicians-as-Employees [The Benefits]

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On Tax Free Benefits

By Dr. David Edward Marcinko; MBA, CMP™


There are three categories of benefits that hospitals typically provide to their physician [hospitalists], medical, nursing or technical employees; or clinics, office and medical practices provide to their employed staff:

Those that are totally income tax-free; some are still taxable for FICA (Social Security and Medicare).

Those that are not taxed at their full economic value, or are taxed at a special preferential rate.

Those where a tax liability is not incurred until sometime after the employee receives the benefit.

1. Tax-free Benefits

The following are benefits typically provided that are tax-free to physicians and hospital employees:

  • Group term life insurance
  • Accident and health benefits
  • Moving expense reimbursement
  • Dependent care expenses
  • Meals and lodging
  • Adoption expense assistance
  • Use of athletic facilities
  • Employee awards
  • Educational assistance
  • Qualified employee discounts
  • No additional cost services
  • Retirement planning service
  • De minimus benefits
  • Qualified transportation benefits
  • Working condition benefits
  • General fringe benefits
  • Miscellaneous specialized provisions

All tax-free benefits have varying conditions, which can include:

  • What constitutes a benefit to qualify (as defined by the IRS)
  • What constitutes an employee to qualify; the most commonly restricted employee types are S corporation employees who owned greater than 2% of the corporation’s stock in the taxable year, highly compensated employees and key employees.
  • Which employees are excluded
  • Monetary caps
  • IRS reporting requirements
  • Exclusion from what type of taxes (income, FICA and FUTA)


And so, what has been your experience with the above; is the tax-free benefits package increasing or shrinking, please comment and opine?

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6 Responses

  1. Seeking Doogie Howser MD

    Dr. Marcinko – As a nationwide shortage of physicians looms, older doctors may find themselves taking a back seat to younger doctors suggests a new survey by physician recruiters, the Medicus Firm.

    In the survey of 1,072 physicians of varying backgrounds, specialties and experience levels, Medicus found that physician candidates who were 15 years or more out of training didn’t get nearly the same response from recruiters or potential employers as did those within 15 years of their training.



  2. Surgeons for Hire

    The number of surgeons who reported having their own self-employed practice decreased from 48% to 33% between 2001 and 2009, and this decrease corresponded with an increase in the number of employed surgeons. Sixty-eight percent of surgeons in the United States now self-identify their practice environment as employed.

    Between 2006 and 2011, there was a 32% increase in the number of surgeon in a full-time hospital employment arrangement. Younger surgeons and female surgeons increasingly favor employment in large group practices. Employment trends were similar for both urban and rural practices.

    Dr. Locum


  3. Hospital Employment vs. Private Practice

    A “pros and cons” review.

    Ann Miller RN MHA


  4. 10 Layoffs in Healthcare, April 2017
    [The Employee – Drawbacks]

    1. Care New England eliminates jobs at multiple hospitals
    2. UMass Medical School to lay off roughly 65 employees
    3. Mid-Columbia Medical Center cuts 11 jobs
    4. KentuckyOne Health to lay off about 150 employees
    5. UP Health System-Marquette eliminates dozens of jobs
    6. Kentucky hospital cuts jobs, delays ER expansion as patient volume sags
    7. Victor Valley Global Medical Center lays off 18 workers
    8. CHI St. Alexius lays off another 25 employees
    9. Louisiana long-term care hospital to close by June 3
    10. Trios Health cuts 95 FTEs to improve finances

    Source: Becker’s Hospital Review


  5. Study Reveals Practice Owners no Longer the Physician Majority

    Less than half of patient care physicians had an ownership stake in their medical practice, according to a newly updated study on physician practice arrangements by the American Medical Association (AMA). This marks the first time that physician practice owners fell below a majority portion of the nation’s patient care physicians since the AMA began documenting practice arrangement trends.

    The preference of younger physicians toward employed positions has had a prominent impact. Nearly two–thirds (65.1%) of physicians under age 40 were employees in 2016, compared with 51.3% in 2012. The share of employees among physicians age 40 and older also increased between 2012 and 2016, but at a more modest pace than younger physicians.

    Source: MDLinx [6/1/17]


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