The Leading Business Education Network for Doctors, Financial Advisors and Health Industry Consultants

A Primer for Physicians

By Dr. David Edward Marcinko MBA

[Publisher-in-Chief]

An executive bonus plan (or § 162 plan) is an effective way for a medical practice, clinic or other healthcare company to provide valued, select physician or other employees an additional employment benefit.  One of the main advantages to an executive bonus plan, when compared to other benefits, is its simplicity. In a typical executive bonus plan, an agreement is made between the employer and employee, whereby the employer agrees to pay for the cost of a life insurance policy, in the form of a bonus, on the life of the employee.

Benefits

The major benefits of such a plan to the employee are that he or she is the immediate owner of the cash values and the death benefit provided.  The only cost to the employee is the payment of income tax on any bonus received.  The employer receives a tax deduction for providing the benefit, improves the moral of its selected employees, and can use the plan as a tool to attract additional talent.

Example:  Dr. Stern is a sole practitioner in rural West Virginia.  Among his employees is Nurse Jackson, who has been with him for over ten years.  She is the single parent for two boys.   Although he pays well, and provides additional benefits, he has been looking for a way to selectively reward Nurse Jackson for her years of service and hard work.  Recently Nurse Jackson has expressed a concern for her children if she were to die prematurely.

Dr. Stern chooses to provide an executive bonus plan by allowing Nurse Jackson to purchase a life insurance policy on her life.  Dr. Stern will provide the premium payments in the form of a bonus to her.  Nurse Jackson must simply pay the tax on this additional income.  Dr. Stern’s practice will get a tax deduction for the premium and improve the morale of an important employee.  Nurse Jackson will get needed protection for her family.

Assessment

More info: http://www.jblearning.com/catalog/9780763733421/

Conclusion

And so, your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Medical Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com and http://www.springerpub.com/Search/marcinko

Our Other Print Books and Related Information Sources:

Health Dictionary Series: http://www.springerpub.com/Search/marcinko

Practice Management: http://www.springerpub.com/product/9780826105752

Physician Financial Planning: http://www.jbpub.com/catalog/0763745790

Medical Risk Management: http://www.jbpub.com/catalog/9780763733421

Healthcare Organizations: www.HealthcareFinancials.com

Physician Advisors: www.CertifiedMedicalPlanner.com

Subscribe Now: Did you like this Medical Executive-Post, or find it helpful, interesting and informative? Want to get the latest ME-Ps delivered to your email box each morning? Just subscribe using the link below. You can unsubscribe at any time. Security is assured.

Link: http://feeds.feedburner.com/HealthcareFinancialsthePostForcxos

Sponsors Welcomed: And, credible sponsors and like-minded advertisers are always welcomed.

Link: https://healthcarefinancials.wordpress.com/2007/11/11/advertise

Filed under: Financial Planning, Practice Management | Tagged: § 162 plan), executive bonus plans | 1 Comment »