How can a physician protect him/herself? The simple answer is to not take Medicare patients. Since most physicians do take Medicare patients how do they protect themselves?
My answer is to have each physician create an asset protected sinking fund through the use of supplemental insurance coverage. This is the only way I know to create a tax deductible resource to pay any potential fines. If you never have a Medicare audit, via the return of premium, you can get your premiums back plus investment growth on the premium (assuming a good claims history).
If a physician does not have insurance to cover the fines from Medicare, the physician will have to pay for the fines out of post tax investment dollar or go borrow money which will have to be paid back with after tax money.
Therefore if you would like to protect yourself from the ever increasing Medicare audits and fines, I strongly recommend that you look into purchasing supplemental Medicare fraud insurance.
Supplemental insurance, what is it and why would a physician purchase it.
Supplemental coverage is in addition to a physician's current insurance coverage. So, if a physician has $200,000 coverage with a traditional carrier for Medicare fraud, supplemental coverage would be above that amount.
For example, if a physician had a Medicare audit where the medical office owed $1,000,000 in fines and his/her coverage was only $200,000, the supplemental coverage would kick in to pay for the other $800,000. Without the insurance, the physician would have to pay for the fine out of other assets in a non-deductible manner. With supplemental coverage a physician can fund that overage in a tax deductible manner.
Return of Premium + Growth
If you are saying to yourself the last thing you need is more insurance premiums, I would agree with you. However, there is a supplemental Medicare fraud insurance program available where the client not only can get a return of their premium on their supplemental insurance, but also the growth on the premium (assuming good claims experience).
For example, if a 40-year old physician paid $100,000 in supplemental Medicare fraud insurance coverage each year for ten years (and if there was good claims experience) the refund numbers would look as follows:
|Cost each year||Account value available
for refund at age 60
*This is a net number after expenses and with an assumed growth rate of 8% on the premium paid.
Income Tax Reduction - Many physicians are looking for ways to reduce their taxes. With the supplemental insurance program, the physician receives current income tax reduction by paying deductible premiums for insurance coverage. Further, with good claims experience and the refund option the physician can get back not only the premiums paid, but also all the investment growth on those premiums. When the premium and their growth are returned, the money will be distributed to the physician where he will pay taxes on the money.
Conclusion - If you like the idea of supplemental Medicare coverage while building a large supplemental benefit, then this program is one you should consider.