Disability Insurance for Physicians

Kurt Kofford

Kurt Kofford

Director

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(Physician’s Money Digest) Perhaps more than any other professional organization, physicians and group medical practices understand and appreciate the need for disability income protection. Maybe that’s because, at its heart, the practice of medicine is a personal service industry. Unlike with manufacturers, the widgets don’t keep pouring out the door when the physician is disabled, and losing one’s ability to work virtually assures a significant loss of income.  

But in many practices the long-term disability (LTD) plan is poorly structured. It doesn’t protect each class of employee most appropriately. Among the oversights is the improper understanding of the contract language used in LTD policies.  

 
LTD is different

To properly design your LTD plan think through exactly what you want to accomplish. As the old saw says, “If you don’t know where you’re going, you won’t know when you get there.” And LTD plans offer you much more freedom of design than you have with other benefit plans. You can affect the protection you want.  

Other coverages are pretty much plain vanilla — what’s good for the staff goose is good for the physician gander. Sure, you can nibble around the edges with dual option plans and such, but everyone pretty much has the same health care needs. Likewise, life insurance is life insurance, dental is dental, and short-term disability is short-term disability.  

But LTD is different. What constitutes a disability for a surgeon might not be considered disabling for an internist. And what constitutes a disability for virtually any doctor is different from what constitutes a disability for the receptionist or the medical assistant.  

The typical LTD carrier gives you the flexibility to be able to adapt to those needs by offering different benefits for different classes of employees. It’s important to remember that you do have more flexibility. Set out to determine how best to use it to your advantage. Think about these questions:  

  • Under what circumstances will the employee be able to collect benefits?  
  • What risk is there of the employee losing his or her benefit while still “disabled?”  
  • How will the LTD plan impact other aspects of an employee’s life, i.e., his or her retirement plans, health care costs, cost of living, etc?  

That question about being able to collect benefits refers to the typical definition of what constitutes a disability. For example, one real-life example states that the definition of disability is: “… due to an Injury or Sickness the Insured Employee is unable to perform each of the Main Duties of his or her Own Occupation…” and has “…suffered a loss of income of at least 20%.”  

That’s called the “Own Occupation” period, and while that definition is in effect, being unable to perform the main duties of your occupation and losing 20% of your income means you’re disabled.  

There is often a time limit placed on that definition — two years, five years or age 65. After that initial two or five years passes, another definition of disability applies — usually one more difficult to meet.  

This time restriction is probably acceptable for staff workers. By and large, if a secretary or other support worker can’t do the job they’re doing, two things will immediately happen:  

1. Their income will be fairly dramatically reduced

2. They probably can’t do much of any other job.  

So they’ll collect. But a physician is different. He or she may be able to teach or consult or do some other form of (lower-paid) work. The result is that if the physician were subject to a more restrictive definition of disability, he or she might — despite suffering a 40%, 50% or 60% cut in income — be deemed NOT to be disabled.  

Different coverages for different classes

So the first thing we should consider is whether we ought to offer two different coverages to two different classes of employee. For physicians we might select an Own Occupation period that goes to retirement so as to give them maximum protection.  

But for the rest of the staff, we might select a two-year Own Occupation period. They don’t run as great a risk of non-qualification as physician do; therefore, the two-year Own Occupation contract doesn’t expose them to the same level of risk as physician.  

And that point is where most brokers stop analyzing the LTD contract, but that’s where the mistakes begin to build. In fact, that traditional contract language quoted above dramatically shortchanges a large portion of physicians in several ways. We’ll discuss those considerations next.

If you have any questions about how these ideas could affect your practice, e-mail Kurt Kofford here or call him at (719) 579-9090.

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Business Tune Up: Monitoring and Measuring Your Performance for Optimum Business Health

Led by Kurt Kofford, CPA, and Austin Buckett, ACA, CM&AA

Kurt Kofford, CPA, is a director at BiggsKofford.  He plays a major role in the management of the firm’s clients, overseeing all of the firm’s auditing and accounting engagements, as well as consulting clients on long-term planning.

Austin Buckett, CMA, CM&AA, is a manager in BiggsKofford Capital, BiggsKofford’s Investment Bank department and also acts in an outsourced CFO capacity for clients, providing consulting in financial performance as well as developing growth and exit strategies.      

We’ll discuss:

  • Determining your profit and cash breakeven
  • Growing a business efficiently
  • The key numbers you need to know about your business

Thursday, April 26, 2012

7:30 – 9 a.m.

BiggsKofford’s Office

R.S.V.P. here.

Chris Blees

Chris Blees

President & CEO

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Kurt Kofford

Kurt Kofford

Director

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Austin Buckett

Austin Buckett

Manager

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BiggsKofford was happy that three members of the management team got the opportunity to speak to many of Colorado Springs’ top businesses at the Revenue North Small Business Growth Summit, which was held January 20 and 21.

If you missed their presentations, you can find them here:

If you have any questions about how you can take your business to the next level of growth, value and success, please feel free to contact us.

Kurt Kofford

Kurt Kofford

Director

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Austin Buckett

Austin Buckett

Manager

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This morning’s Entrepreneurial Corner presentation covered the seven key things you need to know to succeed in the new economy.

You can find the PowerPoint presentation here.

If you have questions about specific areas where your business might need an extra focus or about the presenation, please contact Austin Buckett or Kurt Kofford.

Interested in attending our future events? Contact Stephanie Johnson.

Kurt Kofford

Kurt Kofford

Director

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Finding an accountant for your small business can seem like a bit of a chore. Considering that most of us run in the same circles or are members of similar professional groups.  There is also the fact that many new clients have trouble understanding exactly what it is that BiggsKofford can do for them, so it’s no wonder that choosing someone to help you think big picture when it comes to your company’s financial matters can be so difficult.

To make things a bit easier for you, here are five questions you should ask any accountant you’re thinking about hiring:

What are your specialty areas?

As with any other field, most accountants have specialties and areas of expertise. Whether it’s helping to smooth out cash flow, making payroll easier, or dealing with lots of liquid assets, you should find out what your accountant really likes working on, and whether that strength is likely to be important to your business.

Do you have experience with businesses like mine?

Just as important as the first question, an accountant with a similar client base will have an easier time understanding what your needs are, not to mention anticipating the sorts of challenges you’re likely to face. What’s more, accountants who work with the same industry and client types can do a better job of keeping up on news, laws and trends.

Could I speak to two or three of your existing clients?

It’s always a good idea to check a few references before you pick a new accountant. While it’s unlikely that any professional is going to give you the name and phone number of an unhappy client, you can still get a good sense of whether the accountant is one who is willing to go the extra mile, or does just enough to keep clients satisfied.

How long have you been practicing?

While a lack of experience isn’t necessarily a huge deal – after all, we were all new once, you should know from the start if a newer accountant is going to be cutting their teeth with your business’ books and tax planning. Experience is a great teacher, and someone who’s been around the block a few dozen times is going to be a lot less prone to the kinds of simple errors most professionals make early in their careers.

How do you like to work?

This is probably one of the most important, but overlooked, questions you can ask an accountant you’re thinking about working with. That’s because, assuming you are only meeting with men and women who are qualified, competent and professional, what’s really going to be important is whether your personalities and working styles are going to mesh together. No matter what their skills are like, maintaining a good relationship with your accountant requires a certain degree of compatibility.

Of course, these questions are only a starting point; as you get to know a few different accountants and evaluate their strengths and personalities, you’ll probably think of several more questions. Consider using these as a starting point and remember that doing a bit of interviewing now can help you find the person who can save you a lot of time and money in the long run.

BiggsKofford has many specialty and industry niches, and we would be glad to see how we can help move you and your company from one success to the next.  If you have questions about our services, please contact Kurt Kofford.

Kurt Kofford

Kurt Kofford

Director

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If you missed yesterday’s event “Is It Time for Your Business Check Up?” with the Better Business Bureau of Southern Colorado, Kurt Kofford presented basic and indepth ideas about areas of business that can either make or break a successful company.

You can find the PowerPoint presentation here.

If you have questions about areas where your business might need an extra focus or about the presenation, please contact Kurt Kofford

Interested in attending our future events?  Contact Stephanie Johnson.

Kurt Kofford

Kurt Kofford

Director

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Deborah Helton

Deborah Helton

Manager

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If you missed today’s Entrepreneurial Corner breakfast that highlighted updates from the Healthcare Law and how it could affect your business, please find the handouts below.

BiggsKofford, P.C. Entrepreneurial Series, October 28, 2010

Panelists:
Deborah Helton, CPA, Manager, BiggsKofford
George Martin, President and CEO, Benefit Resources
Dan Karpel, Founder and CEO, Peak Medical Management

If you are interested in attending or sponsoring a future Entrepreneurial Corner, please contact Stephanie Johnson at (719) 579-9090.

Chris Blees, CPA

Chris Blees

Director

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Kurt Kofford

Kurt Kofford

Director

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Recently, BiggsKofford hosted an event highlighting the various topics that are essential to The Mayor Project, which is slated to be on November’s ballot. In case you missed this event, a copy of the presentation handouts can be found here:

The Mayor Project: A Perspective on City Governance 

Funding is imperative for this initiative to be successful, and we believe that this is an issue our city must pass. We are requesting that you join us in contributing to this extremely important cause. We would be happy to discuss with you why we believe so strongly about this issue. Feel free to call Kurt, Chris or Jerry if you need more information before you decide to donate.

Jerry Biggs – (719) 661-1202
Kurt Kofford – (719) 661-9091
Chris Blees – (719) 649-8749

To make a donation to The Mayor Project, please make your checks out to The Mayor Project and mail to BiggsKofford, P.C., 630 Southpointe Court, Suite 200, Colorado Springs, CO 80906. You may also make online donations here.

Kurt Kofford

Kurt Kofford

Director

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    Consider these scenarios:

    1. You just received a regulatory notice in the mail from the government agency that regulates your company or organization, informing you that the audit of your company didn’t meet the required standards. The notice uses threatening language to spell out the negative consequences of not complying. What went wrong?
    2. You just received your company’s audit report in the mail and you realize that you have had very little interaction with your auditors. Instead of reaping the side benefits of insights and recommendations from the auditors outside perspective developed while auditing your organization, all you got were the pieces of paper you are required to give to the bank. What went wrong? Could this situation have been changed by taking different steps when choosing a CPA firm?

    Aren’t all financial statements audits created equally?

    The answer is a definite no! Audits are not a commodity in which one gallon of gas is just like the next. Yes, there is a large body of professional standards to guide all auditors in the performance of an audit and reporting on financial statements, but there is a wide variance in actual practice as to how those standards are followed.
    The professional auditing and reporting standards are broad enough and flexible enough to allow for the uniqueness of different companies and organizations and the different approaches of CPA firms performing the audits. This is as it should be, because no two organizations are alike and professional judgment is still the most important element of an audit.

    When an audit is not an audit

    Unfortunately, in my 26 years as a CPA and an auditor, and my experience over the last four years on the Colorado State Board of Accountancy, I have learned that some audits are better than others, and a few are downright bad. There are many factors that go into creating a superior audit, including the approach, skills, knowledge and time allocated to the audit. Most of these are factors in arriving at the cost of an audit, yet many organizations and companies select their auditors on the basis of cost alone as if the audit by one CPA firm is the same as the next.

    How big is the problem?

    No one knows for sure how many sub-standard audits there are, but recent studies in certain sectors have revealed concerning deficiencies. Substandard audits have become enough of a concern for the department of Housing and Urban Development (HUD) that they are considering a proposal to require any auditor performing an audit to be submitted to them to be from an approved list, which would allow them to exclude auditors who have not been performing audits up to the required standards.

    What to Do? Our Recommendations

    The first thing to consider is the competence and longevity of the firm or accountant that you are engaging to audit your company. How long have they been in business? What is the firm’s professional standing and experience in your industry? Do they list references in their proposal for similar work and similar industries that they have done work for in the past? Check the Web site for the Colorado State Board of Accountancy to see if they have had any complaints filed against them. Not only should you find out if the CPA firm is a member of American Institute of Certified Public Accountants (AICPA), but you should inquire how they have used their membership to improve their audit quality. For example, the AICPA has Audit Quality Centers for specialized areas such as employee benefit plan audits, where members can join to access resources to improve the quality of their audits. Also, check to see if they are in good standing with the Colorado Society of Certified Public Accountants (CSCPA). Both organizations require audit firms to conduct tri-annual peer reviews (an audit of the auditors).

    Ask them for their most recent peer review report and discuss the finding of their peer review with them to determine what suggestions for improvement were made.

    And of course, it’s important to take a detailed look at the proposal. Are they proposing in writing that your company’s needs will be met and to the proper regulations? When looking at proposals to decide on a CPA firm, many companies put together an audit committee to come to a decision as a group.

    In my position with the State Board of Accountancy, I’ve seen situations where businesses or organizations have made bad decisions in choosing CPAs when it came to their audit. These situations haven’t made headlines, but bad situations happen more than what I would like to see.

    The Bottom Line

    Selecting an auditor based only on cost is not a good idea. Often the old axiom applies “You get what you pay for”, so make sure you are reaping the benefits that an audit should bring to an organization.

Kurt Kofford

Kurt Kofford

Director

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  • Not sure how your clients will react to changes you are thinking about?
  • Would you like to know how you could increase your market share while times are tough?
  • Would you like to be able to get more business from your current clients?
  • Do you wonder how your product or client service stacks up against the competition?
  • Are you looking for some specific, valuable guidance for your business problems?

Who wouldn’t love to get answers to these important questions?  But where can you go to find a group of people who know about your business and would take the time to give you their advice?

The answer is much closer than you think.  Your own clients are one of the most valuable groups your business has, and if asked, it is likely that they will be more than willing to provide meaningful, relevant and supportive input to your business.

With a structured, fully facilitated Client Advisory Board, you can get a real ‘outside-looking-in’ perspective of your business.

Holding a Client Advisory Board will:

  • help you identify what things you’re doing well—so you can keep doing them
  • give you ideas on what you can improve, and get suggestions on how
  • help you determine your priorities based on what your clients would like
  • give your team a real sense of reward and focus, so they are more motivated than ever before.

The information you’ll gain from holding a Client Advisory Board is specific to your business and represents a giant step on a path towards helping you deliver the extraordinary service that will keep your customers coming back for more.

Our firm has received that kind of valuable input and feedback.  We held a Client Advisory Board with 14 of our good clients to find answers to some of the questions that were most important to us to help us formulate our strategy to react to the challenging times we are in.  It turned out to be a very positive and helpful experience for us. I think it can be a big source of help for you as well.

How Does It Work?

  1. Determine exactly what you want to achieve from your Client Advisory Board.
  2. Decide who of your clients will be best suited to invite to your Client Advisory Board. You typically want to invite your better clients, the kind you would like to take care of.
  3. Inviting them to your Client Advisory Board with a letter and a phone call that lets them know their input will be important and valued.
  4. Design a list of appropriate questions to ask at your Client Advisory Board. We asked questions such as “What suggestions do you have for how BiggsKofford could improve its service?”, “What could we do to obtain more referrals from our clients?” and “If you were CEO of BiggsKofford, what is the first thing you would do to make change?”
  5. Find an outside party to facilitate your Client Advisory Board for you. This allows your clients to give input without pressure.  We had a CEO of an accounting firm from Denver facilitate ours.
  6. Once the meeting is over, meet with your facilitator to review what was said and to help you decide what to do about it.
  7. Audio record the entire meeting and the follow-up consultation so you can review and get a real understanding of the essence of the meeting.
  8. After you have reviewed the recordings, prepare a report to send to your clients outlining the issues that were raised and what actions you’ll be taking on each one.
  9. The last step is to implement the strategies and ideas your Clients spoke about.

This process turned out to be a very positive one for our firm. Our clients were very gracious and willing to provide feedback on both positive aspects of our firm and things we could be doing better.  It is amazing what you can learn when you just ask your clients. For example, we were wondering what we should do to obtain more referrals from our clients and had considered elaborate methods to try.  It turned out that our clients told us to forget about any fancy methods for referrals and to just ask them.  They also came up with some great ideas for better communicating how we could help them and had specific suggestions on how to make the process of preparing corporate tax returns easier.

See – if you really want to know how to improve – just ask your clients.  They can be your best source of help.  And it never hurts to let your best clients know that you want to improve and serve them better.  Try a Client Advisory Board for your business!