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Top Tax Changes Affecting Physicians and Medical Practices

The Tax Cuts and Jobs from 39.6% in 2017 to subchapter C corporations as a result. care resulting from the repeal of the indi-
Act has some clear win- 29.6% in 2018. Subchapter C corporations are taxed at a vidual mandate, but physicians will be
ners and losers – and a lot This change will benefit flat 21% under the new tax law, but there affected, too.
of grey area in between. physicians and healthcare is a second level of taxation on qualified Changing reimbursement models have
The healthcare industry professionals who annually dividends paid to shareholders. Before been making it more and more challeng-
is one of those in the grey. earn $207,500 or less for a you change your tax structure though ing for physicians to run a profitable prac-
The good news is that single filer or $415,000 or you should understand the pros and tice. Add uncompensated care to the equa-
while hospitals will have less for a married couple fil- cons. You should consult with your tax tion, and physicians will have some tough
several complex tax pro- ing jointly. The deduction adviser and attorney before making any decisions to make surrounding payment
visions to consider, it begins to phase out gradual- changes to your business structure or tax models for their practice.
should be – somewhat – ly when taxable income election status. The repeal of the ACA individual man-
more straightforward for exceeds $157,500 for a sin- date and the pass-through income deduc-
physicians. gle filer or $315,000 for Repeal of the ACA tion will affect the vast majority of physi-
My Kaufman Rossin BY KEVIN N. FINE, MHA those who are married filing individual mandate cians and medical practices, but those
colleague, Tax Services jointly. Effective in 2019, the new tax law aren’t the only tax changes to be aware of.
Director Evan S. Morgan, The new tax law disallows repeals the Affordable Care Act’s individ- Contact your tax adviser to learn more
CPA, has extensive experience with the this 20% deduction for taxpayers with ual mandate, which requires Americans to about these and other provisions within
taxation of healthcare organizations. He income above the threshold in “specified carry health insurance and imposes a tax the new tax law that could affect you or
offers the following overview to help service trades or businesses. (1) ” This penalty on those who do not. your practice.
physicians understand two major tax definition includes healthcare profes- Consequently, it’s expected that the rate of
changes that could have a significant sionals. As a result, healthcare profes- uninsured patients will increase signifi- Kevin N. Fine, MHA, is a director of
impact on their practice. sionals with incomes above the phase- cantly for healthcare providers, who will healthcare advisory services in the Miami
out thresholds mentioned above will not have to find ways to adapt. office of Kaufman Rossin, one of the top
Pass-through income deduction be eligible for the 20% pass-through The Congressional Budget Office esti- accounting firms in the U.S. He can be
The new tax legislation includes a big income deduction. This means many mated in its November 2017 analysis (2) reached at kfine@kaufmanrossin.com.
break for owners of certain pass-through higher-earning specialists and two- that the repeal of the individual mandate
entities. Pass-through entities include physician households will likely not would increase the number of uninsured Evan S. Morgan, CPA, is a director of tax
subchapter S corporations, partnerships qualify. In some cases, higher-earning Americans by 4 million in 2019, with that services in the Miami office of Kaufman
and some limited liability companies. professionals could even see a net number growing to 13 million by 2027. Rossin. He can be reached at
Many physician and dental practices are increase in their 2018 taxes resulting The CBO report stated “if the individual emorgan@kaufmanrossin.com.
structured as pass-though entities. from other changes in the new income mandate penalty was eliminated, but the
Owners of certain pass-through entities tax law. mandate itself was not repealed, the results 1 https://www.journalofaccountancy.com/news/
will receive a 20% deduction on “quali- Some owners of pass-through entities would be very similar.” 2017/dec/tax-reform-bill-changes-for-individuals-
201718070.html
fied business income,” effectively reduc- may consider changing their business tax Hospitals may end up bearing the brunt
ing their maximum effective tax rate structure from pass-through entities to of the financial impact of uncompensated 2 https://www.cbo.gov/publication/53300

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Holy Cross Hospital Opens the

Phil Smith Neuroscience Institute

(l-r) Holy Cross Hospital President and CEO Dr. Patrick Taylor, Kaelin Kelley,
Shawn Smith-Myers, Susan Smith and Charlie Myers, Phil Smith Neuroscience
Institute Director Dr. Eduardo R. Locatelli

Holy Cross Hospital celebrated the official opening of the Phil Smith Neuroscience
Institute with a ribbon cutting and tribute to the late Phil Smith, president and CEO
of the Phil Smith Automotive Group, who donated $7 million to fund state-of- the-
art neurological care at the non-profit hospital. Through the Phil Smith
Neuroscience Institute and Phil Smith ALS and Movement Disorders Clinic, patients
have access to first class research and leading edge clinical trials and treatments
through an expanded relationship with Massachusetts General Hospital, the largest
teaching hospital of Harvard Medical School. There are more than 15 neuro physi-
cian specialists at the Phil Smith Neuroscience Institute at Holy Cross.
Previously there was no specialized care for ALS patients in Broward and Palm
Beach counties and only three Certified ALS Centers of Excellence in Florida. With
the opening of the Phil Smith Neuroscience Institute at Holy Cross, that will change.
Serving Broward County and beyond, Holy Cross Hospital offers comprehensive
neurological and neurosurgical care for a variety of conditions. The Institute meets
the needs of patients living with these diseases and conditions, providing support
and enhancing access to services and treatment

8 February 2018 southfloridahospitalnews.com South Florida Hospital News