Employees obtain income protection insurance to protect themselves from the financial consequences of workplace injury. While this insurance provides the same kind of protection to all types of insurance holders, coverage varies greatly by profession. For instance, construction workers enjoy a different type of coverage compared to office workers.
One of the most complex kinds of coverage is income protection insurance for doctors. The reason is obvious. Doctors, after all, face unique risks every day. Unlike construction workers who are exposed to predictable risks, such as falling from height and inhaling cement dust, doctors are exposed to a myriad health hazards, including needle-stick injury, airborne diseases, and splash back.
Each of the injuries or illnesses a doctor can acquire while in service must have a unique coverage as these may lead to long-term disability. For instance, if a doctor accidentally inhaled or swallowed blood from a patient with contagious disease, that single incident may entail several weeks or even months of unpaid sick leave.
There’s nothing more stressful than contracting an illness without a dependable source of income. In the case of doctors who fall ill while in the line of duty, the accompanying stress may worsen their condition. Fortunately, with income protection insurance, doctors can focus on their recovery without having to worry about how they can make it through a long period of unpaid rest.
In an effort to encourage innovation and improve services among eligible health providers, the Australian government launched the Practice Incentive Program or PIP back in 1998. As of January 2014, medical practices can apply for 10 individual incentives under the PIP. Those applying for the program consequently need to deal with several paperwork and bookkeeping requirements.
For example, a medical practice in Sydney can qualify for an Indigenous Health Incentive through one of four ways, which in turn requires four different calculations. Medical accountants in Sydney should keep in mind the specific incentive that the practice will seek, for tax reasons.
The practice can target a sign-on payment (i.e. single payment for activities intended to care for Aboriginal and/or Torres Strait Islander patients) which grants $1,000 or a patient registration payment (i.e. Aboriginal and/or Torres Strait Islander patients must be registered in the practice’s disease management program) for a $250 grant per calendar year.
Alternatively, practices can aim for an outcomes payment that comes in two tiers, $100 and $150 per calendar year. The amount the practice will be eligible for depends on the quality of long-term care they’re willing to provide for indigenous patients.
Proper financial planning for a health practitioner typically entails an investment component to make the most out of one’s income. Prior to finalising any investment, certain things have to be considered such as:
Income and Taxes
Understanding how income and taxes are determined serves as the baseline for proper investment planning. The doctor should be aware of how shares, property, and other investments can affect taxes. Capital gains may be higher when tax-friendly investments are chosen.
Goals and Strategies
Investment strategies are based on identified objectives. Starting with simple, short-term goals like paying off credit card debts, the individual can then progress to future aims. Doctors would normally seek income protection and appropriate plans for retirement, goals that can be achieved by choosing diverse, lucrative investment instruments.
Risks and Returns
Risks should be weighed against possible returns or capital gains. Short-term investments like online savings accounts or term deposits carry little to no risk though have lesser gains, while long-term investments (e.g. superannuation funds) can either result in significant losses or yield huge returns. The latter is usually appropriate for retirement planning and wealth accumulation. In any case, stable markets or industries should be chosen.
A medical accountant should ideally be consulted throughout the planning process. Such a professional can assess an individual’s financial situation, formulate sound strategies, determine the most advantageous sorts of investment that can be undertaken, and point out the corresponding implications.