Owning a captive insurance company may be one of the best risk management and wealth planning tools available to physicians...allowing the physician-owners to benefit from the profits of the insurance company in a highly tax efficient manner.
Beverly Hills, CA (PRWEB) September 13, 2010
In response to the passing of the recent Patient Protection and Affordable Care Act and its expansion of risks imposed on the medical community, physicians have increasingly turned to alternative forms of risk management to cover these expanding range of risks. A captive insurance company is often found to be a superior option.
“As many can attest, insurance is an expensive, necessary evil,” says Stewart A. Feldman, CEO of Capstone Associated Services, Ltd., a Houston-based firm specializing in alternative risk planning for physician-owned professional practices and related businesses, “And then when the coverage is needed on account of a claim, the insurer often denies coverage.”
To many physicians, insurance is anathema—and increasingly so given the continued environment of escalating premiums for less coverage. But rather than recoiling from insurance, some physicians are choosing to embrace it. Today, high-income physicians are finding that owning their own insurance company (called a “Captive” insurer) can be an effective (and profitable) component of their overall business strategy “Owning a captive insurance company may be one of the best risk management and wealth planning tools available to physicians,” explains Mr. Feldman. “Captives provide a platinum level of coverage to a medical practice, imaging center, ambulatory surgery center, while allowing the physician-owners to benefit from the profits of the insurance company in a highly tax efficient manner.”
According to Feldman, captives help control the rising cost of insurance paid to third parties, provide added insurance protection by filling in the holes and exclusions of conventional policies, and provide coverage for either self-insured or non-insured risks. Other benefits can include income tax savings, asset protection, and estate-tax mitigation.
Many physicians unknowingly self-insure a wide range of risks, including change in insurance reimbursement rates, the costs of CMS and insurance company audits, the risk of delisting, malpractice deductibles, changes in government regulations, professional liability, employment practices, accounts receivables, administrative actions (such as HIPAA), disability, loss of business license or professional license, and business interruption, among others. A captive also allows its owners to use specifically tailored and customized policies that are often too expensive or unavailable through the conventional insurance markets.
“Captives are usually tax advantaged, for-profit insurance companies,” says Mr. Feldman, a 30+ year tax attorney, former practicing CPA with a Wharton business degree. “Provisions under the IRS code have been in place before 1920, providing tax exempt treatment for small insurance companies. Similar provisions now apply to insurers with annual premiums under $1.2 million.”
Captives are commonplace among Fortune 1000 companies and are among the most attractive risk planning tools available to middle market businesses. A captive puts physicians in control of their insurance coverages, which can be designed to specially match the nature of the business and letting the physicians make the claims paying decisions themselves.
Since 1998, Capstone Associated Services, Ltd. together with their affiliated law firm, The Feldman Law Firm LLP, form and operate captive insurance arrangements for physician-owned businesses. Capstone is Houston-based, with offices in Delaware and in the British overseas territory of Anguilla, where many of its clients’ captives are domiciled.
To learn more about Physician Owned Captives, or to interview Stewart Feldman, contact The Professional Image, Inc. at (949) 768-1522. Or giles(at)theprofessionalimage(dot)com