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Understanding the Real Difference Between 1099 and W-2 Dentistry When you are a dentist, associate, or specialist and are trying to make the decision on whether to work as a 1099 or W2, you have likely heard the same old worn-out arguments: 1099 is better for write-offs, or W2 is better for benefits. Both are technically true, yet neither of them tell the whole story. It is not only the difference between the two in terms of taxes, but also the way you prefer to live and work every day. The Predictability and Simplicity of Being a W-2 Dentist Being a W2, life is a little more predictable. There are automatic withholding taxes, you receive standard benefits such as health insurance, malpractice, possibly a 401(k), and some CE or PTO. It is predictable, well-organized, and simple to manage. This arrangement is attractive to most associates, especially at the beginning of their careers. You are able to concentrate on mastering your dentistry skills and do not have to concern yourself with quarterly tax and business deductions; you can do your taxes simply through an online software. It is the plug-and-play version of your career: you come in, work hard, and leave. The downside here is that you sacrifice a certain degree of control; you can't write off costs as easily, your schedule may be predetermined, and your income potential is limited unless production-based bonuses are high. However, the peace of mind and ease are worth it to many. The Flexibility and Responsibility of a 1099 Arrangement Now, when you take a 1099 offer, that is a whole different game. You are not merely a dentist; you are a small business. You are more flexible and have more opportunities to design your income the way you want. CE courses, scrubs, supplies, travel, and part of your home office can be written off. If you are a car person (like me), you can take advantage of Section 179 of the tax code and be able to write off a business deduction for a vehicle over 6,000 pounds, think Bentley Bentayga and Mercedes G-Wagon. You choose the way you spend your money and construct your way of life. However, this comes with the responsibility, quarterly tax payments, and spending money to get a qualified CPA, instead of possibly doing your taxes through a low-cost version of TurboTax if you were W-2. Some love it, some don't. Choosing the Structure That Best Suits Your Life and Goals No universal solution fits all, and that is what people jump over. The final determination lies in the fact that you know what arrangement will suit your goals and life. The point is understanding what you are really getting yourself into before signing a contract. Written by: Vinny Grasso
What is Life and Disability Insurance Underwriting? There are two components used in underwriting Life and Disability insurance Medical Underwriting: is used to identify risk in a person’s health history and lifestyle when applying for an insurance policy. Financial Underwriting: is used to evaluate an applicant’s financial situation, income, assets, and debts for the same purpose as Medical Underwriting. In this article we will look at changes made to these processes since entering the 21st century. What has changed in the last 26 years? Accelerated and Simplified: The largest change one may notice is the increased efficiency in which a policy may be issued. Insurers removing the need for physical medical exams, blood tests, and extensive attending physician statements for many applicants has greatly helped in speeding up the issue of policies. Use of Data Resources: Underwriters have a much larger pool of data to draw from than in years past. More obvious sources include MIB (Medical Information Bureau), motor vehicle reports (MVR), prescription histories, and credit scores. Lesser-known sources for data collection may include use of data from wearable devices, health apps, and public records (given consent from the consumer). These can be invaluable resources when assessing risk. AI: Artificial Intelligence is capable of automating data collection, performing predictive risk modeling, identifying patterns, and making instant decisions for simple cases. These tools allow human underwriters the time and energy to focus on complex cases. Advancements like these in underwriting cannot be understated in their usefulness. Personalization: In the effort to make the experience more comfortable for customers, there has been a shift towards digital applications, tele-underwriting (remote interviews), and virtual medical exams. This personalization extends to pricing, with some models offering dynamic premiums based on real-time data and health behaviors. The ease provided by these developments in not only technology, but also in information processing have been crucial to the underwriting landscape as we currently know it. While the previous advancements have been on the side of the underwriters, the following reflect more on the societal and regulatory changes that have occurred in the timeframe we are discussing. Privacy: With the new data collection resources underwriters have access to, concerns regarding privacy have been rightly raised. Insurers are now more scrutinized on the transparency of how data is collected and used in regards to building customer trust and regulation compliance. Mental Health: With disability policies, we’ve seen insurers pivot towards more often offering coverage for mental health condition spurred on by societal views and demands as understanding around mental wellness expands. We can see that through these advances in underwriting that insurers, who can appear to be flippant in their requirements for coverage, have been hard at work refining their methods to better fit the needs of the now. In the insurance industry, often considered slow-changing for several reasons including some companies reliance on antiquated systems; high levels of regulation on the state and federal level; risk aversion creating a cautious environment that does not handle quick changes well; and a cyclical presence in the market more easily handled by having a reactive approach opposed to proactive, it is plain as day that the industry is capable of growing and adapting to this ever-evolving world. Written by: Jerold Dougherty