Key Provisions related to Medicare and Medicaid Extenders Act of 2020-Physicians get reprieve

In December Physicians averted at 24.9 % cut in their income as a result of a last minute passing of The Medicare and Medicaid Extenders Act of 2010. Here are the key provisions:
1. Replace scheduled cuts with a freeze in Physician payments from 2012 to 2020.
2. Direct CMS to develop an improved physician payment formula.
3. In order to make sure CMS establishes a new formula on a timely basis, the annual reductions could be reinstated in 2015 until CMS establishes new payment.

These major provisions are a step in the right direction but our a "day late and a dollar short" as so much of tax payer money could have been saved if Congress acted on this years ago rather than perpetually delaying the cuts with last minute legislations.

Medical Student loans and Tax Forgiveness

The new tax law provides an added benefit for doctors with medical student loans. If your loan is forgiven and you work in an "underserved" area, you may be entitled to tax free treatment on the forgiveness of the tax free loan. This was not always the case.
In the past, often the trade off of practicing medicine in an underserved areas, albeit rewarding emotionally and intangibly, typically did not create the income to offset the benefit of the forgiven loan. In other words, it was more cost effective to keep the loan and practice where you could make money that far exceeded the amount of the loan. However, in today's changing health care landscape, that is not always the case anymore. So, when weighing your options, the intangible benefits plus the tangible cost benefit of a forgiven loan plus tax free treatment of that forgiven loan, may be enough for some people to actually take advantage of this offer and practice in underserved areas.