FTC approves rule banning most noncompete agreements; litigation to follow

In a long-anticipated decision, the Federal Trade Commission (FTC) April 23 approved on a 3-2 vote an administrative rule that would ban most noncompete clauses in employment contracts. In announcing the rule, FTC chair Lina Kahn said that of the approximately 26,000 public comments received on the original rule proposal, around 25,000 were in favor of the rule. The Wisconsin Medical Society (WisMed) submitted its support in April 2023 during the initial public comment period (see this Medigram story for background and a link to the comment letter). More background on the FTC’s justification for the rule can be found in this FTC fact sheet.

The rule’s impact on employed physicians most likely depends on how an employer is organized; while for-profit entities fall squarely within the FTC’s scope, employers categorized as nonprofits may not be subject to FTC rulemaking – indeed, FTC Commissioner Rebecca Slaughter, who voted in favor of the final rule, bemoaned the fact that the rule would not apply to nonprofits due to the FTC’s limited oversight. The American Medical Association estimates that between 37% and 45% MDs and DOs are affected by noncompete clauses.

The rule is scheduled to take effect 120 days after publication in the Federal Register, but that timeline will undoubtedly be affected by the rule’s opponents rushing to the courts. The U.S. Chamber of Commerce declared its intention to sue just hours after the FTC’s April 23 meeting, then followed through in a filing on April 24 in the Eastern District of Texas. Additionally, the American Hospital Association issued a statement revealing the vehement opposition the rule will face, meaning the likelihood of the rule taking effect any time in the next two years quite small.

As this federal rule plays out in the judiciary, WisMed will explore potential options for supporting physicians by improving Wisconsin’s law in this area (which lags behind many other states, as shown by this Economic Innovation Group map of state laws and this 50-state summary from the Epstein Becker Green law firm). The next state biennial session begins in January 2025.

Contact WisMed’s Mark Grapentine, JD for more information.

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Wellness Week for WisMed Members – May 7-10

Join us for Wellness Week, a dedicated time from May 7-10 for Wisconsin Medical Society members to explore mental health resources. This free service offers a 30-minute well-being check-in with a licensed therapist to discuss the benefits of therapy and answer any questions in a confidential setting. There is no obligation, and insurance is not required.

In light of the 2024 Medscape report revealing that 83% of physicians experience burnout, we are initiating these sessions to help our physicians understand and utilize therapy to improve their well-being.

Registration is open!

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Foundation supports Sources of Strength trainings

Sauk Prairie Healthcare Foundation reached out to the Wisconsin Medical Society Foundation (Foundation) in late 2022 to seek support for a community education program, Sources of Strength, to address a rise in teenage suicides in their community. Adults in the schools received mentor training. Students and adults then participated in additional combined training. Student groups continue to meet with their mentors/facilitators to spread the Sources of Strength message to the entire school. Lead mentors participated in training during the summer and student training will continue.

Recently Foundation Program Coordinator Jaime Craig attended Sources of Strength Community Night Training at the Goodman Community Center. After the training, Jaime noted, “What a powerful evening and a chance to connect with an amazing group of individuals with such passion to move through a hard topic.” She added, “Unfortunately too many have been affected by suicide in some way. Sources of Strength gives us the opportunity to talk about science and research-based ways to be proactive and identify at-risk individuals.”

Sources of Strength is a program that focuses on stories of strength, rather than on stories of trauma, and utilizes groups of diverse students and adults from many different cultures within the schools and communities. The goal is to be “connectors” to spread help and strength. The message begins in elementary school and is continued through high school. Everyone is encouraged to explore the eight protective factors represented in the Sources of Strength Wheel: family support, positive friends, mentors, healthy activities, generosity, spirituality, physical health and mental health. As part of the Community Night Training, members were invited to divide into small groups and each draw something that brought us peace and/or positivity. Family and friends were a common theme for each group and brought back into discussion about how the wheel reflected positively in lives.

Sources of Strength is a rigorously evaluated upstream prevention program. The program outcomes have shown increased connectedness to adults, school engagement, likelihood to refer a suicidal friend to an adult, positive perceptions of adult support and acceptance of seeking help – the largest increase of students asking for help was amongst students with suicidal ideation.

The Wisconsin Medical Society Foundation is excited to continue to learn more about Sources of Strength and its impact in communities like Sauk County thanks to partners, like Sauk Prairie Healthcare Foundation, that are dedicated to serving the mental health and health equity and access needs. Learn more about how Sauk Prairie Healthcare Foundation is serving the community here. More information about Sources of Strength can be found at sourcesofstrength.org. Grants like this are supported thanks to the generosity of donors at events like Health & Harmony and direct support to the Foundation’s mission to increase health equity and access in Wisconsin. You can add your support that work here.

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Tax treatment of long-term care insurance a game changer

We put my dad into a nursing home on a Monday. My mom had been his caretaker since he was diagnosed with a somewhat rare neurological disorder. My mom has been superwoman, a real- life example of a family member caring for a loved one. However, even superwoman has a kryptonite, hers being a diagnosis of breast cancer with an impending dual mastectomy this Friday. In need of her own care, our family had no choice but to concede to the fact that dad needed continuous care from qualified professionals. The cost? $8,000 per month, and that does not include costs for prescription medications and other needed skilled medical treatments. My parents are faced with a common long-term care phenomenon, which asset do we liquidate first?

As part of our financial planning, we should all anticipate being faced with this conundrum. Which asset should we set aside to be liquidated first in the event of the need for exorbitant long-term care expenses? In considering the tax treatment of “qualified” long-term care insurance products, we may be able to make this decision much easier.

Qualified long-term care insurance premium deduction

First, the IRS allows a tax deduction for qualified long-term care insurance premiums. These premiums could be in the form of a traditional long-term care policy or for the prevalent “hybrid” life insurance with long-term care benefits available today. In essence our premiums can be combined with our unreimbursed medical expenses to the extent that they do not exceed 7.5% of our adjusted gross income. The maximum we can deduct is subject to age limits, but this by itself can be significant, especially if we combine the sum-total over a respective number of years. If we do not claim the deduction on our Federal return, we can claim the expense of our premiums on the State of Wisconsin income tax return. All states vary with how these premiums are treated, so you need to check with your individual state.

The 2024 federal IRS deduction limits are:

Age 40 and below       $470

Age 41-50                     $880

Age 51-60                     $1,760

Age 61-70                     $4,710

Age 71 and over          $5,880

How are long-term care insurance payments for care treated by the IRS for tax purposes?

When determining which asset to liquidate first, this can be the determining game changer! If the policy is “qualified” per IRS guidelines, typically the payments for any level of care including home health care, assisted living or skilled nursing home care are not taxed. For my parents that would mean an estimated $96,000 in annual benefits received that would not be taxed. If assets were set aside and allocated to a taxable investment for future long-term care, it likely would need to achieve a significant rate of return to compete and almost certainly involve volatility and risk. I would say most of the time it makes much more sense to purchase “tax qualified” long-term care protection. My grandmother was in a home with cognitive impairment for 12 years. In her case at an average nursing home cost of $100,000 per year, she would have received $1,200,000 in tax-free benefits. Can a savings account or investment compete with that? And how will inflation and supply and demand affect future costs?

Using a Health Savings Account for long-term care insurance premiums

Another tax consideration worth mentioning is that qualified long-term care insurance premiums can be funded with Health Savings Account (HSA) assets. As we know, our health savings accounts accumulate on a tax-free basis, are deductible for individual contributions and can be funded with employer contributions. This fact can further enhance the benefits of purchasing long-term care protection.

I work with insurance planning for our physicians every day. Yet, the value of proper planning still resonates with an abrupt wake-up call when faced in real life. How much expense will accrue with my dad’s nursing home stay? Only the future holds the answer. One fact is undisputable, knowing which asset we will liquidate first should be planned well in advance. That asset may very well be and should be a tax qualified long-term care insurance policy.

For help with your insurance planning, contact Tom Strangstalien at 608.442.3730 or the WisMed Assure team at [email protected], complete this quick online form or call 608.442.3810.

Originally posted in the Antidote March 30, 2024

Note: This article is for informational purposes only and should not be considered as insurance advice related to your specific policy or situation. Please consult with a qualified insurance advisor or professional before making any policy decisions. Full disclaimer and contact information.

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