Most patients pay via insurance, check, debit card, or credit card. I’m guessing a handful of practices accept bitcoins. And, yes, every practice accepts cash.
Did you know that if you receive over $10,000 in a trade or business, Form 8300 needs to be filled out and sent to the IRS? Is medical care considered such a “trade or business?” Let’s analyze.
First, what is the purpose of Form 8300? It’s designed to identify money laundering or illicit activities. The default premise assumes that those who pay in cash do not want a paper trail and may be up to no good. Banks are well aware of this form. If you bring in a large pile of cash to the bank, Form 8300 will be on its way to the IRS.
Form 8300 includes the cash payer’s name, social security number, date or birth, and record of identification document (such as driver’s license or passport). It includes the cash payer’s occupation, profession, or business. The person filing must check a box if it was a “suspicious transaction.” Question #34 asks for a “specific description of property [sold] or service [rendered].”
If you ignore your duty:
A minimum penalty of $25,000 may be imposed if the failure is due to an intentional or willful disregard of the cash reporting requirements.
Well, what about HIPAA? Can you report all of the details about your cash-paying patient to the IRS and still comply with detailed Privacy Laws? HIPAA allows for disclosure of protected health information (without a patient’s consent) in numerous circumstances. These are explicit exceptions.
Let’s make this complicated.
Our answer may lie in Section 164.512 which addresses “Uses and disclosures for which an authorization or opportunity to agree or object is not required.”
Section 164.512 (a)(1) says: “A covered entity may use or disclose protected health information to the extent that such use or disclosure is required by law and the use or disclosure complies with and is limited to the relevant requirements of such law.”
That sounds straightforward.
In that context, Form 8300 would need to be filled out for every patient who pays with $10,000 or more of cash.
Not so fast.
Section 164.512 (a)(2) says: Section 164.512 (a)(1) says: “A covered entity must meet the requirements described in paragraph (c), (e), or (f) of this section for uses or disclosures required by law.”
And, without boring you with details, these respective sections deal with “Disclosures about victims of abuse, neglect or domestic violence”; “Disclosures for judicial and administrative proceedings”; and “Disclosures for law enforcement purposes”.
Well, isn’t Form 8300 related to law enforcement? Probably not. Examples of disclosures related to law enforcement are defined to include “crime on premises”; disclosure to victim of a crime”; or “reporting a crime in an emergency.” Looking at the examples in the HIPAA statute, “law enforcement” may not be the same as “enforcement of a law.” Confused yet?
To add further to the confusion, HITECH (HIPAA’s child) has something to say about privacy rights being increased with cash payments (or at least payment not associated with insurance).
Section 164.522(a)(1)
(v) A covered entity must agree to the request of an individual to restrict disclosure of protected health information about the individual to a health plan if:
-
The disclosure is for the purpose of carrying out payment or health care operations and is not otherwise required by law; and
- The protected health information pertains solely to a health care item or service for which the individual, or person other than the health plan on behalf of the individual, has paid the covered entity in full.
So, what’s the answer?
Not sure.
But, the irony is that some patients go to great lengths to maintain privacy. They don’t want their insurance carrier, employer, spouse, bank, or credit card company to have any knowledge they were treated by Dr. Smith for X, Y, and Z. So, what do they do? Naturally, they pay cash.
Back to bitcoins. The IRS recently disclosed they will be treating bitcoins as “property” and “not a “currency.” This implies that payment in $10,000 or more of bitcoins would NOT trigger this Form 8300 reporting; the trigger for that reporting being cash transaction.
I need to stop writing now as my head just exploded.
For maximum medical secrecy, leave the country. Non-physicians can read medical charts.
Recommend Switzerland for “skiing Holidays.
Great blog post. What in the world is a bitcoin, and what is the conversion to USD? Is this is the IMF global currency rolled out 5 years ago in anticipation of global financial collapse?
Personal note: A local real estate attorney was convicted of money laundering after his bank reported several “suspicious” deposits of cash over 10k that were placed in his practice’s escrow account. Not sure if he’s facing jail time, but he’s no longer practicing law.
Eric
Not mentioned but an important thing to know is that Form 8300 is mandatory for cash transactions over $9,999.99 and optional for lesser amounts. Your bank may send in a Form 8300 for a $5,000 cash deposit if they think the circumstances are suspicious. Also, not just banks, but as the article points out, many businesses may be required to file Form 8300 such as car dealerships and professionals like doctors and lawyers.
Another very serious obligation you have as a US Citizen is reporting FBARS or “foreign bank account reporting” to the IRS. There are very severe penalties for failure to report. This can be of particular concern to an investor who thinks a foreign bank will pay better interest than local or American banks. This can start out quite innocently. We sometimes go to Canada for vacation. It’s very easy to open a Canadian bank account and make a deposit. There have been times when their interest rates were better than ours.
For the American doctor who also practices in Canada, these are still considered foreign accounts. You may have a holding account for your part-time practice in Vancouver or some bank just over the border. IRS has limits that are very easily and accidentally crossed, since their rules are aggregate, meaning that if you have more than one account and all total over $10,000 for even a single DAY you must also report.
IRS has some amnesty programs still available. If you are a person who accidentally forgot and wants to make it right, there is a possibility that you can avoid some charges if you step up. But you need to do this under the auspices of a professional accountant or lawyer. You can look up enrolled agents or accountants who specialize in damage repair and reporting for international investors. They know what they are doing. You will end up paying some nasty fees and penalties, but you will get better sleep. Even more important, if you die before you do this, your estate will still have to repair the damage.
Your heirs will get some enormous bills and outright confiscation of your assets WILL be done to repair the tax defect. IRS has a specific department dedicated to this, and they are experts. By then it is too late. There will be no amnesty. It’s not just back taxes owed, but also updated penalties.
For any doctors who work in foreign countries and have bank accounts, this is a special area of concern. You need to hire an accountant who knows how to arrange and report all of your bank accounts.
Our Government is hemorrhaging cash and money on entitlements. Their representatives look at you as a cash cow who is taking unfair advantage of the system. When you are in contact with them, you must also remember that they can and will report you if they feel you have done anything illegal.
You should always have your lawyer with you before you speak to them and never volunteer information. If there is more than one investigator with them, the other is there to verify your incriminating statements. If you are on their turf, you are being recorded even if they are not in the room. Your best response is: “I wish to co-operate fully, please write down your questions and my lawyer and I will respond back in writing in a timely fashion.”
IRS agents are considered Federal Agents. They will be polite, even friendly. But they are NOT your friend.
Michael M. Rosenblatt, DPM
This just received today from Office for Civil Rights for HHS:
“If the IRS requires a covered entity to report certain information by law, the disclosure of that information would be permitted without the authorization of the patient under Section 512(a) of the HIPAA Privacy Rule.
Regards,
Rachel Seeger
HHS Office for Civil Rights”
Kudos to Medical Justice for getting a direct quotation from a real governmental agent regarding disclosure of PHI under specific circumstances, which would otherwise not be permitted.
When and if you had to make such a disclosure, it would be wise to include the above quotation in your documentation. Big Brother watches…
Michael M. Rosenblatt, DPM