Feb. 20, 2025, News Staff — With several tax cuts set to expire at the end of this year — including some affecting independent physician practice finances and patients' costs — Congress is making a priority of tax reform. Other tax policy proposals that could benefit family physicians, especially residents and those who practice in underserved areas, are also part of the discussion.
The AAFP is weighing in early.
“Numerous tax-related policies within this committee’s jurisdiction,” the Academy recently told the House Ways and Means Committee, “could protect independent physician practices, incentivize other family physicians to work in high-need communities and invest in the health and well-being of patients.”
The AAFP sent its Jan. 28 statement, signed by Board Chair Steven Furr, M.D., FAAFP, to the committee ahead of a hearing titled “The Need to Make Permanent the Trump Tax Cuts for Working Families.” The Academy urged legislators to undertake tax policy that
protects independent and small family physician practices,
extends the Patient Protection and Affordable Care Act’s enhanced premium tax credits,
ensures access to affordable care for patients with chronic conditions by codifying current IRS guidance,
encourages physicians to participate in federal loan repayment programs that provide care to rural and medically underserved communities, and
upholds the tax-exempt status of nonprofits that support physicians and their patients.
Noting that 73% percent of all AAFP members and 91% of new family physicians (one to seven years post-residency) work as employees in a wide range of practice settings, the statement asked lawmakers to maintain or expand provisions of the Tax Cuts and Jobs Act that serve as backstops for small, physician-owned practices.
“Increasingly, family physicians report that independent practice is unsustainable,” the Academy said. “Market consolidation, physician payment cuts and administrative burden are just a few of the factors that have contributed to this practice model shift. The closure of community-based primary care practices has impacted access to care for many patients, especially in rural and medically underserved areas, and dissuaded family physicians from or hindered their ability to practice in the areas with the highest need.
“Maintaining or expanding existing small business tax credits, such as pass-through income deductions or maximizing tax deductions for improvements to small businesses, can be a crucial part of maintaining the independent ownership model for family physicians.”
The Academy recently surveyed members about their tax situations. A vast majority of those who are owners or partial owners of small independent practices said they take advantage of small business tax credits.
Beyond this, the AAFP suggested income or property tax credits for primary care physicians who serve or work in rural communities.
“Specifically, primary care physicians who care for Medicare and/or Medicaid patients in a rural community should be eligible for a $50,000 tax credit on their federal income taxes in each year that they meet the qualifying requirements,” the letter said. “Additionally, if the physician provides prenatal, obstetrical and postpartum services, they should be eligible for an additional $25,000 tax credit in each year that they meet the qualifying requirements.”
Echoing a recent editorial by Academy EVP/CEO Shawn Martin, the statement said that providing such tax credits “would provide additional capital to further encourage primary care physicians to practice and stay in rural communities.”
The Academy’s letter credited the Inflation Reduction Act’s extension of the ACA’s advanced premium tax credits through 2025 with “significant coverage gains for individuals and families across the country,” noting that enrollment of lower-income individuals in ACA plans increased by 115% since 2020.
“Unfortunately, if there is no congressional action to extend the APTCs beyond the end of this year, premiums will increase dramatically for many individuals who cannot otherwise afford coverage … resulting in additional costs to the federal government and our health care system.”
To prevent this, the letter called for legislation to make APTCs permanent.
The Academy also called for legislation to exempt federal loan repayment programs, including those administered by the Health Resource and Services Administration, from taxable income.
“The student loan debt for four years of medical school, undergraduate studies and higher education is on average between $200,000 and $250,000,” the AAFP said. “Reducing student debt, especially through the utilization of federal loan repayment programs that require practicing in underserved and rural communities, can help reduce physician shortages in areas of greatest need. Mitigating student debt also frees up capital for family physicians who wish to pursue the independent practice model.”
Medical residency preceptors should be eligible for tax credits as well, the letter added.
“Preceptors provide a one-on-one relationship with a resident to help the student develop the needed clinical skills and practical experience working with patients,” the Academy wrote. “It is especially important to attract preceptors to residency programs located in rural districts. That is why the AAFP has supported the Rural Health Preceptor Tax Fairness Act, a bipartisan bill from the last Congress that would provide a $1,000 tax credit to preceptors in health professional shortage and rural areas.”
The AAFP recently joined the Public Service Loan Forgiveness Coalition, which advocates for the protection and expansion of the PSLF program. The program provides student debt relief to individuals working in eligible nonprofits and enrolled in certain federal student debt loan repayment programs. Family physicians employed by federally qualified health centers are among those who could seek assistance.
In calling for continued tax-exempt status for medically focused nonprofits, the letter specified that the AAFP’s chapters and their charitable foundations are such entities: “organizations with the shared mission of supporting family physicians and their patients throughout the country.”
The Academy, its Foundation and its chapters “support family physicians by providing an array of unique resources, such as necessary continuing medical education, clinical guidelines and materials, practice advice to manage administrative burden, and education on how to navigate new state and federal rules and regulations.
“As Congress considers policy options to fund tax reform policies, the Academy urges the Committee to ensure that the important role that we and our state chapters play in supporting our family physician workforce and access to care for patients in all communities is not undermined.”