By Dan Miller, WCI Contributor
If you're a physician, your state's medical board probably requires you to take a certain number of hours of Continuing Medical Education (CME) each year. CME is a way that physicians can learn about new techniques, studies, and other important updates in their field of practice. If you are employed as a physician, your employer may include CME money as part of your overall compensation. If so, they may have specific CME reimbursement rules that you'll need to follow so you can be reimbursed for your CME expenses.
Here's what you need to know about CME reimbursement rules.
What Is CME?
Continuing Medical Education (CME) is the term used to describe educational activities mandated by many state medical boards to make sure that physicians stay up-to-date on current medical practices. Different states have different requirements for CME, so make sure to check with your state medical board to understand who has to take CME, what counts, and how many hours of CME you'll need each year.
CME Reimbursement Rules
If your employer gives a CME allowance, you may be wondering about the CME reimbursement rules. There is not one definitive set of IRS CME reimbursement rules. Instead, each employer sets its own CME reimbursement policy.
The IRS does offer general guidelines for employers reimbursing business expenses, and many employers follow these guidelines when setting up their CME reimbursement policy.
What Can Be Reimbursed for CME?
There is not a definitive guide for CME reimbursements—each employer sets its own CME reimbursement policy. However, there are some common expenses that are often reimbursed for CME:
- Medical CME conferences, including the annual Physician Wellness and Financial Literacy Conference (WCICON)
- Travel to attend CME seminars/conferences. This can include airline, hotel, car rental, or food expenses. It can also include a set amount per mile driven on the employee's personal vehicle
- Online courses—including some offered by The White Coat Investor—or subscriptions
- Medical-related books and courses
Your employer should provide you with documentation for what qualifies as a CME reimbursement. If you're not sure, check with your HR department.
Are CME Reimbursements Taxable?
In most cases, CME reimbursements from your employer for valid expenses you paid out of pocket are not taxable. Typically this type of CME reimbursement is considered a rebate to spending and is therefore not taxable. However, some employers include CME reimbursement money as part of your salary and include it in Box 1 (Wages, Tips, and Other Compensation) of your W-2 form. This money is taxable, and you can only deduct your actual CME expenses (not necessarily the full amount your employer gives you).
Another scenario to watch out for is a gift card or other incentive you get when attending a CME conference. Many CME conferences and seminars offer these types of incentives in the hopes of attracting physicians to their particular event. So, your ticket to the event might cost $2,000, but you also get a $500 Amazon gift card with your ticket. In some cases, you might pay for it and get the entire $2,000 reimbursed by your employer as a CME expense, pocketing the $500 gift card. This can become an ethical dilemma. One thing to keep in mind is that in a situation like this, the gift card is considered taxable income. Your employer's CME reimbursement policy may also require you to turn over any sort of incentive like this as well.
As with most tax questions, if you're not sure, your best bet is to talk to your accountant and/or financial advisor.
How to Use CME Money
If you have a flat amount of CME money each year from your employer, you may be wondering what is the best way to use CME money. Naturally, there is not one “best” way that will work for everyone, since everyone's situation is different. Some physicians use their CME money on online courses or subscriptions on a topic that is interesting and relevant. Others prefer to travel to vacation destinations for a Continuing Medical Education seminar or conference. You could also buy and be reimbursed for CME books.
If you're not sure how to use any CME money offered by your employer, consider talking to other physicians in your department or practice. They may be able to share some of the things that they use their CME money on. That could give you inspiration on what would be the best use of CME money for your particular situation.
The Bottom Line
CME is an important part of many physicians' annual schedules and their compensation packages. If you have a CME allowance or get CME reimbursement from your employer, make sure that you understand the CME reimbursement rules for physicians where you work. That will help you make sure that any expenses that you pay for are reimbursed by your employer, so you don't have to pay anything out of pocket.
There aren't specific IRS CME reimbursement rules. Instead, check with your employer for their CME reimbursement policy and make sure you stay within the allotted guidelines.
Did you know that you can receive CME for participating in most of the courses offered by The White Coat Investor? Check them out today and learn all about financial wellness while getting CME credit!
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