Cognitive Biblical
Therapy Coursework
Counseling Through God’s
Transformative Word
Course 6 Chapter 8
Chapter 8 Business Expenses
a. Insurance Procedure Codes (continued)
b. Taxes
c. Business Credit Card
d. Monthly Evaluation of the Practice through Statistics.
e. Expanding the Practice
Essay Questions: Answering the section questions (red buttons) is a great way to prepare for the end of the Chapter Quiz. Chapter 8 questions will help you review the text material and apply to your present or future counseling setting. The section questions will provide Dr. Wilkinson’s feedback to your answers.
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Chapter 8
Business Expenses
Insurance Procedure Codes (continued)
The sheet that you have in front of you will say, Behavioral Health Codes AMA, listing the majority of common mental health procedure codes. Looking at the second document, the Behavioral Health Coding Resource, listing the 5-digit codes under specific provider services. Through the American Medical Association (AMA), you can find links on the document to lead you to further CPT codes, books for CPT coding and descriptions for the codes (Psychotherapy, p. 2). Several other codes are not listed, like 90791 for an initial consultation called, Psychiatric Diagnostic Evaluation without medical services.
Once you fill out this initial form, you still send a bill using an invoice which has to have the same information: client's name, session date, charges. After all of that, you will put your license number, the procedure code, your tax ID number, the diagnosis, the number for the diagnosis, and in some cases the insurance company requires you to put in the client’s employee ID number, social security number, and the group plan number for the insurance policy. After this initial form and bill/invoice is filed, then you send just the invoice to the insurance company, though the insurance companies may make you fill out one of these things every time you bill. If you send an invoice that has all the pertinent information on it, then they will process it and pay for the claim.
Once you have done all this, you or the client are ready to submit this claim by mail or on their online insurance portal. For your own safety and record keeping, make a copy of the invoice, both the sides of the insurance form, and keep that information in the client's file. I make duplicate copies of invoices, so that I can keep a file of the invoices that I submit every month. It's a good idea to do that, if you are billing churches, because you will be sending invoices to them every week for clients they are supporting. Sometimes invoices get lost, or records need to be explained if they are questioned. Make sure that you keep all this information, so that you can use this information for each invoice you prepare for that client. Sometimes you send the documents to the client to forward them to the company. Either way, the wait for payment is three to seven weeks. As you keep sending invoices, the payments will catch up and you will be getting payments regularly.
Every insurance company is different. Some will pay 80% of the claim, others will pay 100%. Some companies will give them benefits for different lengths of time. Some will have deductibles that will be expensive, maybe $500 deductible. Some will have none. It just varies with the company. Be sure to explain to the client that they should check their benefits, but often it is difficult to know until a claim is filed. Yet there are several options, such as ideally the client pays the full or standard rate and will receive their health insurance payment. Second option, the client pays what the insurance company does not pay in charges and the insurance payment goes to your practice. If that is known, ask the client to pay their “copay” at the end of the session.
Business Taxes
The next thing I want to talk with you about will be the whole issue of taxes. Probably the most important thing to realize with taxes is you don't get much forgiveness. In other words, you owe them, and the federal and state government are concerned that you pay those taxes when you're supposed to. If your business is a corporation, the IRS will send you letters and coupon books for your estimated payments. If you are a sole proprietorship, you still have to pay quarterly, but they don’t seem so intense about it. You need to get professional help before you have to start paying taxes, so that you do it correctly and on schedule. You will need to know the amount of tax on your salary using a tax table. If you are using an accounting computer program, you must enter the correct information so that it can calculate the tax withholding for you. Your net paycheck should list your tax withholding which includes income tax, FICA or Social Security, and Medicare. Since you are your own employer, you get to pay that portion of your matching tax as well. At this time, it is 15.3% for FICA. The employer part comes from the profit gained that month in your corporation. State income tax is less and not a matching tax like the Federal tax. You may be on a schedule of quarterly tax or monthly tax payments. Whatever the case, you must have that much money set aside to pay on time.
You need to get help from someone who is a specialist and current on the tax laws when you get ready to do this. The tax benefit is that you don’t pay taxes on your expenses. You benefit from the things you pay for, don’t pay for it out of personal income or pay taxes on them such as equipment, disability insurance, health insurance, and retirement funds. If you use a home office, your tax advisor can help you to know what is tax deductible.
The other side of taxes with a corporation is paying taxes on the profit the corporation makes, just like my income as an individual, is subject to income tax. There is a corporation income tax that is levied both by the federal government and the state government that's usually paid every quarter. The things the corporation pays for reduce its profit. It's just you have to earn enough extra income above all your other expenses to pay that. Some other things are an annual registration report to renew your business registration, and unemployment tax that they levy on you. At the end of the year, you fill out reports for employees, wages, and withholding amounts and reconcile your taxes from the whole year to make sure that you paid for everything. You will need to file income tax as a corporation.
Don't pretend like you know what you're doing. It's just not worth it. If you go into sole proprietorship and get a tax consultant, you won't have much to do with your business, because you won't have any perks or retirement plans. Unless you have business experience and knowledge of these things, be sure to get professional help to walk you through this tax process even if it is just a few months. Don't just let this thing sort of slide by, because it is hard to catch up.
Fully answer the following question from the content you just read and submit your answer to find your score and Dr. Dan's answer to the question.
List the tax liabilities that a counselor may be responsible for in his or her practice and what each tax is for.
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Dr. Dan's Answer:
The taxes will include federal income withholding, F.I.C.A. (Social Security and Medicare), state income withholding, federal unemployment tax (in some cases), state unemployment tax, federal corporate income tax, and state corporate income tax.
Using Credit Cards
The next section is about credit cards and how to use them properly in your business. If you choose to use a credit card, realize that a business credit card is not the same as a personal one. You obtain it in a slightly different manner. Your business has to have a track record of transactions. In other words, they want proof that you've been earning income, you're stable and consistent. Based upon that, they'll establish a line of credit for you, usually in the first year or somewhere around $2,000. They are hesitant to give you a large line of credit at the beginning. It's like any other credit card in that you will pay higher interest than a bank loan. If you get irresponsible with it, it can be a drain on your practice. I have limited my use of credit cards for equipment purchases that I had an immediate need for and did not have the capital saved to purchase it. I've also used it on business lunches. I don’t usually carry much cash, and it is a good way to build a credit record, and keep a record of expenses for advertising. I've also made a policy to not use it for large purchases unless it's absolutely necessary. Instead, to save the capital until I can afford the purchase. That is the best way to go, because you eliminate the high interest which is an extra cost. I recommend you get a business credit card, but to use it sparingly with the plan to pay it in full each month to avoid interest charges.
Fully answer the following question from the content you just read and submit your answer to find your score and Dr. Dan's answer to the question.
At times the counselor's practice may have a need for capital in order to make a given purchase or meet a financial need. Discuss the process, and pros and cons of obtaining a business charge card such as VISA, Discover, or Bank Card.
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Dr. Dan's Answer:
A business credit card is obtained in a somewhat different manner than a personal credit card. The business has to have a track record of business transactions and establish credit upon that record -- meaning the practice must be established first before the card can be obtained.
The credit card is like any other in that it is easy to get into trouble if spending is random and irresponsible. On the other hand, purchases such as computers or office equipment can enhance the practice and are reasonable if charges are paid off as soon as possible to avoid high interest charges.
Evaluating Your Practice
The next issue in this section is the monthly evaluation of your practice through data you have collected and statistics to generate reports that will provide feedback for you. You will need a database to keep track of the number of sessions you had, different denominations of your clients, number of referrals, and your overhead and expenses through an accounting system. You will want to know about cancellations, and the number of sessions before a client feels restored. This also allows you to keep track of your pro bono sessions and how much that is costing you to hold to your policy of 10% of your sessions. Another is to track your insurance billing and payment cycles. The majority of the data comes from the client information on the Initial Session Inventory (ISI) and the Individual Data Inventory (IDI). Tracking client recovery progress and session cancellations can help you plan your counseling sessions.
Checking your database is the easiest way to keep an eye on how your practice is doing. For example, I know that if I average 100 sessions a month, with 10 of those being pro bono, then I know my income is going to be at about the right place. When I check my accounting system at the end of the month, I know I've got to have a certain dollar amount. Over the span of a month, I can have a low week, a high week, and average weeks. I can check it any time, if I think I'm doing poorly. I can check it in the first week or the third week, and I can know where I'm at precisely. That information is very important to have, so that when your emotions are low from being tired or stressed, and you are tempted to be afraid, you get the facts from your data. If you need to adjust something, you can do it before the problem becomes huge. If I go to the statistics, I get facts, then I know what I'm doing. If I find that I need to increase advertising, I can make that happen.
Make sure you know what your goals are for the number of sessions, income and clients in active counseling. If my sessions get too high and I'm exhausted, then the statistics tell me why I need to stop working so much and rest more. I need to put more people on a waiting list, or I need to not take extra sessions, or I need to refer people to somebody else.
Fully answer the following question from the content you just read and submit your answer to find your score and Dr. Dan's answer to the question.
The ongoing statistical analysis of a counselor's practice is vital to his or her own sense of its growth and direction. Discuss some means by which this analysis can be obtained.
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Dr. Dan's Answer:
Statistics can be kept by hand, but the easiest method for tracking statistics is through a database such as Paradox or Microsoft Windows. This allows the counselor to track such things as the client's denomination, age, profession, and other items of interest.
This enables the counselor to see which denominations are referring clients or what the median income of clients is. Decisions can then be made regarding which churches should be targeted for mailers or whether the counseling cost per session is realistic for a given geographical area.
Expanding the Practice
There are several options to expand your practice as we discussed earlier like partnerships, and other organizational models. If you expand with any of these models, be sure to get a good, solid agreement (see Employment Agreement Example in Required Written Documents) if a formal contract is written by an attorney. A friend and a handshake will not be solid enough to solve differences in thinking and legal issues. Make sure that you have good, solid agreements that are contractually sound, with limitations, and legal protections, so that you don't become absorbed or dissolved by somebody else, mistreated financially, or frustrated because you find out they don't have the same spirit that you do.
If you go into other organizations, query the people. Ask the specific questions about how they handle problems, what are your policies, and ask for the written policy statements. Then be sure to check out how they are viewed by their clients and community of other professionals.
Copyright 1987, 1990, 1993 by Daniel D. Wilkinson. All rights reserved. For more information concerning this material, write to:
The Biblical Christian Counseling Ministries, Inc., 2730 Radcliffe Dr., Florissant, MO 63031.
Any reproduction of this material without the express written consent of the author is prohibited. Printed in the U.S.A..
Fully answer the following question from the content you just read and submit your answer to find your score and Dr. Dan's answer to the question.
There may come a time when a counselor decides to expand the practice. The means by which this is done will be very important to the success of the attempt at growth. Discuss some means by which this can be accomplished and what the potential pitfalls are that may be encountered within this effort.
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Dr. Dan's Answer:
Growth may be expanded through partnerships or other organizations. A partnership is only as good as the individuals involved -- thorough plans must be made, a legal agreement must be drawn up, and all contingencies evaluated before a final agreement is reached.
Organizations can offer much of the needed support -- finances, facilities, and support staff -- but can also be rigid and stifle creativity.
You are ready to take Course 6, Chapter 8 Quiz.
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