Optometry Practices Gain Tax Relief, But Looming Healthcare Shifts Demand Strategic Planning
A recent legislative win offers a significant financial boost to small and mid-sized optometry practices, but it arrives alongside broader healthcare changes that demand proactive adaptation. The One Big Beautiful Bill Act, signed into law on July 4th, permanently extends the 20% qualified business income (QBI) deduction for small businesses – a provision initially slated to expire in 2026. This isn’t just a tax break; it’s a potential lifeline for practices navigating rising costs and evolving patient demographics.
The QBI Deduction: A Deeper Dive for Optometrists
For many optometrists operating as sole proprietorships, partnerships, or S corporations, the QBI deduction allows them to deduct up to 20% of their qualified business income, plus 20% of other qualified income, according to the IRS. This means more capital available for reinvestment in technology, staff development, or practice expansion. However, understanding the intricacies of “qualified business income” is crucial. Practices should consult with a tax professional to ensure they are maximizing this benefit, particularly regarding income limitations and specific deduction calculations. The American Optometric Association (AOA) has highlighted that the legislation doesn’t target optometry specifically, ensuring the profession’s role remains secure.
Beyond Tax Relief: A Mixed Bag of Healthcare Changes
While the QBI extension is positive, the One Big Beautiful Bill Act isn’t solely beneficial. It includes a 2.5% increase in the Medicare Physician Fee Schedule for 2026, a win secured through AOA advocacy, and lays the groundwork for potential annual positive pay updates. However, these gains are offset by significant reductions in federal Medicaid support – a projected $930 billion cut over the next decade – and changes to the Affordable Care Act (ACA) expected to reduce enrollment. These shifts could disproportionately impact practices serving vulnerable populations and those reliant on Medicaid reimbursements.
The Medicaid Impact: Adapting to a Changing Landscape
The substantial cuts to Medicaid pose a significant challenge. Optometry practices heavily involved in providing care to Medicaid recipients may need to explore strategies to mitigate the financial impact. This could include diversifying patient bases, negotiating value-based care arrangements, or streamlining operational efficiencies. The future of Medicaid is a key area to watch, as further legislative changes are likely. Understanding the evolving regulations and potential reimbursement models will be critical for sustained financial health.
ACA Adjustments: Potential Enrollment Shifts
Changes to the ACA could lead to fluctuations in patient enrollment, potentially impacting practice volume. Practices should proactively monitor enrollment trends in their area and adjust marketing and outreach efforts accordingly. Focusing on preventative care and building strong patient relationships can help retain existing patients and attract new ones, even amidst broader market shifts. Consider offering flexible payment options or expanding service offerings to appeal to a wider range of patients.
The AOA’s Role and the Future of Advocacy
The AOA’s advocacy efforts were instrumental in securing the positive provisions within the One Big Beautiful Bill Act. As William T. Reynolds, OD, chair of the AOA’s advocacy group, stated, the organization demonstrated “relentless” dedication to representing the profession’s interests. This underscores the importance of continued engagement in legislative processes. Future advocacy efforts should focus on securing long-term, sustainable reimbursement rates for optometric services and protecting access to care for all patients.
Looking Ahead: Strategic Planning is Paramount
The One Big Beautiful Bill Act presents a complex landscape for optometry practices. While the permanent QBI deduction offers welcome financial relief, the broader healthcare changes necessitate strategic planning and proactive adaptation. Practices that prioritize financial resilience, diversify their patient base, and remain actively engaged in advocacy will be best positioned to thrive in the years ahead. The key isn’t just reacting to change, but anticipating it and building a practice that can withstand – and even benefit from – the evolving healthcare environment. What steps will your practice take to navigate these changes and secure its future?
