Moving from a W-2 role into locum tenens work as a 1099 independent contractor can be an exciting career change for physicians and advanced practitioners. The transition often brings more flexibility, greater control over your schedule, and new earning opportunities.
However, as with any career change, the switch from W-2 to 1099 locum tenens comes with a few new considerations. Understanding how 1099 locum tenens work differs from traditional W-2 employment can help you prepare with confidence and make the most of your locum tenens career.
If you are considering a move into locum tenens, one of the most important things to understand is how W-2 and 1099 differ. The biggest distinctions usually come down to how income, taxes, benefits, and contracts are structured.
In a W-2 role, you are employed directly by a hospital, medical group, or healthcare organization. In many locum tenens jobs, you work as a 1099 independent contractor instead.
Physicians and advanced practitioners in W-2 roles receive a W-2 form from their employer. In a traditional employed position, the employer typically withholds federal and state taxes, along with Social Security and Medicare contributions, from each paycheck. When working locum tenens jobs, you are considered a 1099 independent contractor and receive a 1099 form. This means that rather than having taxes withheld automatically, you are generally responsible for setting aside income and paying taxes directly, often through quarterly estimated tax payments.
In W-2 roles, you often receive employer-sponsored benefits, including health insurance, retirement contributions, and paid time off. Those benefits are typically built into the overall compensation package offered by the employer. When you work locum tenens, you generally do not receive the same employer-sponsored benefits. Instead, you are responsible for selecting and managing benefits such as health insurance and retirement planning on your own.
When you are a W-2 physician or an advanced practitioner, you are covered under the employer's malpractice policy. As a locum tenens clinician, malpractice insurance may be provided by your partnered locum tenens agency on your behalf. If not, you will need to secure malpractice insurance independently.
W-2 physicians and advanced practitioners are employed by an organization under a formal contract that outlines salary, benefits, responsibilities, and other terms of employment. In contrast, as a locum tenens clinician, you or your partnered locum tenens agency will establish a contract with each healthcare facility for every locum tenens job. This contract will include the duration of the locum job, the duties expected to be performed, the pay rate, and other conditions, such as reimbursements for travel expenses.
Those in W-2 roles typically work within a schedule and structure established by their employer. Although schedules vary by organization and specialty, the role is generally tied to a permanent position within a single practice or facility. In contrast, as a 1099 locum tenens, you have flexibility in choosing when, where, and how often you work. That flexibility enables you to pursue locum tenens jobs that align with your professional goals, lifestyle preferences, and desired work-life balance.
In a W-2 role, compensation is typically structured as a salary or productivity-based model and may increase over time based on tenure, performance, and market conditions. That compensation package is often paired with employer-sponsored benefits such as health insurance, paid time off, and retirement contributions.
In 1099 locum tenens work, compensation is usually tied to the specific assignment, including the specialty, location, schedule, and level of demand. Since you are considered independent contractors and do not typically receive the same employer-sponsored benefits as W-2 employees, pay rates may be higher than those offered in some traditional permanent roles.
Moving from a permanent role into locum tenens involves more than accepting a new job. The transition to 1099 work often includes new financial, legal, and administrative responsibilities. Taking time to prepare for each step can make the shift more manageable and help set you up for long-term success.
Here are a few tips to make your transition from a W-2 physician or advanced practitioner to a 1099 locum tenens role efficient and stress-free:
Some physicians and advanced practitioners choose to form a legal business entity, such as an LLC or professional corporation, when moving to 1099 work. A separate entity may help protect your personal assets and access certain tax benefits.
It is important to familiarize yourself with the tax requirements of a 1099 independent contractor. You are generally responsible for making quarterly estimated tax payments and tracking eligible business expenses throughout the year. Taking time to prepare early can help you stay on top of deadlines, maintain accurate records, and make more informed decisions about budgeting,
Unlike a traditional salaried role, locum tenens income may vary based on assignment timing, specialty, location, and schedule. Creating a financial plan can help you prepare for potential income fluctuations, manage tax obligations, and stay aligned with long-term goals such as retirement savings or major purchases.
Physicians and advanced practitioners moving from W-2 employment to 1099 work typically need to arrange their own benefits, including health insurance and retirement planning. Reviewing coverage options early can help avoid gaps and make the transition smoother.
Before you begin your locum tenens job, it is essential to have malpractice coverage. Depending on your partnered locum tenens agency, coverage may be provided on your behalf. Otherwise, it is important to secure your own before the start of your assignment.
Before beginning a new locum tenens job, you need to be licensed in the state where you’d like to practice and be credentialed at each facility you work. Since licensing and credentialing timelines can vary, early preparation is important to ensure you can begin your locum tenens job promptly.
For a detailed breakdown of licensure timelines and costs, access our Physician Licensure Fees and Timelines by State and/or our APRN Licensure Fees and Timelines Report.
If you’re considering a switch to locum tenens, partnering with a locum tenens agency like Medicus can make the transition more manageable. In addition to helping you find locum tenens jobs aligned with your personal and professional goals, Medicus provides access to comprehensive resources and services to support an efficient transition into a locum tenens career.
How Medicus Supports the Switch from W-2 to 1099 Locum Tenens:
Since tax, legal, and financial considerations can vary by individual circumstances, physicians and advanced practitioners should always consult qualified advisors when preparing for the transition to 1099 work.
Interested in partnering with Medicus for your locum tenens career? Complete the short form below to connect with a member of the Medicus team.
Locum tenens jobs structured as 1099 independent contractor assignments generally do not include the same employer-sponsored benefits that come with many W-2 roles, such as health insurance, paid time off, or retirement contributions.
You do not need to; however, it can provide liability protection and offer some administrative and tax benefits.
As a locum tenens physician or advanced practitioner, you can deduct several expenses from your taxes, including mileage, meals, health insurance, equipment, and CME costs. Be sure to keep detailed records, save receipts, and consult with a qualified tax professional to understand which deductions may apply to your situation.
A reputable locum tenens agency, like Medicus, can help you find locum tenens jobs, explain assignment details, and support parts of the transition, such as malpractice coverage, licensing, credentialing, and access to external resources.