Transitioning from a W-2 physician or advanced practitioner to a 1099 locum tenens is an exciting career move. Working locum tenens offers newfound freedoms and control over scheduling and rates. It is important to note that having more autonomy over your career requires careful financial planning and preparation. Understanding the difference is essential for ensuring a smooth and successful shift from a W-2 employee to a 1099 locum tenens physician or advanced practitioner.
What is the Difference Between W-2 and 1099?
The differences between W-2 and 1099 include the way taxes are handled, the level of control over work hours and assignments, the benefits package offered, and more. Here are the major differences between W-2 and 1099 locum tenens:
1. Tax Forms
A W-2 form is given to employees who work directly for an employer and typically have their taxes automatically withheld from their paychecks by their employer. A 1099 form is used for independent contractors or self-employed individuals. 1099 independent contractors are responsible for paying their taxes directly to the government.
2. Benefits
W-2 employees are generally eligible for benefits such as health insurance, retirement plans, and paid time off. Health benefits are not provided to 1099 contractors as they are not considered employees of their company. 1099 locum tenens physicians and advanced practitioners can secure health coverage through a health insurance marketplace or private insurance provider.
3. Malpractice Insurance
As a W-2 physician or advanced practitioner, you are covered under the employer's Malpractice. As a 1099 locum tenens physician or advanced practitioner, you must obtain your own malpractice insurance.
4. Employment Contract
As a W-2 physician or advanced practitioner, you will have an employment contract with your employer outlining the terms and conditions of your employment. The contract includes salary, benefits, job responsibilities, and more. As a 1099 locum tenens physician or advanced practitioner, you will need to enter into an agreement with each employer for each assignment. This agreement will include the duration of the assignment, the duties you will be expected to perform, the rate of pay, and other conditions, such as reimbursement for travel expenses.
5. Work Flexibility
As a W-2 physician or advanced practitioner, you work a consistent schedule set by your employer. You have complete control over your schedule when working as a 1099 locum tenens physician or advanced practitioner. You can choose when and where you take jobs based on your personal and professional preferences. This gives you the flexibility to decide your own schedule and maintain a better work-life balance.
6. Compensation
As a W-2 employee, your salary will normally grow with the length of your employment. Hospitals typically utilize the MGMA Physician Compensation and Productivity Survey and market data to determine competitive market compensation. When working as a 1099 locum tenens, you'll receive competitive compensation based on your specialty, location, and duration of the assignment. You'll have the ability to earn more money by taking on additional assignments or working in locations with higher demand for your specialty.
Making the Transition from W-2 to 1099
Here are a few tips on how to make your transition from a W-2 physician or advanced practitioner to a 1099 locum tenens efficient and stress-free.
1. Set Up a Separate Business Entity
When embarking on the switch from permanent employment to locum tenens, it is always a good idea to form a legal entity, such as an LLC or professional corporation. Opening a separate business entity helps protect your personal assets. In addition, it also allows you to take advantage of certain tax benefits. Medicus, a leading locum tenens agency, has an exclusive partnership with legal support professionals to ensure that our physicians and advanced practitioners can access expert guidance when setting up their own legal entities.
2. Know Your Tax Payment Schedule
Secondly, it is important to familiarize yourself with the tax requirements of a 1099 contractor. You will be responsible for paying your taxes quarterly, including your self-employment and income taxes. As a 1099 locum tenens you must manage your finances carefully; this includes tracking all meals, license fees, subscriptions, tools, clothing, etc. You can deduct various expenses when filing your taxes, such as travel, clothing, meals, mileage, licensing, board fees, and more. Medicus has partnered with a company that offers professional tax support and quarterly reminders to help you stay on track each step of the way! Our partner offers free tax preparations to ensure you take advantage of all the deductions and credits available.
3. Start Building Your Financial Plan
Medicus partners with experts in the financial sector to give our locum tenens physicians and advanced practitioners the tools and knowledge they need to make the most money possible. With their help, you can create a plan for budgeting, saving, and investing that fits your unique lifestyle.
4. Update Your Health Benefits Insurance Plan
When switching to a 1099 locum tenens position, you are not provided health benefits by your employer. When working with Medicus, you have exclusive access to customized benefits and resources through our partner. They offer affordable individual and family health insurance plans.
5. Secure Malpractice Coverage
Before beginning a locum tenens assignment, it is important to make sure you have malpractice insurance in place. Medicus has secured and will continue to secure claims-made coverage and prior acts coverage from an A-rated insurance company. Our malpractice insurance covers you when working as a locum tenens with Medicus.
6. Complete the Credentialing and Licensing Process
Before beginning a new locum tenens assignment, you need to be licensed in the state where you would like to practice and credentialed at each hospital or medical facility you provide. Medicus streamlines and expedites the entire credentialing and licensing process. Our team ensures you have all of the required documents and information ready before each locum tenens assignment start date. Medicus always prepopulates your applications, saving you hours of valuable time. We aim to make the process seamless so you can focus on patient care.
Partnering with a Reputable Locum Tenens Agency
When partnering with Medicus Healthcare Solutions, shifting from a W-2 employee to a 1099 locum tenens can be made easier. We offer comprehensive services to help you navigate the transition to a locum tenens career as effortlessly as possible. With support from Medicus, you can confidently take the steps necessary to successfully transition from a W-2 employee to a 1099 locum tenens physician or advanced practitioner. It is important that you always consult with a tax professional, employment attorney, or business advisor.
Contact us today for more information on successfully transitioning from W-2 to 1099.
