Are Locum Tenens Independent Contractors?

Yes, locum tenens physicians work as independent contractors, which means they are self-employed rather than employees of the staffing agency or healthcare facility. This means that locum tenens contractors need to manage their own taxes, which typically looks like quarterly estimated payments, and are responsible for obtaining their own medical insurance.

Self-employment is empowering for many physicians, but managing a new contract status can be overwhelming initially. No worries! We’ve compiled some of the most common questions we get about working as a contractor in a locum tenens position. If you want more personalized guidance after reading through our tips, reach out to our expert consultants for more help with your locums journey. 

How Do You Get Paid as a Locum Tenens Physician?

Locum tenens physicians are usually paid an hourly, daily, or weekly rate, which is negotiated in advance with the staffing agency or healthcare facility. Payments are often processed through the staffing agency, which acts as an intermediary. Physicians working as 1099 contractors must track and report their income for tax purposes and may need to make quarterly estimated tax payments.

Do Locum Tenens Physicians Receive Benefits?

As independent contractors, locum tenens physicians typically do not receive traditional employee benefits like health insurance, retirement contributions, or paid time off. However, some staffing agencies offer optional benefits packages that physicians can purchase. Alternatively, many contractors choose to source their own benefits through private insurance plans or health exchanges.

While locum tenens physicians do not receive traditional benefits, Era Locums does offer malpractice insurance as part of its concierge services for physicians in our network.

What Is a 1099 Contractor? 

While employees receive W-2 forms for tax purposes, independent contractors receive 1099 forms. Locum tenens physicians, as 1099 contractors, report income earned to the IRS using a 1099 form provided by the staffing agency or facility. This designation signifies that they are responsible for managing their own taxes, including self-employment taxes.

PandaDoc offers free 1099 forms that you can view in order to familiarize yourself with the format. 

What Taxes Do 1099 Contractors Pay?

As independent contractors, locum tenens physicians are responsible for managing their own taxes, which differ from those of traditional employees. This includes self-employment taxes, which cover Social Security and Medicare contributions, typically amounting to 15.3% of income. In addition, contractors must pay federal income tax and, in most states, state income tax. 

Locum tenens physicians are required to pay their taxes quarterly in what are called “estimated tax payments” to avoid penalties. However, contractors can deduct certain business expenses, such as travel, malpractice insurance, and continuing education, to reduce their taxable income. Managing taxes as a 1099 contractor requires careful planning and record-keeping, and many physicians choose to work with a tax professional for guidance.

How Do Locums Staffing Agencies Work with Contractors?

Staffing agencies act as a bridge between healthcare facilities and locum tenens physicians. They handle the logistics, such as matching contractors with job opportunities, coordinating travel and accommodations, and ensuring payment. Agencies also assist with licensing and credentialing, streamlining the process for contractors so they can focus on patient care.

How Do Locum Tenens Physicians Acquire Health Insurance?

As independent contractors, locum tenens physicians do not receive employer-sponsored health insurance and must secure their own coverage. Many choose to purchase plans through the Health Insurance Marketplace, private insurers, or professional associations that offer group rates for medical professionals. Some staffing agencies may provide access to optional insurance plans, though these are typically at the contractor’s expense. 

Physicians can also explore Health Savings Accounts (HSAs) paired with high-deductible health plans, which allow for tax-advantaged savings for medical expenses. Evaluating coverage options and costs is an important step for locum tenens physicians to ensure they are adequately protected while maintaining financial stability.

Many locum tenens physicians purchase healthcare plans through the Health Insurance Marketplace, private insurers, or professional associations that offer group rates for medical professionals.

What Are the Pros and Cons of Working as a 1099 Contractor?

Working as a locum tenens contractor offers unique advantages and challenges that can significantly impact your career and lifestyle. Before diving into this flexible work model, it’s important to weigh the pros and cons to determine if it aligns with your personal and professional goals. Below, we break down the key benefits and potential drawbacks to help you make an informed decision.

Pros

• Higher Pay Rates: Often higher than W-2 employee salaries. According to ZipRecruiter, locums physicians make an average of $148 a year in the U.S. compared to $90 an hour for attending physicians nationwide.
• Flexibility: Control over work schedules and assignments. When you get involved with an agency like Era Locums, you can apply for individual jobs or work directly with a recruiter to identify opportunities that fit your lifestyle.
• Variety: Opportunities to work in different locations and settings.
• Tax Deductions: Ability to deduct business expenses such as travel and malpractice insurance.

Cons

• No Benefits: Lack of employer-provided benefits.
• Tax Responsibility: Must manage and pay self-employment taxes.
• Inconsistent Work: Potential gaps between assignments.
• Administrative Burden: Responsible for record-keeping and compliance. However, many locums agencies like ours offer resources such as virtual scribes to offset the administrative burden.

Let Us Help You Manage Being a Physician Contractor

Ready to take control of your career and experience the freedom of locum tenens work? At Era Locums, we specialize in connecting physicians like you with rewarding locum tenens opportunities tailored to your goals. Whether you’re looking for flexibility, variety, or competitive compensation, our team is here to support you every step of the way—from credentialing to finding the perfect placement. 

Discover how Era Locums can help you achieve the work-life balance you deserve. Learn how to start your locum tenens journey today!

Resources

Featured Image Photo by Kelly Sikkema on Unsplash

Income Tax Forms by Kelly Sikkema on Unsplash