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What Kinds Employment are there in EM and what is an Independent Contractor?
*Please note that I'm not trying to address the differences between independent groups and corporate groups here. That will be done in a seperate, forthcoming thread dedicated to that topic.
Employees
There are different ways to be employed as an Emergency Physician (EP). The simplest is to be an employee of a hospital. While this is pretty straight forward its also rare and is pretty much limited to some academic groups and groups at publicly owned hospitals or hospitals owned by a health plan (and by that I basically mean the Kaiser hospitals in HI, CA and CO). The advantage of this situation is that you are likely to be part of a public or university employees benefits organization and can share in the volume advantages of those plans. The downside is that you have less say in decisions about those plans. You money gets paid to you in the form of W2 wages and withholding, SSI (or similar) are taken out as you go. This is like the traditional employee model where every April you sit down and do your taxes. If you owe more than your withholding you write a check to the IRS. If you owe less you get a refund.
Another way to be employed is to be an employee of a group that has a contract with a hospital. This is much more common. In this setting you have more say over things that involve your group as those decisions are made locally. You still get paid W2 wages and have taxes and so on withheld.
A similar situation to the above is to be an employee of a large, corporate group. Groups such as EmCare and EPMG fit this model. In these groups you still get paid W2 wages but you have less say over administrative issues because those issues are negotiated on a regional or national scale.
Independent Contractor
The other way to be employed is to be an Independent Contractor (IC) for any of the above mentioned groups. As an IC you are essentially subcontracting with the primary contractor who has the contract with the hospital. As an IC you are not paid W2 wages. You get paid and your earnings are reported to the IRS on something called a 1099. The biggest difference between the two is that ICs get more money paid to them but then they have to turn around and pay everything they owe to the IRS. There is nothing withheld. ICs usually have to pay their taxes quarterly because the IRS wants its money sooner rather than later. That can get pretty complicated.
The big advantages with being an IC are due to taxes. You can deduct a lot of expenses that are not deductible by a W2 earner. If you know what you are doing or you have a good accountant you can come out ahead as an IC. If you or your accountant dont know what you are doing you can get into a lot of trouble.
Another thing about ICs is that they generally dont get benefits and often dont get malpractice provided. Obviously they have to get paid more to offset these expenses but that is negotiated in their contracts.
While the potential upside to being an IC is attractive it is very complex and has a lot of pitfalls. My personal opinion is that new grads should be wary of IC positions unless they bring some previous financial knowledge to the table.
Here are some links to previous discussions about ICs:
http://forums.studentdoctor.net/showthread.php?t=569574
http://forums.studentdoctor.net/showthread.php?t=381892
*Please note that I'm not trying to address the differences between independent groups and corporate groups here. That will be done in a seperate, forthcoming thread dedicated to that topic.
Employees
There are different ways to be employed as an Emergency Physician (EP). The simplest is to be an employee of a hospital. While this is pretty straight forward its also rare and is pretty much limited to some academic groups and groups at publicly owned hospitals or hospitals owned by a health plan (and by that I basically mean the Kaiser hospitals in HI, CA and CO). The advantage of this situation is that you are likely to be part of a public or university employees benefits organization and can share in the volume advantages of those plans. The downside is that you have less say in decisions about those plans. You money gets paid to you in the form of W2 wages and withholding, SSI (or similar) are taken out as you go. This is like the traditional employee model where every April you sit down and do your taxes. If you owe more than your withholding you write a check to the IRS. If you owe less you get a refund.
Another way to be employed is to be an employee of a group that has a contract with a hospital. This is much more common. In this setting you have more say over things that involve your group as those decisions are made locally. You still get paid W2 wages and have taxes and so on withheld.
A similar situation to the above is to be an employee of a large, corporate group. Groups such as EmCare and EPMG fit this model. In these groups you still get paid W2 wages but you have less say over administrative issues because those issues are negotiated on a regional or national scale.
Independent Contractor
The other way to be employed is to be an Independent Contractor (IC) for any of the above mentioned groups. As an IC you are essentially subcontracting with the primary contractor who has the contract with the hospital. As an IC you are not paid W2 wages. You get paid and your earnings are reported to the IRS on something called a 1099. The biggest difference between the two is that ICs get more money paid to them but then they have to turn around and pay everything they owe to the IRS. There is nothing withheld. ICs usually have to pay their taxes quarterly because the IRS wants its money sooner rather than later. That can get pretty complicated.
The big advantages with being an IC are due to taxes. You can deduct a lot of expenses that are not deductible by a W2 earner. If you know what you are doing or you have a good accountant you can come out ahead as an IC. If you or your accountant dont know what you are doing you can get into a lot of trouble.
Another thing about ICs is that they generally dont get benefits and often dont get malpractice provided. Obviously they have to get paid more to offset these expenses but that is negotiated in their contracts.
While the potential upside to being an IC is attractive it is very complex and has a lot of pitfalls. My personal opinion is that new grads should be wary of IC positions unless they bring some previous financial knowledge to the table.
Here are some links to previous discussions about ICs:
http://forums.studentdoctor.net/showthread.php?t=569574
http://forums.studentdoctor.net/showthread.php?t=381892
