Financial disadvantage of military?

[bokermmk]

I have applied for the Air Force HPSP b/c being a militrary physician appeals to me. I first became interested in the scholarship for financial reasons. Ironically, people have told me that if you go into a high paying specialty such as radiology or anethesiology you are worse off by taking a scholarship. This math doesnt seem to hold up.

Military: you make about 140K total (base pay + MD pay + specialty + room + food) plus you dont pay malpractice and are in a 27% tax bracket. In the end this seems to come to about 102K net pay.

Civilian: 225K average salary (of say an anesthesiologist) - 50K for malpractice. Since you make over 200K you are in a 35 or 40% tax bracking depending if the tax breaks hold up. For the sake of argument Ill use 37.5% of 225K which is 141K less the 50K for malpractice. Thus net pay would be about 91K.

Are these calculations correct. Please dont reply with "its not about money'. I know its not, all else being equal though, money doesnt hurt.

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[umass rower]

Don't forget that the monthly cost of living and housing stipends are untaxed.

EDIT and that buying things on-base you only get charged at-cost plus 5%.

AND that you can get a full retirement package after 20 years.

 

[TTSD]

If you're in a practice wouldn't the malpractice be included in your overhead?

 

[kingcer0x]

how about pay for deployments? since you can expect a minimum of 2 of these during the 4 year commitment, id assume this is a sustantial pay period.

 

[edmadison]

Originally posted by bokermmk
I have applied for the Air Force HPSP b/c being a militrary physician appeals to me. I first became interested in the scholarship for financial reasons. Ironically, people have told me that if you go into a high paying specialty such as radiology or anethesiology you are worse off by taking a scholarship. This math doesnt seem to hold up.

Military: you make about 140K total (base pay + MD pay + specialty + room + food) plus you dont pay malpractice and are in a 27% tax bracket. In the end this seems to come to about 102K net pay.

Civilian: 225K average salary (of say an anesthesiologist) - 50K for malpractice. Since you make over 200K you are in a 35 or 40% tax bracking depending if the tax breaks hold up. For the sake of argument Ill use 37.5% of 225K which is 141K less the 50K for malpractice. Thus net pay would be about 91K.

Are these calculations correct. Please dont reply with "its not about money'. I know its not, all else being equal, money doesnt hurt.

Your calculations are wrong for at lease of reasons. First, income tax brackets a marginal. This means that you don't pay your tax rate on your entire income, just that in excess of the next lower rate. For example: assume there are two tax rates 20% for incomes to 50K and 40% for incomes above 50K; if you make 100K you pay 50K x .20 = 10K + 50K x .40 = 20K for a total of 30K not 40k if it were a straight rate.

Second, reported salaries are often reported as net. Institutions may pay for the malpractice insurance. I also think that you can do much better than 250K as a gas passer.

Ed

 

[Mutterkuchen]

According to H&R Block's quick tax calculator your takehome pay for 140,000 is 108,000. For 225,000 it's 165,000. So the difference (not counting state taxes and the fact that a small portion of the military pay is tax free) is 55,000!

At 55,000 per year, you could pay off your loans at the most expensive private school in 4 years without committing to the military.

So the lesson is . . . join the miltary because you want to be in the military, not because of the money.

Of course, if you choose a lower paying speciality, things are different.

 

[Mr. Rosewater]

Originally posted by bokermmk
I have applied for the Air Force HPSP b/c being a militrary physician appeals to me. I first became interested in the scholarship for financial reasons. Ironically, people have told me that if you go into a high paying specialty such as radiology or anethesiology you are worse off by taking a scholarship. This math doesnt seem to hold up.

Military: you make about 140K total (base pay + MD pay + specialty + room + food) plus you dont pay malpractice and are in a 27% tax bracket. In the end this seems to come to about 102K net pay.

Civilian: 225K average salary (of say an anesthesiologist) - 50K for malpractice. Since you make over 200K you are in a 35 or 40% tax bracking depending if the tax breaks hold up. For the sake of argument Ill use 37.5% of 225K which is 141K less the 50K for malpractice. Thus net pay would be about 91K.

Are these calculations correct. Please dont reply with "its not about money'. I know its not, all else being equal though, money doesnt hurt.

your math is off. for one thing, if the avg. reported salary for a radiologist or something is 225k, that is AFTER malpractice is paid.

 

[Mr. Rosewater]

i was just using his numbers. he said avg. pay is X, so then you deduct malpractice and taxes to get true net earnings. i was just pointing out that the salaries reported by specialty are net of malpractice so you need only deduct taxes. sorry if it sounded like i was quoting specific avg. salaries.

 

[vtucci]

50K is really on the low end of malpractice insurance-- particularly for high risk specialities. In some areas, it is more like 100K.

Being in the military, you can avoid a lot of the legal hassles as well. Almost every doctor I know has been sued or been threatened with a lawsuit-- not a factor in the service.

Plus, you get to take care of the men and women who defend and protect our country and that is no small thing.

 

[Mr. Rosewater]

Originally posted by vtucci
50K is really on the low end of malpractice insurance-- particularly for high risk specialities. In some areas, it is more like 100K.

Being in the military, you can avoid a lot of the legal hassles as well. Almost every doctor I know has been sued or been threatened with a lawsuit-- not a factor in the service.

Plus, you get to take care of the men and women who defend and protect our country and that is no small thing.

i seriously doubt that 50K is the low end of malpractice. i think you'de have to be in one of the most dangerous specialties in one of the worst areas to pay more. besides, even if it's a million dollars it doesn't change the fact that the avg. reported physician salaries are NET of malpractice. lastly, the OP wanted to know if there were financial disadvantages to going into the service, not if it was worth it overall.

 

[rgporter]

Originally posted by JBJ
According to H&R Block's quick tax calculator your takehome pay for 140,000 is 108,000. For 225,000 it's 165,000. So the difference (not counting state taxes and the fact that a small portion of the military pay is tax free) is 55,000!

At 55,000 per year, you could pay off your loans at the most expensive private school in 4 years without committing to the military.

So the lesson is . . . join the miltary because you want to be in the military, not because of the money.

Of course, if you choose a lower paying speciality, things are different.

You have never had a >$100,000 loan have you? I'll agree that a disciplined person could pay it off quickly, but it probably would be longer than 4 years. If it works like my mortgage then there are large interest payments that must be payed off first before you significantly affect principle balance. By making double/triple/quadruple/what-have-you principle payments you could speed the process up but you are going to be limited by other costs of living. i.e. you will have a house payment, car payment, etc.
You may not have tons of spare cash, not many doctors I know do. Having said that, I think the military is a lousy idea if your just in it for the money. Because the payback is actually 10 years when you add in the time you spend in your residency. 10 years is about how long I think it would take a marginally disciplined person to pay off their loans. I am going to go military, but only because I want to be a military doctor.

 

[DD214_DOC]

Since it was mentioned here, I will pass on some info. It seems the military may be phasing out primary care physicians and outsourcing them to civvies. This could have serious implications for those who are considering HPSP and primary care.

http://forums.studentdoctor.net/showthread.php?s=&threadid=104149

 

[rgporter]

Originally posted by Mr Reddly
He didn't have to deal with being sued (you can't sue in the military). So, he got to do something he loved without all the hastle that you deal with as an FP on the outside. He didn't have to deal with insurance and paperwork... just being a doc.

He did have to worry about being court marshaled though. Totally negligent behavior as a doctor still gets you in trouble.