How much are W2 benefits worth?

[Fox800]

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Question for the hive mind. I'm trying to compare hourly rates between W2 jobs and IC jobs. W2 job where medical, dental, disability, malpractice, etc are all covered (think Kaiser, but I'm looking at other employed positions, too). I'm trying to figure out how much to value those vs an IC job where you have to cover almost everything yourself.

How much is a package like that worth? Assume a single person in their 30s that's healthy. How much should value should I be adding to a W2 job's hourly rate?

 

[Brioche]

Question for the hive mind. I'm trying to compare hourly rates between W2 jobs and IC jobs. W2 jobs are the kind where medical, dental, disability, malpractice, etc are all covered (think Kaiser, but I'm looking at other employed positions, too). I'm trying to figure out how much to value those vs an IC job where you have to cover almost everything yourself.

How much is a package like that worth? Assume a single person in their 30s that's healthy. How much should value should I be adding to a W2 job's hourly rate?

From what I read here $20-30/ hour

 

[thegenius]

You can usually just ask them, or calculate it yourself. You can ask the employers what the value of their compensation policies are. I know at Kaiser, their compensation package is worth an extra ~30% on top of your salary, but this also includes your pension when you retire.

In general there are tax advantages to being an IC, namely you can stash away 54K in pre-tax money into a solo-401K or SEP-IRA, and you can't do even close to that if you are an employee of a company, even if the company does 401K matching. You can deduct your health insurance as an IC, but you use pre-tax dollars as a W2 so that is a wash, same thing. You get to deduct some business expenses, but overall the standard emergency physician doesn't have that much in business expenses because you don't have to pay for office space, employees, rent, stuff like that.

Just looked at my 2017 tax return as an IC....in the "above the line" deductions (on page one, under "Adjusted Gross Income"), I deducted 83K.
HSA Acct: 6,750
Deduction 1/2 Self Employment tax: 7,017
SEP IRA contribution: 54,000
Health Care deduction: 15,850

 

[miacomet]

You can usually just ask them, or calculate it yourself. You can ask the employers what the value of their compensation policies are. I know at Kaiser, their compensation package is worth an extra ~30% on top of your salary, but this also includes your pension when you retire.

In general there are tax advantages to being an IC, namely you can stash away 54K in pre-tax money into a solo-401K or SEP-IRA, and you can't do even close to that if you are an employee of a company, even if the company does 401K matching. You can deduct your health insurance as an IC, but you use pre-tax dollars as a W2 so that is a wash, same thing. You get to deduct some business expenses, but overall the standard emergency physician doesn't have that much in business expenses because you don't have to pay for office space, employees, rent, stuff like that.

Just looked at my 2017 tax return as an IC....in the "above the line" deductions (on page one, under "Adjusted Gross Income"), I deducted 83K.
HSA Acct: 6,750
Deduction 1/2 Self Employment tax: 7,017
SEP IRA contribution: 54,000
Health Care deduction: 15,850

$20-$30 an hour, but you also receive less favorable tax treatment, which can make up some of that difference, OTOH you have to pay self- employment tax. FYI Kaiser's pension is significantly underfunded.

 

[link2swim06]

$20-$30 an hour, but you also receive less favorable tax treatment, which can make up some of that difference, OTOH you have to pay self- employment tax. FYI Kaiser's pension is significantly underfunded.

$30 an hour?!?!

I work 200 hrs/month = 200 x 30 = $6,000 a month x 12 months = $72,000

Currently I pay:
$4,500 a year for health insurance
$468 a year for life insurance
Don't have disability
Malpractice covered by employer

So for me to "replace" my current level of benefits it would cost $2 an hour.


Not to even I save a bunch of money as an IC with:
write off all expenses as deductions
and $54K a year in deduction through sep ira

 

[miacomet]

$30 an hour?!?!

I work 200 hrs/month = 200 x 30 = $6,000 a month x 12 months = $72,000

Currently I pay:
$4,500 a year for health insurance
$468 a year for life insurance
Don't have disability
Malpractice covered by employer

So for me to "replace" my current level of benefits it would cost $2 an hour.


Not to even I save a bunch of money as an IC with:
write off all expenses as deductions
and $54K a year in deduction through sep ira

So, my company pays:

$6000 a year for my insurance (more if family were included)
$2500 for STD
$5000 for LTD
$750 to HSA
$12000 match
$10000 towards pension
$1000 towards optical/dental/life insurance (500k LI policy, more available)
$3500 CME
$5000 a year (variable) for licensing fees, professional organizations, recertification exams, MOC etc beyond my CME

I work 100 hours a month, so 100 x 12 x 30 = $36000, so I fall on the high end. I could do without both LTD and STD, but the cash value for me comes out to more than $30 an hour. I do agree benefits are oversold and that a higher hourly is often worth it as the tax benefits (even for docs) are huge. In my state the health exchange is terrible, so work-related insurance is a big plus.

 

[gamerEMdoc]

I work 200 hrs/month

200 hr/month?!?

My interns don't work 200/hrs a month on their ED months. That is an impressive workload.

 

[hundreddaysoff]

Agree w/ estimating your own benefit costs, since as link demonstrates our individual needs for benefits are so diverse.

Estimating the IC cost of your health insurance can be tricky if you aren't already covered by family. The premium numbers I used to estimate were from Physician Solutions (can email them for current rates), which in any case for me and my family as an IC is much better health insurance vs the exchanges.

 

[EctopicFetus]

Also, keep a few things in mind. Benefits will vary greatly. You MUST calculate them yourself to have any meaning.

Also the value depends on how much you work. if FT benefits start at 100 hours a month but you work 200 then at ED type pay the hourly value of your benefits is halved.

Figure out what the benefits are, then and I think this is most important figure out which you would want. If someone pays $100/month for life insurance for you and you are healthy and 30 and still carry your own policy for $3m I would argue that thats not $1200 a year in benefits to you. it is worth 0 since you wouldn’t pay for it with your own money.

 

[littlejuan]

$30 an hour?!?!

I work 200 hrs/month = 200 x 30 = $6,000 a month x 12 months = $72,000

Currently I pay:
$4,500 a year for health insurance
$468 a year for life insurance
Don't have disability
Malpractice covered by employer

So for me to "replace" my current level of benefits it would cost $2 an hour.


Not to even I save a bunch of money as an IC with:
write off all expenses as deductions
and $54K a year in deduction through sep ira

200 hours a month?! Whoa. That seems crazy to me.

You seriously need to have disability though. You can’t account for the future and you don’t want to end up getting f**ked over by something out of your hands. Especially working 200 freaken hours a month.