Independent Contract Pay (insurance) question?

[danxdan]

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when you are an independent contractor i understand that you make the exam fees for every patient minus a monthly rent (flat or %).

Do i get paid from the place im working for with a check directly or do i have to worry about collecting from insurances? and if so how does that whole process work. for example, if i see a pt covered by insurance how do i get paid for that? what is the process. sorry i dont know a lot about business aspects of optometry.

 

[310]

It depends on the work agreement.

It sounds like what you are talking about is being a commercial lease holder, in which case you get paid off of exam fees. You need to be credentialed through the insurance panels to get paid or in some cases, take cash or bill out of network.

 

[20DOC20]

I've done a lot of IC work.

Usually done one of two ways: You're a leaseholder in a commercial location and pay space rent. In the olden days, the entity you leased from would bill your insurance for you (because they billed the glasses and exam together) and they'd cut you a monthly reimbursement check with a statement on what each individual insurance paid for the exam. Nowadays, you have to bill your own insurance because it's easier and mostly done online.

Have you heard of the CMS1500 form?

When I did some IC work, I liked to use Office Ally for insurance billing. They are very inexpensive. You can fill out the CMS1500 form online and they will mail out a hardcopy for you, or can submit electronically with a code listed in the address box. If you call their customer service, they can walk you through it. But, MOST insurances allow you to bill online using their own websites. For instance, Davis Vision is really easy to bill. You just get an authorization number and click a checkbox and hit submit. VSP is harder to bill because their Eyefinity website is less user friendly. Just depends on individual plans. Again, call customer service for each insurance and ASK QUESTIONS.

The second way to do IC is working for someone and that other person bills insurance for you. You're usually paid a flat rate per diem. Sometimes per hour. Sometimes there's a base rate plus bonus incentive. You don't bill your own insurance. You pay no rent.

You are responsible for: Malpractice (professional liability) insurance, licenses and fees, state and federal tax withholding's (including additional self-employment tax), and any other business expenses. Save your receipts. Your business expenses will be listed on Schedule C and you can deduct pretty much everything. Hire a CPA to do your taxes for you, but just keep good records.

At the end of the year, you'll be issued a 1099-MISC form from people you've worked for (excepting those where you made less than $600 for that year). File a tax extension because optometrists are notorious for submitting LATE 1099-MISC forms. I got one in JULY one year!

Make sure you fill out a W-9 form for everyone you do IC work for. That enables them to submit you a 1099-MISC. Also, insurance companies will submit you a 1099 form if YOU bill them. If you work for someone (or a lessor bills for you) that person will submit you a 1099 and not the insurance company. That is, if there's a middle-man, you wont get 1099 from an insurance company.

Do good bookkeeping. Keep track of who pays you cash, credit card, check and if any portion of their bill is paid by an insurance company. That helps!

First years a learning curve! Best wishes.

 

[shu10str]

I'm a fourth year student, graduation is one month away. I have been talking with a doc about being an independent contractor at her private practice. I don't know much about being an independent contractor but it sounds like the second way above (that's the best description I have come across). How is that any different than being an employee? Is the only difference being that taxes won't automatically be taken out and I'd be responsible for my own malpractice, etc as mentioned above? And in talking with this doc it sounds like at some point she would stop paying me and I would be working solely off a "eat what you kill" basis, meaning that I would only get paid what I bill; does that sound right?

Thanks.

 

[optsuker]

There is almost no situation in optometry where an independent contractor is the appropriate/legal way to pay an OD.
If investigated by the IRS, they will almost always determine that the OD is an employee & will penalize the employer.
As an I.C., you'll have to pay double FICA taxes and your tax prep will be more complicated and expensive.

Why do so many do it?
1. It saves the employer money (and the employed OD pays more)
2. Easier to fire an I.C. (and usually can be done without notice/severance pay)
3. There are a boatload of naïve new grads willing to do it.