Questions about working as an IC

[Old_Mil]

---

Members do not see this ad.

...so I've signed on to take a job as an IC. I'd appreciate it if those of you who have gone this route and are a little further down the road could weigh in on the following:

(1) Do you let where you work influence where you live? Or do you pick a place on a map and commute? If so, why?

(2) Have you formed a LLC/PLC? Why did you decide to do this? For those of you who are ICs who didn't, why didn't you? If you did, did you chose your state of residence, state of employment, or somewhere else?

(3) Finally, regarding disability insurance...my current policy is not portable. I've looked at a couple. The choices seem to be ones that pay out for 5 years, or pay out till age 67. Also, they either offer a "flat rate premium" (subject to rate hikes) or one that rises as you get older (also subject to rate hikes). There is a 5 year "usual occupation" rider for each. Any recommendations?

 

[fuegofrio17]

1) I first chose the metro area I desired to live in, and then chose the area of the metro area that was most desirable to live in. I then accepted a job that was near the area that I live. That said, I have changed jobs since and now commute further to a better job. If moving to a large metro area, I would recommend living in a centralized location so that if you decide to change jobs for any reason, you have other opportunities within an easy commute. A high percentage of new grads work at a different job within their first 2 years out. Also, along with that advice, don't buy a house during your first year out.

2) The formation of a PLLC is much debated by many people. Initially I started out as an IC and have recently converted to a PLLC. About half my group are ICs, and the other half are PLLCs. The PLLC will not afford you any liabililty protection. You can save a moderate amount of money by structuring yourself as an S-Corp and giving yourself a reasonable salary and paying out the rest of your income as disbursements or dividends. This results in savings in payroll taxes. There is expense in setting this structure up and filing annual taxes for an LLC. Some claim it does lower your overall tax burdern by a moderate amount, and others say there is no net difference from operating as a IC. You need to discuss this with a qualified CPA and Tax Attorney in your state.

3) Disability is very important and much more important than life insurance. Find a portable policy that includes the clause "own occupation" that provides insurance for your specialization. You do not want to lose a hand and can never work in EM, but be told you can then work as a pathologist or general family physician. Thus, the policy won't pay out because they claim you have alternatives to work as a physician in other areas of medicine (even if this is not practical or feasible).

I have a policy that has a flat rate, has a COLA rider for inflation, and pays out for the duration of my practice lifetime (until age 67 I believe). There are only a few really good carriers, and I would make sure that you do extensive research. My policy is with Mass Mutual and I am very happy with it. I would recommend that anyone in residency presently, especially 2nd or 3rd years, look to buying a policy now. Your rates will be lower now than when you get out, and you can lock in low rates for the duration of your practice. The older you get and the more health issues arise, the more expensive the premium gets. The qualifying medical exam for my disability insurance was much more extensive and rigorous than any health insurance exam.

I hope this helps. These are the things I was interested in as well after finishing residency, and no one really teaches these things before you get out.

 

[la gringa]

get DI before you have life trauma that necessitates any sort of mental health treatment or before you get a bad ortho injury or other malady that affects your ability to practice... i'm only 1.5 yrs out of residency and this happens more than you think... from my experience, any red flag stuff they don't like throws you into the secondary market and you're looking at $1000/mo for a half decent DI policy w/ own occ.