In the previous post, I discussed the benefits of independent contracting as a physician assistant. In this blog, I will highlight special things to consider working as an IC:
1. Malpractice Insurance
2. Taxes
3. Health Insurance and other benefits
Most importantly, you must make sure you are covered with a medical liability policy. The group for which you contract may cover you. However, it is worth considering a personal policy. I carry a $100,000/$300,000 claims made policy. This costs $2,700 per year. It is very basic coverage, but in the event of a claim, it is adequate for covering legal expenses. The American Academy of Physician Assistants has an excellent explanation of the types of medical malpractice insurance available and details about coverage:
https://www.aapa.org/career-central/practice-resources/malpractice-insurance-basics/#1
Second, independent contractors pay their own taxes. Taxes are filed on form 1099. Keep in mind, employed PAs have some of their taxes paid by the employer (employment taxes). As an IC, you are responsible for 100{9981e14ce943923de3bdc7a53c73b24cc6a35d6b10a5feb630438bc0e5fd7698} of your taxes. Depending on your income bracket, you will need to save 20-35{9981e14ce943923de3bdc7a53c73b24cc6a35d6b10a5feb630438bc0e5fd7698} of your earnings for taxes. Every quarter, you will need to send a check to the IRS. I advise that you discuss this with your certified public accountant (CPA). You can also read this article on the IRS website:
https://www.irs.gov/businesses/small-businesses-self-employed/estimated-taxes
Though paying taxes is never fun, working as a IC does allow for itemized deductions that regular employees do not: travel expenses, meals, medical equipment, cell phones etc. can all be deducted from your tax plan. A good CPA will help you to determine what is deductible.
Finally, IC do not get employment benefits. In order to receive the fringe benefits of employment (medical and dental insurance, paid time off, short-term/ long-term disability, 401k) a PA must be full-time. PAs who simply moonlight in addition to their full time employment will continue to receive their employee benefits. However, PAs who work only as an IC will need to provide their own benefits. This is one of the biggest negatives. If your spouse is employed full time, you can find coverage through their work. If you buy a personal policy (one not purchased through your employer), consider that pre-existing conditions can limit your coverage or increase your cost. Current law does not allow employer plans to consider pre-existing conditions, but personal policies can.
The benefits of working as an IC are numerous, as we discussed in the last post. But you must know the rules and make sure you have the coverage you need.
I hope this article is helpful. Please let me know what you think!