Understanding your Travel Nurse Compensation
The most alluring advertisements that Healthcare Staffing Agencies use to get you in the door is the pay package. These pay packages come in all shapes and sizes. Some agencies will offer a low taxable pay rate and a higher non-taxable pay while other agencies will offer a higher taxable base rate and lower non-taxable pay. To help the first-time travelers or the folks thinking about travel nursing here are a few main components of a pay package:
- Taxable Base Pay
- Non-Taxable Pay (Stipends, Per-diem, reimbursements)
- Traditional Benefits
Taxable Base Pay – This is also known as the traditional base wage or base pay rate. There are typically four types of taxes that you’ll notice on your pay stub: federal income tax (based on tax bracket), FICA (Social Security tax at 6.2%, Medicare tax at 1.45% ), state income tax (note that not all states have an income tax, some states may levy additional taxes, and some employees might be excluded from certain taxes), and state disability insurance(again based on state you are in). It is important to note that both the employee and employer pay taxes in this type of compensation. For the employer they pay the same amount on FICA (Social Security and Medicare) and they also pay FUTA (Federal and state unemployment .8%), and unemployment tax (varies state to state)
Non-Taxable Pay – Because you are traveling away from home to work, there are certain expenses that are tax deductible or non-taxable. To break this down further we will start with per-diem.
Per-diem Rates – The General Service Administration or GSA set the per-diem rates for the Continental United States. “Per-diem” is the term used by the GSA to refer to the maximum allowance for lodging and meals and incidental expenditures (M&IE) that can be provided to individuals while they are traveling away from home on government business. The IRS uses the same rates for private citizens who travel away from their tax home for work. This is how per diem (tax-free money) gets applied to travel nursing pay. This is where it gets confusing, the actual word per-diem is Latin for “per day”. In the healthcare industry many folks also use per-diem to describe on call work. There is double meaning, for the sake of not confusing we are going to use the terminology to describe the allowance for lodging and meals and incidental expenditures. Make sure when you are discussing with a recruiter, they are explaining what part of the per-diem package Lodging and Meals and what part is for incidental expenditures. These rates have maximums per state, so if you go over limit you could have tax liability ramifications. If you want to ensure your agency is compliant visit https://www.gsa.gov/travel/plan-book/per-diem-rates. Why do Healthcare Staffing agencies offer non-taxable pay? Simple, you have expenses that will be incurred because you are traveling away from home. The per-diem is not taxed. Meaning the agency will not be taxed on this compensation nor will the travel nurse. It is simply net pay. This way it benefits both, to a degree. Typically, if an agency is offering per-diem they are not covering the housing cost. This is great for those that want to control their housing. There are a lot of factors that go into what’s right for you, make sure you clearly understand your options. Please read our How to maximize your hosing stipend article.
Stipends – The biggest stipend deals are with housing. A housing stipend is a sum of money that is intended to cover the cost of housing while you’re working a travel assignment. It is important to note, with most agencies the terminology per-diem and stipends is mostly interchangeable. If you are going to take the housing stipend and arrange your own housing, your first step would probably be in investigating the going rates for rental units in the area. Let’s say you were going to take an assignment in San Diego. Your research shows that most one-bedroom apartments in that location are renting at $1500 a month. Now you have a starting point for negotiations in your travel contract. It is possible that the travel company does a lot of business in the area, and may pay direct for your housing. The second more common stipend is the travel stipends, these are paid in two different ways; the first way, the stipends are paid out like a sign-on bonus. For example, they offer to pay airfare for travel to the assignment. In this case, the agency isn’t going to recoup the entire cost until all contracted hours are complete. To illustrate this, let’s say the agency pays $500 for a round-trip ticket between California and Ohio. And the traveler only completes 36 hours of the assignment (not realistic but go with it for a second), in this case the agency will have lost money on the contract. Due to that risk agencies have now shifted to the second way they are paying travel stipends, split stipend. This is the half now and half at completion. For example, the agency may offer $1000 total, to be paid $500 on the first check and $500 on the last check of the assignment. This allows the agency to mitigate some risk. Most travel stipends are capped. The reason being, an agency can get in trouble with the IRS for mischaracterizing wages. As a result, many agencies, and particularly the large agencies are very inflexible with the travel stipends they offer. By keeping their travel stipends and other tax-free reimbursements at set levels, they’re able to ensure that they don’t run afoul of this rule.
Reimbursements – The simple definition, the agency will reimburse you up to a certain amount for lodging and meals and incidental expenditures (M&IE). The maximums are always with in the GSA/IRS guidelines. However, the agencies all vary
Bonuses – The most common bonuses are given at the time of completion of the assignment, or at the beginning as a sign-on bonus, or for a referral. Not all assignments have bonuses. If they do, there are usually specifics that need to be followed to earn the bonus and such, review the details with your recruiter. I would hate to see anyone lose out on money because they didn’t understand the fine print. Finally, it’s always important to consider how taxes will be calculated on the bonus received.
Traditional Benefits – Many travel nursing agencies offer health insurance for travel nurses at reasonable rates, but most of the time you’re only covered while you are working on their assignment. Gaps in coverage can be incredibly anxiety pressing and are very possible. Make sure you know the details of the coverage the agency is offering and when they come into effect. Important questions to ask:
- Are medical and dental insurance included?
- How soon do insurance benefits take effect?
- Do travelers qualify for life and liability insurance?
- What are the retirement planning options?
- Does the travel company offer 401(k) opportunities?
Fusion HCR Healthcare Travel Nursing
We hope this helps give some insights into travel nursing compensation. If you are interested in learning more, or have questions about travel nursing compensation, please call us at 937-572-7902. We are happy to help!