Consider all of these financial factors when job hunting
As physicians, we are fortunate to have many options to consider when we are on the job hunt. Though the clinical setup and work atmosphere are critically important, it is also imperative that we compare the physician compensation and benefit packages of offers we’re considering. The economic impact of a job decision on a family can be huge. Let’s consider some factors in play
When job hunting, it is important to consider the cost of living of the area. For example, let’s say someone lives on a $300,000 salary in Augusta, Georgia, but wants to move to San Diego. They would need to earn $478,198 annually in San Diego to maintain the same standard of living. Housing costs are 193% higher, transportation costs are 49% higher, food costs are 15% higher, health care is 21% higher, and entertainment costs are 6% higher in California. Enter your variables in one of the many cost-of-living calculators available online to compare multiple areas. Interestingly, areas with the lowest cost of living also tend to offer higher compensation, making geographic arbitrage hugely beneficial to the financially savvy physician.
Many physician jobs offer W2 or employed pay with employee benefits. Some physician jobs are offered as 1099 independent contractors. Others offer partnership and pay on a K-1. Jobs with a W2 generally offer a salary and bonus. They also often include a benefits package with life, health, dental and other insurances, access to a 401(k) or 403(b) with employer match, a CME stipend, a moving stipend, etc.
Taxes are simpler for W2 jobs, as the employer pays the payroll taxes. However, the downsides of being an employee are that business expenses such as scrubs and mileage to and from work are not deductible. Also, if the employer does not have a good option for retirement plan investing or health insurance, the employee is generally stuck with those bad choices. Look at investment and insurance options before signing with an employer.
A 1099 independent contractor job has the upside of deducting all work-related expenses on Schedule C. The contractor also gets to deduct health insurance premiums, HSA and retirement plan contributions. The contractor also gets to choose their own benefits, including a solo 401(k).
Setting all of these up is more complicated and can provide a barrier to entry. However, contractors generally have more freedom of movement and are not bound by having to pay back signing bonuses and such when leaving an employer.
Members or partners in a practice are paid on a Schedule K-1. They get some of the benefits of being independent contractors, such as being able to deduct expenses, but have to abide by the rules of the partnership
When reading the fine print, make sure you understand what needs to happen if you want to pick up a moonlighting job. Most W2 contracts require that permission be obtained from the employer.
Student loan repayment
This is a hugely important factor to consider when comparing jobs if you have student loans. If pursuing Public Service Loan Forgiveness, ensure the employer is a 501(c)(3) nonprofit organization. Watch out for for-profit companies that contract with nonprofit employers, as these jobs do not currently qualify for PSLF. For-profit employers may offer non-PSLF student loan payoff.
Finally, more than half of new attendings leave their first jobs. Before relocating, it is important to consider if the contract has a non-compete and how that will impact your family if you ever leave that position.
There are many factors to consider when looking for a new job. The financial implications of our job decision should be kept in mind when considering employment options. •
DISHA SPATH, M.D., writes about personal finance, money-saving hacks, and investing to help doctors and other high-income professionals get out of debt and design their ideal life at The Frugal Physician. She is a podcaster and ambassador for The White Coat Investor.