What do locums emergency physicians give up for the higher rate?

The give up list, priced in order

Start with taxes. A contractor owes the full self employment tax, 15.3 percent combined, made of 12.4 percent for Social Security up to the wage base and 2.9 percent for Medicare, where an employee pays half and the employer pays the rest invisibly. Next comes retirement. An employed physician receives a match and employer contributions that never appear in the salary figure, and the locums physician has to fund the solo 401(k) to the same total entirely out of the rate: $24,500 of elective deferrals plus the employer side, up to the $72,000 total annual additions limit for 2026.

Health coverage moves to the household budget at individual market prices, or onto a spouse plan where one exists. Disability and life coverage become individual purchases at individual prices. Paid time off disappears as a category: an unworked week is an unpaid week, which reprices every vacation and every illness. Malpractice arrangements vary by agency and assignment, so the claims made tail question, who pays it when the assignment ends, has to be answered in writing for every contract. Add the quiet lines: licensing and credentialing time across sites, travel days that pay nothing, and the accounting help a contractor household needs.

The structural math that decides the comparison

This site uses one band for every W2 against 1099 comparison: the contractor offer must run 25 percent to 30 percent above the W2 offer to be the same pay after payroll tax, the benefits layer, and unpaid time. Run the band before anything else. On a W2 package worth $400,000, the matching contractor figure is $500,000, because $400,000 times 1.25 is $500,000, and at the top of the band it is $520,000, because $400,000 times 1.30 is $520,000. A locums offer that clears the W2 salary by 10 percent and loses to the W2 package on total value is not a premium. It is a pay cut wearing a larger number.

The established physician runs this math from a stronger position and should still run it. A household with finished reserves, grown accounts, and coverage already owned individually has fewer lines to replace, so more of the premium survives. The 1099 setup question builds the contractor stack from scratch, and the W2 or 1099 topic page works the fork at the specialty level.

The two give ups that do not appear on any invoice

Loan forgiveness ends. Contractor status is self employment, and self employment is not qualifying employment for Public Service Loan Forgiveness, outside a narrow exception in states such as California and Texas that bar hospitals from employing physicians directly. Eligibility follows the employer that pays you, not the building you work in. An established physician with no student debt feels nothing here, which is one reason locums fits this stage better than the early years. A physician still carrying a live forgiveness count should price a locums year as a year of payments that buy nothing but interest reduction.

Schedule security ends too. Assignments cancel and hospital contracts turn over, as the lost contract question works in full. The income between assignments is the reserve problem of the contractor household, which is why the waterfall sets the finished reserve by employment type: six months of expenses on W2 income, up to twelve months on 1099 or sporadic income. Locums income is the sporadic kind by design. A locums plan built on a six month reserve is underbuilt before the first assignment starts.

When the trade is still worth it

None of this makes locums a bad deal. It makes it a priced deal. The trade pays when the premium clears the whole replacement stack with room left over, which happens most often for physicians who carry coverage through a spouse employer, who have no forgiveness count to protect, whose individual disability policy is already owned and portable, and who treat the gaps between assignments as the product being bought: time, in blocks, at full price. It also pays as a career stage strategy. A few high rate years with the surplus aimed at the reserve, the remaining debts, and the taxable account can fund the staged exit the exit plan question builds, rather than serving as a permanent arrangement whose benefit costs compound. The discipline is identical at every stage: price the full stack first, hold the reserve at contractor size, and never let a rate comparison happen without the give up list open on the table beside it.