What's in a Travel Therapy Pay Package?

Aug 20

The travel therapy pay package is somewhat elusive and usually unfamiliar territory for most people. Today, I hope to simplify things down to make it easy for you to understand.

When Ryan and I first started looking into travel therapy, we had a lot of big questions. What should we expect when it comes to our pay as travelers? Will there be hidden fees that we should be aware of in our pay package? Will benefits be offered, and will they be taken out of our weekly pay? And even after gaining some small understanding, I would say we were still really confused about how stipends and tax-free money worked.

If you have some of these same questions, this article is for you. Let’s start by understanding where the money is coming from. First, it is important for you to know that you are an employee of your recruiting company, not your contract facility. This means that your recruiting company is the one who is paying your salary and providing your benefits. For tax purposes, this also means that you are a W-2 employee. So, when it comes to your pay, your recruiting company bills the contract facility for your services, the recruiting company receives their payment from the facility, and then the recruiting company divides up that money appropriately according to their needs. The recruiting company will have various overhead expenses such as rent for their building, utilities, taxes, insurance, marketing, etc. And then, of course, they have payroll and benefits.

The second thing that is important to understand is that your recruiting company can package your pay in various ways. Your salary will usually be presented to you as a weekly take-home amount. For travel physical therapists, the national average compensation is $1,819/week, according to ZipRecruiter. Those in the 25th percentile earn $1,635/week, and those in the 75th percentile earn $2,106/week.

When this weekly number is presented to you as TAKE HOME pay, that literally means how much money will end up in your pocket each week. In other words, the company has tallied up your hourly wage, your stipend pay, and deducted your taxes. This number usually DOES NOT account for the cost of benefits. The cost of benefits typically is not accounted for because you opt into these once you sign the contract and become an employee of the recruiting company. The recruiting company usually has different levels of benefit packages that cost different amounts. In addition, they have different timelines for your eligibility to opt-in. For example, one company may have a policy stating that you may opt into benefits on the first of the month, so if you begin your contract on June 2nd, you won’t be eligible for benefits until July 1st. This also means that you will have four weeks of pay without the cost of benefits being deducted. Once you opt-in, your benefits package price will begin to be taken out of each billing cycle.

So, you may be wondering, what’s the deal with this hourly pay and stipend pay? So let's break it down.

As a traveler, you have the option to have your pay split into taxable and non-taxable income. To qualify for tax-free income, you must have and maintain a permanent tax home. If you do not qualify, all of your income will be taxed. For those who do qualify, your tax-free income will take the form of stipends, or reimbursements, for the cost of meals & incidentals and lodging. This reimbursement rate is determined by the U.S. General Services Administration’s determination of the cost of living in the area. You can find these rates at gsa.gov. Your tax-free income may be listed in per hour, per day, or per week terms in your contract. For example, it may say you earn $5/hr for meals and incidentals, or it may say that you earn $40.00/day for meals and incidentals. Either way, it is all the same. However, you will want to check that your daily allowance for meals and for housing does not exceed the daily allowance listed on gsa.gov – otherwise, you will be breaking the law, and the IRS could come get you! ;p

Now, there’s another variable to these tax-free stipends. As a traveler, the normal thing to do is to allow your recruiting company to find housing for you. If you do this, you don’t have to go through the hassle of finding housing. However, this means that the recruiting company effectively decides how much you pay monthly for housing, and that cost will be taken out of your lodging stipend. You can also choose to find your own housing. This means that the full lodging stipend is paid to you, and you pay for your housing out of your weekly/biweekly/monthly checks. Ryan and I chose to do it this way because we thought that if there were even the chance that we could find or negotiate cheaper housing, it would be worth it. Living in an RV also helps us keep more of our lodging stipend in our pocket at the end of the month. For example, say we are given $75.00/day for lodging as a part of our paycheck. In one month or four weeks, we have $1500 that is technically paid to us to cover housing. With our RV, we can find a place to park for $400-$500/month. This means we are keeping $1,000 to $1,100 extra in our pockets each month! Who wouldn’t want that!?

So, now you understand how travel therapy pay packages work. But, that’s not the end of the money you could earn for working as a traveler. Travel companies may also offer one-time reimbursements when you sign onto a new contract. Typically, these are travel allowances, license reimbursements, or sign-on bonuses. You are also usually given a certain amount of money toward CEUs, which you are reimbursed for when you turn in your expense receipt.

So after all of that, I hope you feel like you better understand the components of a travel therapy pay package. Comment down below to let me know your thoughts and to share any additional questions you may have!

What’s the most confusing part of travel therapy pay packages to you?

Pay being presented as weekly (after-tax) always tripped us up at the begin of our travel journey!

Let us know below! 👇

- Written by Dr. Megan M. O’Rear, PT, DPT