Independent Nurse Contractor...A Dying BreedHaving been a successful independent nurse contractor in the past, I have wholeheartedly promoted this career option on Nursing Career Hub. There are, however, several recent negative IRS rulings against nurse contractors that have changed my perspective. The IRS simply does not view nurses as self employed in a healthcare facility setting. Nurses do not use their own equipment (Sorry, stethoscope and bandage scissors aren’t enough.); they work scheduled hours; and function under the policies and procedures of the facility. Furthermore, Medicare and Medicaid will pull funding from facilities using independent contractors for patient care. Those nurses who are contracting with a health care facility can find themselves in a financial and legal quagmire with the IRS. The likelihood of getting audited as an independent nurse contractor is very high. Back taxes, penalties and interest can be devastating. Home Care Contracting Is OK The only setting where you can function as an independent nurse contractor is in home care. It must not be a healthcare facility and you must be paid privately by the patient…not Medicare or Medicaid. Don’t be Misled Don’t be misled by agencies offering hospital contracts to, “self-employed nurses”. Many have fine print in their contracts that essentially state, “If your position is ruled as ‘employee’ by the IRS, you are responsible for all back taxes, penalties and interest.”
Take it From an Expert Patricia Bemis, RN, CEN has consulted and/or testified as an expert witness in several cases regarding the employee status of independent nurse contractors. This is what she has to say on the subject: “In the U.S., there are two work status designations for tax purposes, one is independent contractor and the other is employee. The IRS makes the designation. Nurses working for temporary help services (nursing agencies) providing clinical nursing services to healthcare facilities are designated as employees by the IRS and by state governments taxing (revenue) departments. If you are working for an agency that has designated you as an independent contractor and the agency (or you) are audited, you and the agency will owe back employee taxes and penalties to both the state and federal governments. The agencies hire independent contractors for one reason, to make more money by not paying applicable taxes.” Patricia Bemis is president of National Nurses in Business Association, Inc. She is also a Legal Nurse Consultant and expert witness regarding nursing business practices. Physician Independent Contractors Included Don’t feel slighted. Physicians are also affected. ER doctors and Hospitalists, many whom called themselves independent contractors, are also finding themselves in legal and financial hot water. They use the facility equipment, work scheduled hours and adhere to the facility P&Ps. Patients often view them as employees of the hospital. Facilities are finding they are liable for these physician’s actions. They are, therefore, turning from contracting self-employed doctors to developing employee-employer relationships.
Other Career Options There are many viable options for your nursing career, both as an employee and self-employed. I would not want to lead you down a slippery path to financial ruin by recommending independent nurse contractor as an option. If you want to keep your hands in patient care, take on a per diem position at your favorite hospital. I once had concurrent per diem positions in New York and Oregon. Some facilities are sticklers on maintaining minimum weekly or monthly shifts, while others are happy to have you whenever you are in town. Travel nursing is also a great option. Although a little slow in this economy, there are many facilities still looking for temporary and/or seasonal help. Want to be better prepared for running a nursing business? Subscribe to our monthly newsletter, Nursing Career Tips---filled with nursing career advice, including loads of:
PLUS---FREE report, Brainstorming...Finding the Nursing Career of Your Dreams. Subscribe here. If you feel that self employment is right for you, I recommend you check out our Nurse Consultant and Nurse Entrepreneur pages. Return from Independent Nurse Contractor to Home page
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