Hey everyone! Welcome to The Truth About Travel Nursing Podcast. I’m your host, Kyle Schmidt, and I want to thank you so much for joining me for episode 34 of the podcast. In this episode, we’re going to take an in depth look at the General Services Administration Per Diem Tables. These are often called the GSA Tables, GSA being the acronym for the General Services Administration. These tables are commonly referred to by agencies and travelers alike when discussing the tax-free stipends that are a part of travel nursing pay packages.
More importantly, there is a lot of confusion and misinformation out there about what these tables are used for and exactly how they relate to the tax-free stipends. Also, there are a lot of little nuances and issues to be aware of with these tables especially as they relate to travel healthcare. And while we’ve touched on this issue in previous episodes, again, in this episode we’ll go into detail so that you can approach this issue with confidence.
News From The Travel Healthcare Industry (10-20-2015)
Okay, before we get into that, let’s take a quick look at some news around the travel healthcare industry. For starters, AMN Healthcare, which is commonly referred to as American Mobile, has recently completed a couple of purchases. They completed the purchase of MillicanSolutions which is a physician and medical leadership search firm focused on academic medical centers and children’s hospitals. That acquisition included cash payments totaling $4 million.
They also completed the purchase of a company called The First String Healthcare. This company provides temporary and perm placement of nurse leaders and executives. They were purchased for $6.5 million and additional incentives of up to $4 million.
Meanwhile, Susan Salka, who is the CEO and President of American Mobile was named to the Staffing Industry Analysts Global Power 100 – Women In Staffing. This is basically a list of influencers and power players in the global staffing industry.
And over at Randstad Healthcare, they brought in a new President named Abigail Tremble. In case you’re not familiar, Randstad Holding is a Dutch company. They’re a global staffing firm doing business in virtually all sectors. The most recent valuation I saw was $22.9 billion. One of their holdings is Randstad US, which is their US operation. And Randstad Healthcare is part of that branch.
What Are GSA Tables?
Okay, so let’s get into our discussion on the GSA Tables. The first thing we want to do is to identify exactly what the GSA Tables are. I mean, what’s really going on here. Well, the General Services Administration, or the GSA, is a huge federal government agency that’s responsible for all kinds of stuff. For example, they negotiate rates for goods and services that the government purchases and/or utilizes. They also maintain government facilities and they have a fleet of over 200,000 government vehicles.
So, they’re kind-of like this hub for goods and services that get utilized by the federal government. Now, as such, they’re obviously in a good position to know how much things might cost throughout the United States. As a result, they’re also in charge of setting the “Per Diem” rates for government employees.
So, what is a “Per Diem Rate”? Well, a “Per Diem Rate” is the maximum amount of money that can be given to a government employee as a tax-free reimbursement for lodging, meals and incidental expenditures while the employee is traveling away from their tax home on government business.
Now, the GSA sets these rates for the Continental United States. And the acronym for that is CONUS and it’s commonly used when discussing these rates. And these rates are set by region or by county. I mean, different parts of the country have varying levels of cost associated with them, so the rates vary from place to place.
Now, it’s important to note that Alaska and Hawaii are not included on the GSA’s tables. That’s because they’re not part of the Continental United States. But, they do have per diem rates. And those rates, along with the rates for all US territories, are set by the Department of Defense. The easiest way to find those rates is either by Googling them directly, like Hawaii per diem rates, or by visiting the GSA’s main page where you’ll find a link to the DoD’s tables.
Oaky, so all of that said, these same rates are typically applied or utilized by the IRS when it comes to private citizens. So, essentially, the government is saying, “Hey look, we have these tables set up for our own government employees who travel for work, let’s apply those to private citizens who are in similar circumstances.” And that’s how they make their way into the world of travel nursing, right? Travelers are traveling away from their tax homes for the purpose of work and so their employers can reimburse them tax-free for the cost of lodging and M&IE.
What Does “Per Diem” Mean In Travel Nursing?
Oaky, so already at this point in the conversation, I think there is a lot of room for confusion and we’ve just scratched the surface. I mean, I know this, because this was confusing to me when I first started out in the industry and I spoke to a lot of confused travelers who were also confused by these issues and I see things written on social media sites and forums all the time that are incorrect. So, let’s take a look at the terms and concepts in detail so we can get some clarity.
Alright, so for starters, the first thing to know is that the term “Per Diems” actually refers to two different classifications of costs. The first is Lodging and the second is Meals and Incidental Expenditures which is commonly referred to as M&IE. So, when you go to look at the GSA Tables, you’re going to see two sets of data for each location, one for lodging and one for M&IE.
How To Use The GSA Tables For Travel Nursing
Alright, so when you go to the GSA website, and we’ll link to it on the show notes page for this episode, there are several ways that you can look up the rates that you’re interested in finding. You can enter a city and select a state. You can enter a zip code. Or you can select a state from the map. If you select a state from the map, it will give you the opportunity to enter a city or zip code on the next page.
Remember, the rates are typically listed by county. So, entering the city itself or the zip code is most helpful, because you’re typically not going to know the county that you’re going to be in. But when you enter the city or the zip code, the system will return the result of the county that the city is listed in. And you just have to sort of trust the system, right? For example, if you enter Fullerton, California, the system will return Los Angeles County with no real mention of Fullerton. You just have to take their word for it. This isn’t a big deal, but it tends to confuse some folks, understandably I think.
So, once you have a table up, you’ll notice that there is 1 column for the M&IE per diem rate, but there are 12 columns for the lodging per diem rates. There is a column for each month of the year. And that’s because the lodging rates vary from month to month in some locations due to seasonal issues. For example, some areas are more popular in the summer or the winter for any number of reasons, so more people travel there during those times and it tends to spike the lodging rates in the area due to the increased demand.
Okay, so another thing that people often wonder is what specifically these rates are for. And the rates that you’re looking on these tables are the rates that the employer is allowed to reimburse without the exchange of receipts per day, okay, that’s per day, not per week, or per anything else.
Per Diem vs. Per Diem In Travel Nursing
Next, I think that there is understandably some confusion regarding the terminology and how it gets used. For starters, many folks in the healthcare industry get confused by the use the term “Per Diem” because this term has its own meaning in healthcare. We often use the term Per Diem in healthcare to refer to “on-call” staffing, right? So you might work per diem as a nurse. And we use the term this way because it’s a Latin term that means “per day.” So be careful not to confuse those two meanings.
Next, these per diem rates get referred to in many different ways. Some people simply call them per diem rates. The problem here is that you don’t know whether they’re referring to lodging or M&IE or both. This can be particularly confusing when you’re speaking with recruiters about pay packages. This is why we recommend that everyone, and recruiters especially, refer to them specifically as lodging and M&IE.
Per Diem vs. Stipends In Travel Nursing
Now, similarly, some people will refer to them as the “lodging stipend” or the “housing stipend” or the “M&IE stipend”. Now, these are more clear to me and I think this is the way that they should always be referred to, but the confusion comes in that some people have heard the term “per diems” and so when you talk about stipends, they’re thinking, “Well, what about the per diems?” So it’s important to make sure that everyone is on the same page. Again, this means using clearly descriptive terms like lodging stipend and M&IE stipend…or lodging per diem and M&IE per diem.
And the worst one to me is when people just use the term stipend as a catchall phrase. A lot of recruiters do this. And you have to know that this is really confusing for the travelers you work with. Typically, when the term stipend is used as a stand-alone term, it’s being used to refer to the M&IE stipend. But, it’s really tough to tell, so it’s just flat out confusing. Again, it’s best to use descriptive terms so everyone knows what’s being talked about.
And of course, that brings us to the term stipend. This is another term that causes confusion with this issue. Stipend is term that refers to a lump sum payment. So, note the difference between “per diem” which means per day on the one hand and “stipend” which means a lump sum payment.
So, healthcare staffing companies usually pay their tax-free reimbursements as stipends, right? They pay them out weekly, bi-weekly, or as lump sums in the case of the travel stipend. I mean, I suppose it’s okay for a recruiter to say that you’ll be paid $250 weekly for the M&IE per diem, but personally, I prefer stipend, because these are lump sum payments and using the term “stipends” ensures that we don’t confuse it with the work-related term for on-call staffing. That said, the most important thing is to be descriptive so that everyone is on the same page.
How Do Travel Nursing Agencies Determine The Tax-Free Money?
Okay, so the next thing that tends to cause a lot of confusion is how these stipends are paid out. I think one of the biggest sources of confusion here comes when folks go to the GSA tables and look up a location and then compare the GSA rate with the per diem rate they’re being offered from a travel nursing company.
For example, maybe you get offered an M&IE stipend of $300 per week in Los Angeles, CA. Then, you go to the GSA tables and see that the M&IE per diem rate is $64 per day. Multiply that by 7 days in a week, I mean, you’re going to be there all 7 days, and it comes out to $448. You see that and you think, “I’m getting ripped off!” And that is not the case. I mean, you could be getting ripped off, but this alone certainly isn’t proof of getting ripped off.
Again, the GSA Tables show the maximum amounts that employers are allowed to pay without the exchange of receipts. This doesn’t mean that they’re required to pay this amount. It also doesn’t mean that they’re getting this amount from the hospital. And it doesn’t mean that the government is somehow paying agencies this much to reimburse to travelers. These are all claims or questions that I’ve heard at one point or another.
Instead, remember that the stipends the agency pays are largely contingent on the bill rate for the assignment in question. So, if the bill rate is lower, then they don’t have as much to pay and if it’s higher, they have more to pay. Let’s look at a really stark example to illustrate.
Again, let’s look at Los Angeles, California. I can tell you that there are many hospitals there that have bill rates in the low to mid 60s. So, they might be anywhere from $60 per hour to $65 per hour. And remember that the average contract is 36 hours per week, 13 weeks, 3 months and 468 total hours. So that’s 156 hours per month. At a rate of $65 per hour, the agency will be able to bill $10,140.
Meanwhile, the GSA tables indicate that the agency could pay as much as $64 per day for M&IE. That’s $1920 per month. And they could pay as much as $150 per day for lodging. That’s $4,500 per month. So, just between those two variables that’s $6,420. And remember, they only have $10,140 to work with.
They still need to pay your taxable base rate, let’s say that’s $20 per hour. That’s, $3120, for the month. So, we’re already at $9560 per month and we haven’t even gotten into all of the other bells, whistles and costs. I mean, there is the travel stipend, the medical benefits, the payroll taxes, the non-billable orientation, compliance and credentialing costs and on and on before we even get to the agency’s gross profit margin.
So, how do they determine how much they’re going to pay for these stipends? Well, as we discussed in great detail in episode 14 when we discussed travel pay packages from the agency’s perspective, they’re going to start by entering the bill rate into their rate calculator. They’re going to enter all the variables in terms of contracted hours and the costs they must incorporate into the package including things like the base rate, the payroll taxes, the medical benefits, etc. Then they’re going to determine how much they can pay for the lodging and M&IE per diems. And they’re going to do all of this while keeping their gross profit margin above some level that they’ve deemed necessary. Again, this is usually 20% to 25%, but it could be a bit lower or a bit higher. It all depends and this is where your negotiating skills come into play.
So, that’s kind-of the basics of how they do it. If you want a detailed break-down, then I encourage you to check out episode 14. And I’ll also link to some helpful blog posts on the topic on the show notes page.
Why Don’t Travel Nursing Agencies Maximize The Tax-Free Stipends?
Okay, so there is another side the coin here when it comes to these GSA tables. And the other side of the coin is what happens when the bill rate for the assignment is much higher than the $65 we discussed earlier. I mean, we’ve discussed crisis rates, rapid response rates and other high paying assignments. These can sometimes have bill rates that are $85, $90, heck, I’m hearing of L&D travel assignments with bill rates slightly higher than $100 per hour.
So, when you get offered a pay package for an assignment like this, the agency may increase the taxable base rate and leave the tax-free stipends the same. Or they may increase both a bit. Either way, the point is that they may not just throw all of that extra money into the tax-free stipends to get them up to the maximums indicated on the GSA tables.
And of course, this begs the question, “Why wouldn’t they?” I mean, it sounds as though they’re supposed to be able to, right? Well, many agencies do not see it that way and they have a logical reason to feel this way. Here’s the logic.
The GSA rates are based on short term business travelers. In other words, the assumption is that the business travelers are going to be staying in a hotel and eating out at restaurants. Obviously, both of these things are more expensive than getting an apartment and shopping at the grocery store.
That’s why the rates are so high. I mean, sure, Los Angeles is expensive. But you can certainly get a nice one bedroom apartment that’s fully furnished for much less than $4500 a month, right?
So with that in mind, remember from previous episodes that agencies are supposed to have a reasonable belief that you’re incurring these expenses that they’re paying the reimbursements for. And the fact that they themselves provide apartments for some of their travelers would be proof that they know how much these things cost. So if they’re paying through the roof, or the maximum rate, for these things, then that could be perceived as fishy, right?
Moreover, they may be paying other travelers in the same area less money for the lodging and M&IE stipends. For example, maybe the agency has 2 travelers on assignment in Los Angeles, California. One of them has a contract with a bill rate of $65, the other has a contract with a bill rate of $90. If they pay them both the same base rate, but the one with the higher bill rate gets higher stipends, then that might possibly be viewed as wage recharacterization.
And I want to make sure I’m clear here. These companies are essentially treating their stipends consistently. They basically determine what they believe to be reasonable for the lodging and M&IE stipends in any given area and then pay those rates consistently. So, when a high bill rate pops up, they add more money to the taxable wage as opposed to bringing the stipends up to the maximums allowed by the GSA tables.
Now, whether or not any of this flat out required by the tax laws, I don’t know. But then, I’m not a tax professional, so please remember that all of this information is for information purposes only. But what I can say is that it’s usually the largest companies that maintain these policies, right? So they have huge legal teams advising them and I have to think that there is at least some cause for concern there.
Seasonal Variations In GSA Tables And Negotiating Travel Nursing Pay
Okay, so the next thing I think we should discuss about the GSA tables pertains to the variations in the lodging rates that we discussed a second ago. Remember, some areas have seasonal variations in lodging rates because supply and demand issues cause price fluctuations in these areas throughout the year.
So, I have heard that some agencies and recruiters will say that they need to reduce the lodging stipend of the traveler when these variations kick in. I’ve heard this most often when it comes to contract extensions. When the pay gets negotiated for a contract extension, for example, the agency will say that the GSA stipends went down, so they have to reduce the stipend that they’re paying to the traveler.
Now, if your agency is paying you the maximum amount possible for the stipend, then I can certainly see this being the case. But this is extremely rare. So, in a general sense, I’m calling shenanigans on this one. If your agency pulls this tactic, then be sure to check the GSA tables and let them know that they were never paying the maximum amount to begin with, so why would they have to institute a reduction if they’re still paying less than the allowable limit.
GSA Tables And Taxes for Travel Nurses
Okay so this last set of issues pertains to how these GSA tables pertain to your own personal income taxes. Remember though, I’m not a registered tax adviser, so this is for informational purposes only. You need to seek the help of a tax adviser to get advice for your unique circumstances.
That said, one of the many questions that travel nurse almost always have is whether or not they need to pay taxes if they spend less then they receive in tax-free reimbursements. Now, the simple answer is that know you do not need to declare the difference on your taxes and pay income taxes on it. However, it’s important to note that you should be keeping receipts for your lodging expenses in order to verify that you did indeed incur some expenses on this item. So, you should be keeping lease agreements, hotel and motel receipts or something like that. Apparently, you do not need to keep the receipts for M&IE.
However, what if the agency reimburses less than the maximum allowed by the GSA, which they do in most cases, but you end up spending more than the agency reimburses you? Can you declare the difference on taxes as a tax write-off? Yes, you should be able to. However, you’ll need to be able to demonstrate the costs were incurred with receipts for everything.
So, this is why I think it’s best to save all your receipts. I mean, if you’re securing your own lodging, then it’s a must to have a record of those expenses. Many tax advisers will say that you don’t need them for M&IE items, but I think it’s best especially if you might spend more than the agency reimburses.
Okay, so that’s a really good place to wrap this episode up. We’ve covered a lot of information about the mysterious GSA tables. I hope this added clarity to the topic so you can approach it with more confidence.
As always, we’ll have the transcript along with various useful links up on the show notes page. You’ll find that at blog.bluepipes.com/episode34. Please feel free to post any questions or comments you might have about this topic on the show notes page. There is a comments section down at the bottom there. And while you’re there be sure to join BluePipes to take advantage of all the helpful tools and services designed to help you manage your travel healthcare more effectively and efficiently.
Again, I want to thank you so much for listening to the podcast. And a special thank you to those of you who have provided as with a review. I greatly appreciate that. If you’ve been enjoying the show, then it would mean the world to me if you could provide a review on whatever platform you use to listen on. Whether it be iTunes or Stitcher or some other platform, it really helps a lot. We move up in the rankings so we can share this information with more travelers and keep the show going.
Alright, until next time, have a safe and prosperous travel healthcare adventure.