Travel Nursing Pay: Flexible vs. Rigid
If you’ve discussed travel nursing pay with multiple agencies, then you’ve most certainly found that different agencies compensate their travel nurses in different ways. Some companies pay larger tax-free stipends than others. Some companies offer rental cars while others don’t. Some companies offer furnished one bedroom apartments while others will only offer an Extended Stay hotel.
The various individual differences can be difficult to keep track of. However, there are a couple of general differences that travel nurses should be acutely aware of. We’re going to discuss one of those general differences here, the difference between flexible compensation packages and rigid compensation packages.
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Defining flexible and rigid travel nursing pay
Let’s begin by defining what we mean by rigid and flexible compensation packages. First, it’s important to recall that travel nursing compensation packages are like a pie. The total compensation is split up among different categories like hourly rates, travel stipends, lodging stipends and other variables. So agencies are able to slice the pie up in different ways.
A flexible compensation package is exhibited when a agency offers a set of compensation variables that can be mixed-and-matched. For example, the agency may offer $25 per hour, $250 weekly for the Meals and Incidental Expense stipend, $2000 monthly for lodging, and $500 for travel expenses. However, the agency would be willing to lower the hourly rate and increase the monthly lodging stipend, or lower the hourly rate and add medical benefits to the offer. Of course, there are many other ways that they might offer to alter the compensation package. A rigid compensation package is exhibited when an agency is unwilling mix-and-match the compensation variables.
It’s important to point out that you may be able to negotiate a higher compensation package in both cases. However, negotiating a higher package doesn’t necessarily mean that the agency is going to mix-and-match the variables. It just means that the agency is going to add more money to the overall package.
What’s the big deal?
Tailored Compensation Packages
You’ll come across many agencies who advertise that they tailor their pay packages to meet the unique needs of each traveler. These agencies are offering some level of flexibility. For example, it’s very common for an agency to offer a choice between company medical benefits or an increased pay package if the travelers opts out of the company’s benefits.
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By contrast, agencies with rigid compensation packages will most likely operate with a “take-it-or-leave-it” approach. This is actually quite common with the largest agencies in the business.
Tax-free Money
Of course, this issue takes on extra meaning when the taxable hourly rate is involved in the mixing and matching. For example, some agencies will offer to lower the taxable hourly base rate and add more to the tax-free categories like the housing stipend or M&IE stipend. Many travelers really like this because receive a higher percentage of their income as tax free money as opposed to taxable money. So these travel nurses would like the ability to negotiate a contract with a lower hourly wage and higher stipend amounts.
Advantages for Agencies
Offering a flexible compensation package can give an agency a competitive advantage. They’ll be able to claim that travel nurses will have higher net pay with the agency’s compensation packages. They’ll also be able to save on the employment costs associated with taxable wages.
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Wage Recharacterization
However, there is a problem with altering the taxable hourly wage in order to provide more tax-free money. The IRS calls this practice that many companies engage in “wage recharacterization.” This practice is against IRS regulations. This issue is more important for agencies than travel nurses. Agencies can get in big trouble for engaging in this practice. In fact, there are 16 agencies under IRS investigation for this practice as of the writing of this article.
The risk for travel nurses is that travel nurses are at greater risk of being audited when their agency is audited. During the audit, travel nurses can demonstrate that they qualified for the tax-free money by producing records indicating that they incurred costs equitable to the tax-free payments. However, this may prove difficult.
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Ultimately, it’s the travel nurse’s choice to go with flexible or rigid compensation packages. If you’re looking for flexible compensation packages, then you’ll only be able to work with agency’s that offer them. However, if your concerned about taking a low hourly rate with a company that offers a flexible compensation package, then you could just ask them to increase the hourly rate. They should be willing to comply because they’re flexible, of course.
