May 21, 2012

Work Settings: It’s All About Location
By Denise M. O’Neal
For The Record
Vol. 24 No. 10 P. 8

There are many benefits to working as an office-based medical transcriptionist (MT), just as there are numerous reasons to choose a career as an independent contractor. But which one is better? And which course suits your individual needs? Here are a few pointers to help curious MTs through the decision process.

An office-based MT often has a set schedule and salary. According to various sources, the average annual income for entry-level or nonexperienced MTs ranges between $13,988 and $28,353, whereas an experienced MT can expect to earn somewhere between $22,381 and $45,364 annually.

Benefits typically include health and dental insurance, 401k, and paid vacation and holidays. Most teaching hospitals offer reimbursement to MTs who take classes related to some aspect of their job, contingent on them receiving at least a 90% grade. For example, at my last job, I took an advanced medical terminology class at a community college. When I took my passing grade to human resources, my company issued me a check for the cost of the class. At my present job, I am enrolled in an eight-month, on-site business-writing course at no cost.

On a personal level, working in an office allows MTs to enjoy the camaraderie of working as a team and establish relationships that can last a lifetime.

Arguments against working as an office-based MT include limited earnings potential, as MTs are typically locked into the salary they negotiate at the time of their hiring. The more experience you bring to the table, the greater your negotiating power, but most hospitals have a salary cap. So even if you’re a seasoned MT with 20 years of experience, you will never make more than the cap.

On the other hand, working as an independent contractor can be very lucrative. Independent contractors (also known as 1099 employees) earn higher incomes than MTs, who are W-2 employees. Seasoned independent contractors, who have the opportunity to earn between $60,000 and $80,000 annually, can usually count on steady work and revel in their ability to make their own hours. Most medical transcription service organizations (MTSOs) will ask MTs what days and times they are available to have some sort of idea when they can expect them to transcribe but, in general, scheduling is flexible. For example, if you’re not a morning person, you can set a schedule that starts later in the day and take advantage of shift differential pay.

Compensation for independent contractors is production based and paid on a line rate. Most MTSOs pay between 7 and 14 cents per line, which in most circles is considered to be 65 characters, including spaces and punctuation marks. Rates are higher per line for evening and weekend shifts.

Working from the comforts of home has advantages, too. As gas prices soar, independent contractors avoid the associated costs—not to mention the aggravation—of driving to and from the hospital. MTs with small children have the flexibility to work around their schedule to save on daycare expenses. Also, MTs can claim certain items on their taxes to receive reimbursement. For example, workspaces at home can be claimed as office space and supplies such as pens, pencils, paper, and ink cartridges can be used as deductions. A good tax preparer can serve as a guide to make sure MTs receive every deduction. To reap the most out of this benefit, it’s important to save receipts for phone bills, rent or mortgage payments, and office supplies.

Something else to consider is filing a 1040-ES form. Most MTSOs don’t deduct taxes from paychecks, leaving the MT to handle this chore. Estimated taxes are due on the 15th of April, June, and September of the current fiscal year and January of the following fiscal year. It’s wise to pay this every quarter rather than get hit with a hefty amount at the end of the year. (For more information on filing taxes as a 1099 employee, go to www.irs.gov and follow the “small business/self-employed” link to “filing/paying taxes” and click on “estimated taxes.”)

But before you go running to hand in your resignation at your office-based position, consider that 1099 employees have additional expenses that don’t affect W-2 employees. When I worked as an independent contractor, I used a Lanier machine, along with the foot pedal and headphones, obtained from the local hospital that contracted my services. Unfortunately, I needed to have an additional phone line installed at my home on my dime, which was a bit of an inconvenience, but I was able to recoup the cost when filing taxes.

There was a fair level of difficulty in setting up the equipment. If you’re not computer savvy, it can become challenging. Even with today’s technological advances, some services still require a second phone line. For example, at MedQuist, radiology MTs may require a second phone line depending on the account they are assigned. Also, some MTSOs provide MTs with a PC, another piece of equipment requiring a potentially headache-inducing setup.

Unlike office-based MTs, independent contractors do not receive medical benefits, a disadvantage that can have serious financial repercussions. However, some MTSOs are beginning to change their policies and now offer these services as well as 401k plans.

As an independent contractor, it’s important you don’t mind typing—perhaps a great deal—because the bottom line is if you don’t pound the keyboard, you don’t get paid. To pull in a lot of income, it could take a great deal of time spent in front of the computer. That was my modus operandi, and I was floored when my first paycheck arrived, convinced that more riches were right around the corner. But then I found myself missing out on family functions and life in general because the potential to make a princely sum was too much to resist. In short, it was both a blessing and a curse.

Choosing between being an office-based MT and an independent contractor is not an easy decision. Weigh the pros and cons wisely and select the career option that best suits your lifestyle and ambitions.

— Denise M. O’Neal is a 15-year veteran of the medical transcription industry and a freelance writer based in the Chicago area.