What salary is a locum tenens contract equivalent to?

For the worked example on this page — $200 an hour over 42 billable weeks, or $336,000 of revenue — the equivalent salary is about $308,408. That accounts for both halves of payroll tax, the QBI deduction, self-funded health cover, a forgone employer match, and $10,700 a year of locum tenens-specific costs. Your own figure depends on your rate, billable weeks and premium.

What costs do locum tenens physicians carry that employees do not?

Malpractice tail coverage (about $6,000 a year), Continuing medical education (about $3,500 a year), Multi-state licensing (about $1,200 a year) — roughly $10,700 annually in total. These are market estimates rather than published rates, and the largest of them is usually covered by an employer.

What should a locum tenens negotiate besides the rate?

Is the malpractice policy occurrence or claims-made? Occurrence covers anything that happened while the policy was live, whenever the claim arrives. Claims-made only covers claims filed while it is live — which is why tail exists at all. If nobody says which it is, assume claims-made and keep asking. If the assignment ends early, who buys the tail? This is a negotiated contract term, not a default. Some agencies include it, some provide claims-made cover whose reporting window shuts the day the relationship ends. The gap between those two positions is a five-figure liability sitting with you. Does the retroactive date carry over? A new policy with a fresh retroactive date leaves everything before it uncovered, no matter how long you were insured previously. Does the rate change if you accept 1099 instead of W-2? As a 1099 you carry both halves of payroll tax and every benefit. If the offered rate is identical either way, the W-2 version is worth materially more — that is the arithmetic

1099 vs W-2 for locum tenens physicians

You probably do not get to choose

Most locum assignments arrive with the classification already decided. The agency or facility sets it when it offers the work, and state law can constrain it, so the realistic question is not which to choose but what the one you are offered is worth and what to negotiate inside it.

So read what follows as pricing an offer rather than picking a side. If the rate is the same whichever box the agency ticks, the W-2 version is worth more, and the worked example below puts a number on the difference.

A worked example

$200 an hour, 40 hours a week, 42 billable weeks — $336,000 of contract revenue for a single filer. 42 billable weeks, not 48. Locum work comes in assignments with gaps between them, and an unfilled gap is unpaid — there is no holiday entitlement to draw on.

An employer would have to offer a salary of

$308,408

to leave you as well off as this contract — $148 an hour over a standard 2,080-hour year.

The contract’s headline revenue is 9% higher than that salary. That gap is what payroll tax, self-funded benefits and the costs below consume — and it is narrower than the familiar “knock 25–30% off a contract rate” rule, because the QBI deduction applies to business income and not to wages.

That already prices in both halves of payroll tax, the QBI deduction, your own health premium against an employee’s share, and a 4% employer match you would no longer get. It also deducts the $10,700 a year of locum tenens-specific costs set out next, which is the part a generic calculator cannot know to ask about.

These are illustrative figures, not a claim about what locum tenens work pays. Run your own numbers — the calculator takes your rate, your hours and your actual premium, and every result is a URL you can keep.

Costs a generic comparison misses

Cost	Annualised	Employed equivalent
Malpractice tail coverage	$6,000	Usually covered
Continuing medical education	$3,500	Usually covered
Multi-state licensing	$1,200	Also yours
Total	$10,700

Every figure here is a market estimate, not a published rate. Each one says below where it came from and how much weight to give it.

Malpractice tail coverage — $6,000 a year: Tail is a one-off charge commonly quoted at around twice the final year's premium, and it is owed when a claims-made policy ends. Shown here as an annual share of a figure in the region of $18,000 spread over three years. Your own number depends on specialty, state and the policy's retroactive date.
Source: American Society of Anesthesiologists community, Medical professional liability insurance — A physician-authored estimate on a professional society platform, consistent with figures quoted on physician forums. Treat as a ballpark and get a written quote.
Continuing medical education — $3,500 a year: Course fees, board maintenance and the travel to get there, plus the days not billed while attending. An employed physician typically has a CME allowance and paid CME days; a contractor has neither.
Source: Medical Economics, What locum tenens docs should do about tail coverage — Directional rather than a surveyed figure. CME cost varies widely by specialty and by how much board maintenance falls in a given year.
Multi-state licensing — $1,200 a year: Locum work frequently spans states, and each licence has its own application and renewal fee, plus credentialing time that is not billable. Charged whether or not an assignment in that state materialises.
Source: Medical Economics, What locum tenens docs should do about tail coverage — An order-of-magnitude placeholder. State medical board fees are published per state and this site has not yet recorded them individually.

What to settle before the first day

The rate is the part everyone negotiates. These are the terms that decide what the rate was actually worth.

Is the malpractice policy occurrence or claims-made?
Occurrence covers anything that happened while the policy was live, whenever the claim arrives. Claims-made only covers claims filed while it is live — which is why tail exists at all. If nobody says which it is, assume claims-made and keep asking.
If the assignment ends early, who buys the tail?
This is a negotiated contract term, not a default. Some agencies include it, some provide claims-made cover whose reporting window shuts the day the relationship ends. The gap between those two positions is a five-figure liability sitting with you.
Does the retroactive date carry over?
A new policy with a fresh retroactive date leaves everything before it uncovered, no matter how long you were insured previously.
Does the rate change if you accept 1099 instead of W-2?
As a 1099 you carry both halves of payroll tax and every benefit. If the offered rate is identical either way, the W-2 version is worth materially more — that is the arithmetic this page works through.

Where these figures come from

The tax arithmetic uses the same IRS-sourced figures as every calculator here — see the methodology page. The locum tenens-specific costs are market estimates from the sources below, each shown with the date it was checked. They are the best available evidence and they are still estimates: get a written quote before you rely on any of them.

Medical Economics, What locum tenens docs should do about tail coverage — market estimate, checked October 22, 2026
Describes the standard arrangement: the locum company carries the malpractice policy and sets the terms the physician works under
American Society of Anesthesiologists community, Medical professional liability insurance — market estimate, checked October 22, 2026
Estimates tail coverage at approximately 200% of the final-year premium
Medical Economics, What locum tenens docs should do about tail coverage — market estimate, checked October 22, 2026
Context on what locum arrangements do and do not include relative to employment
Medical Economics, What locum tenens docs should do about tail coverage — market estimate, checked October 22, 2026
Background on the multi-state nature of locum assignments

What this page does not tell you

What your specialty and state actually pay. Rates vary enough by both that a single figure would mislead, so the example above is an illustration and the calculator takes your own.
State taxes. Where you work changes the answer, sometimes by thousands. See the state guides.
Whether to incorporate. At these income levels an S-Corp election is worth modelling — the S-Corp breakeven calculator does that, and names what it leaves out.
Anything about your specific contract. Have a lawyer read it. The checklist above is what to look for, not a substitute for looking.

These are planning estimates, not tax or legal advice — see the disclaimer. If a figure here is wrong, tell us and it gets corrected and logged.