Travel Per Diem: What Is It?
Traveling nurses enjoy many benefits, not the least of which is ample compensation for living an adventure, regularly visiting new cities, and meeting interesting people. One piece of your compensation package will be the per diem rate. This is the Latin term meaning "per day." While the term may be used differently if you aren't traveling, let's stick to how you'll hear it used as you work with your recruiter.
What Does Per Diem Mean for a Travel Nurse?
As a travel nurse, you likely qualify for a per diem rate meant to cover meals and incidental expenditures (M&IE), as well as your housing. As you work out your compensation package, it's important to remember that there are two classifications for per diem rates, your housing stipend, and M&IE. We recommend you and your recruiter confirm how the terms are used to avoid confusion. Sometimes lodging is referred to as a "housing stipend" or "lodging stipend," while M&IE rates may be referred to as "the stipend" or M&IE stipend.
Your per diem rate is a per day allowance to cover your lodging and M&IE while you're away from home. To qualify for per diems, you must be considered a “traveler,” incurring duplicate housing expenses while on assignment. This means you are paying for your permanent housing, in addition to paying for housing costs while on contract. Since these are extra expenses associated with travel, the U.S. tax system classifies the money as tax-free, which means you don't pay taxes on this portion of your check.
How is the Per Diem Rate Calculated?
The per diem rate is calculated by the General Services Administration (GSA). This is an agency in the federal government that serves as a hub to negotiate purchases. They are responsible for setting per diem rates, which is the maximum allowed amount of money that can be paid to travelers for lodging and M&IE. The IRS uses the same rate for private citizens. However, it is the Department of Defense (DoD) that sets the per diem rate for states outside of the continental U.S., including Alaska and Hawaii.
The GSA and the DoD maintain websites where you can find the per diem rates used for travel nurses based on your destination city. On the GSA site, you select your destination. Lodging is listed by month to account for seasonal price changes. Another column will contain the information for the M&IE. Each of the columns are a daily rate. To calculate a weekly total, multiply the daily value by 7.
It is important to remember that these are the maximum allowed values in specific metro areas, and not necessarily the amount paid. The per diem rate you'll see in your compensation package will be based on the bill rate sat set by the contract between the healthcare facility and your agency.
Why Can't I Be Paid a Higher Per Diem and Lower Taxable Salary?
This might leave you curious as to why the agency can't pay a low taxable rate and a higher tax-free per diem rate. IRS rules regulate pay scales making this illegal. The IRS requires employees to receive a reasonable wage that would be acceptable under normal circumstances. By paying a lower tax rate and a higher per diem rate, it places the agency and the traveler at risk for severe financial penalties.
GetMed Staffing Recruiters Help You Get the Most from Your Travel Assignment
Anytime you take on a new assignment or a new job, it can be challenging. Our professional recruiters are experts at helping you pull it all together and make the most of your travels. Call GetMed Staffing recruiters today and discover how easy it is to work with people who are experts in their field.