Earning six figures is a common milestone of financial success for many people including myself. When I began PT school in 2011, the median wage for a PT was $74,713 with 6-figures out of reach for even senior therapists. Nearly 10 years later, the bureau of labor statistics records the median PT wage in 2020 at $91,010 – still not quite $100,000/yr, but more attainable. Though keep in mind more than half the rise in salary is due to inflation.
As a physical therapist, getting paid more than 6-figures isn’t common but it is more common to have your compensation package valued in the 6-figure range, especially in the home Healthcare setting.
My initial salary upon graduation was $62,400 while working in a hospital-based outpatient facility. After my plan for public student loan forgiveness backfired, my quest towards earning as much as I could began. Fast forward to 2020, I would have earned a salary of $96,729. Unfortunately, with COVID-19, that wasn’t the case and I fell short at $91,965, which is still pretty decent with all things considered.
The fear of inconsistent work during the 2020 COVID-19 pandemic pushed me to start my mobile PT practice. It wasn’t long before I asked myself how much I needed to earn to replace my full-time income. Suddenly, my salary became less relevant and I needed to look at my entire compensation package as a staff physical therapist.
Today, I will be breaking down my annual compensation as a home health physical therapist. If you want a summary, just scroll down towards the bottom.
Calculating Base Salary
It normally shouldn’t take much to calculate your salary, but my employer no longer gives a guaranteed salary to their PTs, but use a point and quota system instead of time based pay effectively causing you to do some math if you want to know how much you’re projected to earn at the end of the year.
My employer considers 1 point equivalent to 80 minutes of work per visit which includes travel time, scheduling and case management. 30 points (6 points/day) to be considered a 40 hour work week. Like most salaried positions, it’s really a 50 hour work week, but that’s a conversation for another day.
Currently, I earn $63.85 per point bringing my annual salary to $99,606 if I as able to earn 30 points per week and work 52 weeks a year, but last minute cancellations happen and people get sick. Previously, I would have still been paid out the full 30 points as long as I showed effort in schedule recovery. However, this went away during COVID and I have seen my earnings drop. For the last 2 years, I average of 28 points per week and take no more than 1 week off a year. Fortunately, my employer has no maximum PTO accrual which would require me to spend down. I will be using this for my calculation.
Calculation: $63.85 x 28 points x 51 weeks
Total Value: $91,177.80
Retirement Contribution Match
Most companies will have either a 401(k)/403(b) retirement plan depending on whether they are for profit or non-profit. If you’re a government employee, you will have a Thrift Savings Plan (TSP) instead, some state/local government workers will also get the coveted 457 plans for additional tax deferment opportunity.
Regardless of what numbers and letters make up the name of your retirement plan, most employers will have access to a retirement plan and may contribute to your retirement. Employer contribution plans, if any, vary greatly.
My sister is a speech therapist for a school system and receives a 4% employer contribution regardless whether or not she contributions.
My wife is an occupational therapist for a big hospital system. She receives a tiered base match based on seniority with the company. It maxes out at 50% of her contributions up to 8% of her salary.
My younger brother works for a tech company and receives a match 100% of his contributions up to 7% of his annual salary. Meaning if he earns $150,000 and he contributes at least $10,500 (7% *150,000), they will match that $10,500 completely. Amazing I know.
Point being, know what your employers will match and always find ways to contribute up to the match to take advantage of this benefit.
My employer matches 33% up to 4% of my annual salary bringing the value of this to a pitiful $1,314.80. While it’s better than nothing, it’s lower than the average making it easier to negotiate for raises.
This means, I have to contribute about $4,000 per year in order to get the full match.
Calculation 1: $99,606 * 0.04 = $3,984.24 – Minimum needed for full match
Calculation 2: $3,984.24 * 0.33 = $1,314.80 – Employer match
Total Value: $1,314.80
My employer reimburses $0.45 on the mile. From speaking with colleagues working with other homecare agencies, it seems this benefit ranges from non-existent to the full government allowable amount of $0.56 per mile (2021).
At the current mileage reimbursement rate, I average $60 of travel reimbursement per paycheck which I get each week.
Calculation: $60 x 52 weeks
Total Value: $3,120
Of note, my employer’s mileage reimbursement rate is near 75% of current IRS allowable rate of 58.5 cents per mile in 2022. Since 2018 and until 2015, the IRS no longer allows you to deduct for unreimbursed employment expenses when itemizing your taxes.
Regardless, I was surprised to learn how valuable mileage reimbursement was to my benefit package. Move out of the way 401k, you are no MATCH for what I get from mileage reimbursement! Get it?
Cell Phone reimbursement
My employer gives me the option of using my personal cell phone or receiving a company phone. Some prefer more separation from work and life. I prefer getting my cell phone bill paid for. However, many do not take advantage of this benefit because it requires monthly submissions of expense reports which is a multi-step process that isn’t well documented for employees to follow.
Calculation: $30 x 12 months
Total Value: $360
Employer Healthcare Coverage Value
I was previously enrolled in the high deductible health plan and paid $11.31/week for medical, dental, and vision totaling only $588.12 annually! However, a couple of things to be considered for the purpose of why I am exploring my physical therapist compensation package. First, my situation has changed where I am on a family plan to cover both my wife and our newborn. Second, the amount my employer pays is a special group rate based on the number of employees needing coverage.
What I am paying now for this employer sponsored family health plan is $165.30/week totaling $8,595.60 per year.
Side note: If you’re curious at the cost of your employer-sponsors group health plan, check out your W-2 Form, Box 12, Code DD. The Affordable Care Act requires employers to report this number on your W-2 Form.
After looking up equivalent plans to cover my family if I was self-employed and it appears to be quite costly.
Dental PPO Preferred = $109.19
Healthcare = $1099.81
Estimated Total monthly premium = $1,209
Estimated Total Annual Cost = $14,508
Considering I pay $8,595.60 per year towards my health insurance premiums, my employer saves me $5,912.40 which is the additional cost I would have to pay for equivalent plans if I was 100% self-employed.
Calculation: $14,508 – $8,595.60
Total Adjusted value: $5,912.40
I have not seen a Physical therapist compensation package with much overtime availability likely due to low profit margins. Currently, my employer does not have overtime benefits. However, if our caseload exceeded what we could reasonably complete during the week and overflowed into the weekend, we would be paid out at 1.5x our normal visit rate. We will also be paid out at 1.5x our visit rate during our assigned weekend rotations. We are mandated to work at least 1 weekend every 2 months. Gathering data from the last 6 months, on average, I earn 7 weekend points a month, netting me an extra $31.925 per point since I’m paid out time and a half. That is an extra $223.47/month or $2,681.70 per year.
Total Value: $2,681.70
Paid Time Off:
I feel fortunate that the company offers 3-4 weeks of paid time off. My employer groups their sick leave and vacation in the PTO bank and they separate the holiday bank which is different from at least some other employers I worked with in the past.
In addition to knowing how your PTO bank is broken up, you want to know the accrual rate. Some companies may simplify their PTO accrual to monthly or quarterly. My employer pays my PTO weekly based on the number of hours I work.
My employer uses a PTO accrual rate of 0.0762/hr. As discussed in the salary section, I complete an average of 28 points per week which is considered 37.33 hours of work. Historically, I take off no more than 1 week a year.
My effective hourly rate is $47.89 ($63.85 x 0.75) due to my employer’s hourly point value of 80 minutes per point.
I accumulate an average of 7 weekend points a month which equates to 9.33 hours of work per month and 112 hours per year that I will add to this calculation.
Annual PTO Accrual Calculation: (0.0762 PTO per hour x 37.33 hours x 51 weeks ) +(0.0762 x112 weekend hours/yr) = 153.60 PTO hours accrued per year
Value Calculation: $47.89 hourly rate x 153.60 annual PTO hours
Total Value: $7,356.11
Typically, most companies will recognize the standard 6 holidays:
- New Year’s Day,
- Memorial Day,
- Independence Day (4th of July),
- Labor Day,
- Thanksgiving Day,
- Christmas Day.
In the last couple of years, my employer also added Easter, giving us 7 paid holidays bringing my annual holiday pay compensation to $2,681.7
Calculation: $63.85 x 6 points (8 hours) x 7
Total Value = $2,681.7
Covid Sick Fund
I’ve been exposed twice despite safety measures at work. Fortunately, the first time I was negative and seems to have been coincidental with an asthma event and possibly a cold. The second time, I was positive along with the rest of my house hold. This covid-sick fund would obviously not be available if I was 100% self-employed. Both exposures, I’ve been out a week. It has a maximum payout of $1,400 per week which is under what I would earn if I was approved to work, but it’s much better than nothing.
Total Value: $1,400
Usually I go through 2 BP cuffs, 1 Pulse Oximeter, and 1 thermometer per year. My employer will reimburse for the costs once I submit the expense report. My 2021 expense reports totaled 2021 which is consistent with my annual estimate.
Total Value: $140.80
Worker’s Compensation Insurance
I almost forgot about work comp, which came in handy when my wife tore her a labrum while lifting a patient. It’s not required for employers to carry worker’s compensation insurance in some states, but most employers will have this benefit to protect both themselves and you.
In the event of a workplace injury, you’ll get your medical bills covered along with a percentage of your wage, usually 60% – 66% of your pre-injury wage. In my state, worker’s compensation insurance costs are estimated to be between $1.00 to $1.99 per $100 of payroll depending on the nature of their employees’ work and the risk of injury. Since I don’t know where PT falls on their risk spectrum, I will just estimate employer rate at $1.50.
Calculation: ($99.606/$100) x $1.50
Total Value: $1,494.09
My Physical therapist compensation package summary
Base Salary: $91,177.80
Paid Time Off: $7,356.11
Health Care Coverage adjusted value: $5,912.40
Mileage reimbursement: $3,120
Holiday Pay: $2,681.7
Retirement Contribution Match: $1,314.80
Overtime/weekend rate: $2,681.70
Worker’s Compensation Insurance: $1,494.09
Cell Phone reimbursement: $360
Equipment reimbursement: $140.80
Covid Sick fund: $1,400
Total Compensation package value = $117,639.40
My total compensation package as a staff physical therapist working in home health care is $117,652.35!
Financial experts estimate that employee benefits are usually worth approximately 30% of their base salary. For me, it is closer to 20% due to inconsistent work and the adjusted value I placed on healthcare insurance.
This brings me back to the primary reason for calculating my entire compensation package. It means that my business would need a net profit of nearly $120,000/yr before I could replace my income. This is completely achievable provided I see all my patients myself and receive enough referrals to see have at least 25 appointments per week. The difference here between full-time employment and self-employment is that the latter is scalability, but not without inherent risk. Also, who says I can’t explore other business ventures with higher profit margins?
Regardless, this information does put things in perspective in appreciating what I have and when creating a transition plan from full-time employment to self-employment. For now, I’ll continue enjoying the security of the 9-5 while building extra income from my side-hustles.
If you’re interested in creating the option to retire in 10 years or less, sign up here for a early access to my e-book. I never thought I’d be writing anything, yet here I am on a website writing about money. Hope to share all the information I have gained over the years with you.
Art is the founder of Flexcents, a blog created in 2018 to help others reach their fitness and financial goals through sharing insights as a physical therapist, personal finance nerd, and self-directed investor.