CRNA Specific Disability Insurance: Protect Your Income Properly

Andi Stamper

October 3, 2022

Insurance

About the Author: Patrick N. Clark, managing partner of Caprock Insurance Partners, has extensive experience helping connect CRNAs with disability insurance. The following column outlines points he suggests for locum tenens CRNAs to consider when looking for the right disability insurance.

Congratulations on your journey to becoming a high-income earning CRNA business owner. While the perks of going 1099 will be numerous, this role comes with certain pressing responsibilities. It is critically important that you assemble your own suite of benefits to ensure that you are “financially bulletproof.” One critical component to your plan for success is True Own Occupation Disability Insurance. We are providing a road map to help you choose wisely for your journey ahead.

Selecting the Right Insurance Carrier

The marketplace is crowded with insurance carriers that offer disability insurance. That said, please be aware that not all disability insurance carriers are created equally. There are independent, objective organizations that look out for consumers by providing performance ratings. A.M. Best, Moody’s, Standard & Poor’s, etc. can help you understand the financial strength of certain carriers. There are certain criteria that a carrier should satisfy to earn your business: claims history, financial stability, policy guarantees, and more. An insurance carrier should also demonstrate that disability insurance is a core competency. There are certain carriers that specialize in the right kind of insurance for specialty medical professionals like CRNAs and surgeons.

Designing the Policy Properly

A specialty medical professional requires a certain type of disability insurance that is offered by a select few carriers. For an individual with “golden hands,” the appropriate policy recommendation contains specific definitions. First, the policy should acknowledge your specific occupation with those exact duties in mind. There are broad brush definitions at certain carriers; avoid them. “True Own Occupation” DI provides a monthly benefit amount (non-taxable) in the event a single material duty is lost due to injury or illness. Further, the monthly benefit is payable to you in addition to any other income you may earn if choosing to work in another occupation. Please note that there are a few top tier carriers in the marketplace that provide this proper contractual definition. The policy should also provide “partial disability” language if a medical condition prevents you from working at your full capacity. In this way, any loss, large or small, will be covered with proper policy language.

Building Trust with your Agent

It is incumbent upon an insurance agent to earn your trust before doing business. It is appropriate to ask the agent about representation and best interest in this business relationship. In a properly structured

relationship, the agent should have access to all formidable options in the marketplace and an understanding of pros/cons. The agent should demonstrate objectivity and should be competitive in your search to make suitable recommendations. There should be a thorough analysis of your needs and budget to determine the best fit. Once you are comfortable with the carrier and the policy language, the policy should be tailored with your exact needs in mind. Once the contract is in force, the agent should recommend an annual review process to ensure that your needs are being met and the plan adequately covers all aspects of your income need.

All our best on your journey ahead. If you would like our assistance in preparing a properly designed disability policy, please feel free to reach out to us through our CRNA exclusive website: crnanation.com. This video will also help you get to know more about us and our approach.

STEPS TO FOLLOW TO BUILD A 1099 BUSINESS:

Protect yourself and your assets by performing your contract work under the umbrella of a business entity. Think about what you’d like your proposed business to be named!
- Visit your Secretary of State website to see if your chosen name is available
- Check with your state’s Board of Nursing for state specific requirements
File applicable business set-up paperwork

The S-Corp Edge: How you structure your 1099 CRNA business will have far-reaching consequences, whether it is a sole proprietorship, a limited liability corporation (LLC), or an S corporation (S-corp).
An S-corp may offer several advantages over other business structures when it comes to taxation. In this structure, a business owner is called a shareholder, and the business owner is recognized by the IRS as an employee of the business. What this means is that the business owner must pay themselves a salary through the corporation. The S-corp pays their payroll taxes, which can in turn be deducted as a business expense. Income tax is paid through its owners’ tax returns based on their percentage of ownership. Moreover, any remaining profits have a lower tax rate than regular income. An S-corp may also allow 1099 CRNAs to avoid a higher tax level that other self-employed contractors pay for Medicare and Social Security.
A CRNA may structure their company as an S-corp serving as the sole owner, with their business income, tax deductions, and losses passing through to the owner, as opposed to being taxed at a corporate level – a potentially smart move for maximizing financial security in the future.

- Register for an EIN
Open a business checking account and credit card
Keep track of all your business expenses as these could save you money come tax time!
- Have an envelope for receipts or a folder on your computer where you scan these into
Be sure not to co-mingle your business and personal finances!
Remember, as a freelance CRNA, if you don’t work, you don’t get paid!
- Do you have at least six months savings should your contract abruptly stop?
Think about replacing your current benefits
- Health Insurance
- Health Savings Account/Dependent Savings Account
- Retirement Savings Account
- Life Insurance
- Disability Insurance
Procure malpractice insurance
Look for jobs!
Apply for state licenses where you want to work
- Each state needs a different CRNA license (and RN if they are not a compact state). Keep this in mind as some BONs can take 3-6 months to license a provider.
Have an employment attorney review your contract
Have your contract written to your business and deposit all earnings into your business checking
Keep A Schedule

As a W-2 employee, your taxable income and amounts taken out for taxes appeared on your W-2 form at the end of every year, without you having to calculate them. But when a firm pays more than $600 for services from an independent contractor, that income must be reported to the IRS.
What many 1099 CRNAs don’t realize is that they must pay taxes on their income as they earn it. Paying your quarterly estimated income taxes will be a new part of running your business successfully.
It doesn’t sound so difficult—keeping track of paying estimated income tax only happens four times a year. But the reality is a late payment can result in penalties and fines from the IRS. Keeping a schedule to help you stay on top of your quarterly estimated tax payments, and paying adequately to avoid underpayment, is imperative in avoiding penalties in the future. Not to mention providing peace of mind!

Make sure you have a trusted team of accounting and/or financial professionals who have experience with freelance CRNAs to guide you through this process!

CPAs
Financial Planners
Bookkeepers

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