Should a Physician Assistant be Reimbursed for Moving Expenses?
Should a physician assistant be reimbursed for relocation expenses? The answer is yes, you should be reimbursed. If you are moving to a new area, out of state, across the state, or across the country, you should absolutely be reimbursed for those relocation expenses. However, it can look unique in your employment agreement. There are lots of different ways to structure this and I’ll go through the most common ones that I have seen. I’ll start off. The first way is probably the most common; it’s considered a relocation bonus, or they’ll call it a relocation allowance. And what this looks like is you’re normally offered anywhere from 10 to 20,000 upfront, the company will just, or your employer will pay you directly that amount of money.
And then you take that, and you use that for your relocation expenses. This however, because it’s considered a bonus and it’s really structured like a bonus, it’s considered income. Therefore, it’s taxed as income. You need to realize that if this is sort of the structure within your employment agreement, you’re not likely to receive that full amount. Taxes will be taken off the top. And you’ll want to also look at your employment agreement, especially if it’s structured this way. There’s normally some type of language in your employment contracts that state if you terminate your employment early within a one to three-year range, you will have to pay back that amount either in full or prorated. So, you want to be careful and make sure that you know what you’re signing, and you know what you are required to pay back if you terminate your employment early.
So, that’s the first way, a relocation allowance. The second way is relocation reimbursement. They’ll give you a max of 10,000 or 20,000, they will reimburse you. And so, you will hire your movers or whatever you need to relocate, then you’ll take those receipts and invoices, and you’ll hand those to your employer, and then they’ll reimburse you directly for those. This also can be considered a bonus sometimes. So, you want to be careful. And then also, even if it’s structured this way where they’re reimbursing you, there’s normally some type of language that states that you have to stay employed for one to three years. Otherwise, they’ll make you pay back either a prorated amount or the full amount. You want to be careful about that too.
And then also, when you must provide receipts, you want to make sure you read your employment agreement very carefully or get prior authorization because you don’t want to spend money on relocation expenses only to find out that that’s something that’s not covered under your employment agreement and your employer will not reimburse you for those. So, that’s the second way. And then the third way, I would say it’s probably the rarest, but it is common. Your employer will pay directly to the moving company or whoever the company that’s helping you relocate. You must get prior authorization and then your employer will pay them directly. Again, even with this sort of situation, how it’s structured in your employment agreement, there’s normally a max. Again, anywhere from 10 to 20,000, and then there’s always normally something in there where you’ll have to pay back those expenses that they’ve reimbursed if you terminate your employment early. Just some tips: it’s helpful to try to renegotiate that time down.
So, before you sign your employment agreement you can try to lower that time. I always try to negotiate for one year. I don’t like them to go for much more than one year. And then also, if they’re not willing to do that, then to prorate it. For each month that you stay employed, a fraction of that amount will be forgiven. That way, if you stay with the company almost up until that date, but God forbid something happens and you need to move, leave, or terminate your employment, you don’t have to pay back the whole amount. To me, that’s more reasonable. You want to try to negotiate down either the time that the amount is forgiven or ask for it to be prorated. You also need to take into consideration when you accept a relocation allowance or bonus, that it’s taxed as income, and most of your employment agreements will state that you have to pay back the entire amount or the entire amount is prorated, even though you didn’t receive the full amount.
Because again, remember that if it’s structured like that, taxes will be taken out of that amount. So, you’re not actually receiving the full bonus. Sometimes you can get it negotiated where it says minus any taxes incurred. But normally, your employer will not want to put that language in there. So, it’s better to just go for the shorter period of forgiveness or tap it prorated.
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