The travel nurse Housing stipend causes a lot of confusion. It’s also one of the largest components of the travel nursing pay package. Therefore, it’s imperative for travel nurses to fully understand. So, in this article, we cover everything you need to know about the travel nurse housing stipend so you can approach the issue with confidence.
Why The Confusion About Travel Nurse Housing Stipends?
Travel nurse housing stipends cause confusion for several reasons. First, we’re not used to dealing with them because they are not a part of normal pay packages.
Second, different agencies handle housing stipends in different ways. For example, some agencies quote stipends as a monthly value. Others quote them by the week. And still others quote them by the hour.
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Similarly, some agencies offer higher stipends than others. Although, as we’ll see below, that doesn’t necessarily mean they pay more overall.
Third, different people, whether they be recruiters or travel nurses, explain housing stipends in different ways. Moreover, there is also A LOT of misinformation about travel nurse housing stipends.
Rest assured, you’re in the right place to get the real scoop. This article is written and reviewed by a team with over 50 years of combined experience in the travel healthcare industry.
Let’s begin with a definition.
What is a Housing Stipend?
Simply put, a housing stipend is a sum of money an agency provides to a travel nurse to cover the housing costs that the travel nurse incurs while working a travel assignment. People also refer to the housing stipend as a “housing reimbursement”.
Most travel nursing agencies offer a choice between company housing or the housing stipend. You do not get both.
If you take the company housing, then the agency takes care of everything related to housing. If you take the housing stipend, then you’ll be responsible for finding, securing and paying for the housing.
While this all sounds simple enough, all the nuances make it much more complex. Now, to fully understand the housing stipend, we have to understand “GSA Per Diem Rates”.
Where does the concept of a housing stipend come from?
The “General Services Administration” (GSA) is a branch of the US Federal Government whose mission is to “oversee the business of the US Federal Government.” Of course, this means the GSA has many responsibilities.
One of those responsibilities is to establish the “per diem rates” for federal employees. “Per diem rates” are “the maximum allowances that federal employees are reimbursed for expenses incurred while on official travel.”
The GSA defines three expense categories: housing, meals, and incidentals. The GSA recognizes that these expenses vary with the cost of living across the country. Therefore, the GSA publishes different rates for different locations throughout the United States.
In case you’re interested, we’ve discussed the Meals and Incidentals stipend in a previous article. We’ve also discussed 6 things travel nurses ought to know about the GSA rates in another article.
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Why are the GSA Per Diem Rates important if they only apply to federal employees? Well, the IRS applies the same GSA per diem rates to private sector employers and employees.
Travel Nurse Housing Stipend vs. Per Diem
Now, you might be wondering why the GSA calls it “Per Diem” and we’re referring to it as a “stipend.” “Per Diem” is a Latin term that means per day. And the GSA quotes the lodging rates as daily figures. For example, the current Per Diem lodging rate for Sacramento, CA is $145 per day.
By contrast, a “stipend” is a “fixed regular sum paid as a salary or allowance.” This definition is a better fit for the travel healthcare industry because most agencies pay their housing reimbursements in lump sums. They typically pay them weekly or biweekly. Moreover, agencies typically quote their housing reimbursements as a monthly figure.
Also, using the term stipend helps avoid confusion with the healthcare industry’s use of “per diem” as meaning daily or on-call staffing.
Where does the housing stipend money come from?
When people hear that the housing stipend is related to the government in some way, they sometimes think it comes from the government. You’ll see this on social media sometimes. It’s not true.
Instead, the money for the housing stipend, like all components of the travel nursing pay package, comes out of the bill rate. The bill rate is the hourly rate that the hospital agrees to pay the agency for an hour of the travel nurse’s work.
Should I expect to get the maximum allowed by the GSA?
Another common misconception is that the government, or the hospital, somehow requires agencies to pay the GSA’s maximum housing stipend to travel nurses. Here again, this is not correct.
Similarly, social media might tell you that you should expect to receive the GSA max or use it as a barometer for expectations. They say if you get less than the max or some arbitrary percentage of the max, then you’re getting ripped off. Here again, this is incorrect.
First, the GSA rates are the maximum amounts that an employer can reimburse without the exchange of receipts. So, employers aren’t required to pay the maximum. Instead, they are required to pay the maximum or less.
Second, the GSA rates are based on short term stays that typically require the use of a hotel. By contrast, travel contracts typically last for 13 weeks and are rarely less than 8 weeks. As you know, hotels are much more expensive than apartments. Moreover, hotels typically offer large discounts for long term stays.
What Does the IRS Say?
This is important because according to IRS rules, agencies must have a “reasonable belief” that the traveler will incur the costs that the agency reimburses them for. Meanwhile, many, if not most, of the GSA housing rates are much higher than the reasonable expectation for the cost of a 3 month stay.
For example, the GSA lodging rate in San Diego, CA is $161 per day. That’s $4,830 per month. Agencies should expect that their employees would be able to secure adequate accommodations in San Diego for much less than that.
How Travel Nursing Agencies Determine The Housing Stipend
So, how do agencies determine the housing stipend? Different agencies determine their housing stipends in different ways. Primarily, they consider three factors:
- The bill rate
- The GSA Max
- IRS guidelines
The Bill Rate and the Housing Stipend
The bill rate is a major determining factor for the housing stipend and the entire pay package for that matter. Think of the bill rate like a pie of money that needs to cover every cost associated with a travel nursing assignment. The agency can slice this pie up in different ways, but they can’t increase the size of the pie.
The taxable hourly rate, the employer’s payroll taxes, the cost of benefits, the cost of credentialing, housing and, yes, the agency’s gross profit all come out of the bill rate. So, the larger the bill rate, the more the agency can allocate to housing or other items and vice versa.
It’s important to note that all these variables do, in a sense, have a hierarchy. For example, the agency must factor in a reasonable taxable hourly rate before they determine the housing stipend. Similarly, they must factor in the employer’s portion of payroll taxes before they determine the housing stipend.
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That said, some agencies don’t follow all the rules. For example, an agency may offer really low taxable wages so they can offer higher stipends. They do this so that their “net pay” is higher and therefore more attractive.
Please see the articles below for more information on how travel nursing pay packages work:
- Sample Breakdown of a Travel Nursing Pay Package
- How to Compare Travel Nursing Pay Packages
- 12 Types of Travel Nursing Bill Rates
The GSA MAX and the Housing Stipend
Different companies approach the GSA Maximums in different ways. Some agencies will provide the maximum amount when bill rates support it.
Other agencies will provide a set percentage of the maximum amount. For example, they might provide 60% of the max for all their contracts.
Still other agencies will provide more than the maximum amount when the bill rate supports it. This is against the rules and we recommend avoiding these agencies.
In any case, it’s important to remember the pie metaphor when you evaluate travel nursing pay. Just because one company is paying a higher housing stipend doesn’t mean they are paying more overall. That said, it’s true that you will net more money if you receive more non-taxable income all else being equal.
Agencies also consider IRS guidelines when determining their housing stipends. Again, the agency is supposed to have a reasonable expectation that the traveler will incur a cost that matches what the agency reimburses.
What is the Average Travel Nurse Housing Stipend?
You’ll see travel nurse housing stipends as low as $700 per month and as high as $5,000 per month. Housing stipends vary dramatically between regions. They also vary with bill rates. Housing stipends will almost always cover the cost of suitable housing in the area you are traveling to. In rare cases, the housing stipend is not enough to cover the cost of suitable housing.
Due to the variances, knowing the average travel nurse housing stipend across the entire nation will do you no good. Therefore, don’t fixate on the amount of the stipend. Instead, you must evaluate the entire pay package to know if the pay is good or not. You can use our free travel nursing pay calculator to evaluate pay like a pro.
What Percentage of The GSA Max Should My Travel Nurse Housing Stipend Be?
Some people argue that the housing stipend should be at least a certain percentage of the GSA Max. While we understand the logic, you should still consider the housing stipend in context of the entire pay package.
For example, let’s say an agency offered you a pay package where the housing stipend was only 30% of the GSA Max. However, the taxable rate was $150 per hour and they offered a $10,000 signing bonus. You might be wise to accept that assignment despite the low housing stipend.
If you’re interested in discovering what percentage of the GSA Max a housing stipend is, then you can use our free travel nursing pay calculator which will run this calculation for you.
Do I Qualify For The Travel Nurse Housing Stipend?
In order to qualify for the non-taxable housing stipend, you must meet the following requirements:
- You have a legitimate tax-home
- You are traveling away from that tax home for work
- You are incurring an expense for housing.
We covered tax homes for travel nurses in our four-part series on this topic. Please review those articles for everything you need to know.
Traveling Away From Tax Home
The IRS states that you can accept tax-free stipends if “you need to sleep or rest to meet the demands of your work while away from home”. It does not set a specific distance.
Please note that there is no such thing as a “50 mile rule”. We say this because you will undoubtedly hear that you can accept tax-free reimbursements as long as the work site is 50 miles away from your home. This is not even remotely true. We covered this topic extensively in this article.
Can travel nurses take the housing stipend if they don’t pay for housing?
It is against the rules to take the housing stipend if you do not actually pay for housing. For example, if you have family or friends who live in the assignment’s area and you stay at their home for free, then you do not qualify for the housing stipend.
It’s quite simple. You must incur an expense for housing in order to qualify for the housing stipend.
Do I need to keep receipts for housing when I take the housing stipend?
Yes, you must be able to demonstrate that you incurred an expense for lodging. If you are staying at a hotel, then you can keep the receipts. If you are staying at an apartment, then you can keep the lease agreement. If you are using AirBnB, then you can print the invoices.
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In any case, you must maintain proof that you incurred expenses for lodging.
Can I take the full housing stipend if I only incur expenses on certain days of the week?
Recall that the GSA quotes daily rates. However, travel nurses do not work everyday of the week. But, travel nurses typically are not able to return home in between shifts. It’s simply too far. Therefore, the vast majority of travel nurses must secure lodging for the entire duration of the assignment.
As a result, the agency has a reasonable expectation that the travel nurse will incur a lodging expense for every day of the assignment, not just the days they work. That’s why agencies are able to pay housing stipends for every day of the week and not just the days the travel nurse works.
But what if a travel nurse is close enough to home that they can return home in between shifts? As a result, they would only need to pay for lodging 2 to 4 days per week. Can the travel nurse take the full housing stipend if they only incur expenses on certain days of the week?
The simple and safe answer is no. If you are receiving a stipend for the entire week, then you need to incur an expense for every day of the week.
We’ve heard that some agencies are quoting stipends “per shift” in their contracts and claiming that, therefore, travel nurses only need to incur lodging expenses on the days they work. This sounds like a tax avoidance scheme. It’s definitely contrary to the spirit and intent of the reimbursement regime. We urge you to avoid these companies or seek tax advice if you choose to work with them.
The financial advantages of the housing stipend
Many travelers and recruiters tout the financial advantages of taking the housing stipend instead of company housing. And they’re right; in many cases, taking the stipend can be financially advantageous.
For example, if you are working with a company that offers a straight choice between a stipend and company provided housing, then you could pocket some extra cash if you’re able to find housing that costs less than the stipend.
It’s common for companies, especially larger companies, to offer a straight choice between company housing or a $2000 monthly stipend. It’s a plain and simple choice; there are no caveats. Therefore, if you can find your own housing for less than $2000 a month, then you pocket the difference.
This next scenario is more convoluted. If you’re working with an agency that gives you a choice between pay packages offering either a high stipend and lower taxable wage OR company housing and a higher taxable wage, then you could pocket some extra cash in two ways.
First, by avoiding the extra taxes you’d pay on the higher taxable wage. Second, if you can find housing for less than the cost of the agency provided housing. Like I said, this is confusing, so let’s take a detailed look at this scenario.
Option 1: You take the housing stipend
The agency offers you a pay package that includes a taxable base rate of $20 per hour plus a monthly lodging stipend of $3000, among other compensation variables.
Option 2: Company provides the housing
The same agency tells you that if you don’t want Option 1, then they can provide housing that will cost $2200 per month. Remember, the stipend in Option 1 is $3000 per month. That’s a difference of $800 and they will add this amount to your taxable hourly rate.
They’ll do this by breaking it down to an hourly figure. For example, if this was for a 13-week contract for 36 hours per week, then there would be 468 total hours in the contract. There would be 3 total months or $2400 extra. So, $2400/468 is $5.12 per hour to be added to your taxable rate.
As you can see, you’d be paying taxes on an additional $800 per month that would otherwise be tax free if you took the stipend. Moreover, if you were able to find housing for less than $2200, then you could pocket even more additional cash.
We must point out that this particular scenario could potentially run afoul of the IRS’s wage recharacterization rules. However, this is something that agencies could potentially get in trouble for, not travelers. And because many agencies conduct business this way, it’s an important scenario for you to be aware of.
Contract cancellation risk with the travel nurse housing stipend
As you know, financial advantages and gains typically come with financial risks. And there are a couple of financial risks to taking the lodging stipend.
If you sign a 3-month lease and your contract gets cancelled, then you could potentially lose a significant amount of money. Your name will be on the lease and you will be the responsible party.
If the agency provides the housing, then they’re the ones who are on the hook if the contract gets cancelled. They know this all too well. This is one reason that many agencies sell you so hard on the financial advantages of taking the stipend. They’d much rather that you shoulder the risk.
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Some may argue that the employment contract typically assigns responsibility for costs to the traveler in cases where contracts are cancelled. However, this is only true in cases where the contract is cancelled with cause, meaning the contract is cancelled for some disciplinary or performance issue.
Unfortunately, hospitals cancel contracts for many other reasons, such as low census. Moreover, even when a contract is cancelled with cause, it’s often more trouble to collect from the nurse than it’s worth. Therefore, agencies often shoulder the costs associated with housing when they’re the ones providing it.
Avoiding the risks
That said, there are ways that you can avoid this risk. First, you can use Extended Stay and other hotels.
Second, you can look for month-to-month apartment leases. These are relatively rare, but they do exist. Similarly, you can ask property managers if they can include an early cancellation clause in their lease.
Third, you can utilize housing options like vacation rental services, share rentals, and sublets. These options typically have more flexible terms and more reasonable prices.
Missed hours and cancelled shift risk
If you take the housing stipend, then you may be at greater risk of financial losses due to missed hours or cancelled shifts. Whether or not you face a greater risk depends on the company you work with. Again, different companies handle this in different ways.
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You see, most companies include clauses in their contracts that cover penalties for missed hours and/or cancelled shifts. And remember, while it’s true that most travel nursing contracts include a “guaranteed hours” clause, these clauses typically allow the hospital to cancel a certain number of shifts per 13 week contract. Moreover, guaranteed hours clauses never cover missed hours (ie calling in sick or scheduled time off).
These “penalties” exist to ensure the agency does not have to pay you if you do not work. As we mentioned above, agencies need to bill hospitals for a travel nurse’s time and they can’t bill if the nurse does not work.
To clarify, these “penalties” are designed to cover all the compensation variables except the taxable hourly rate. It’s not that the agency is going to take money from you that they have not paid you. Instead, they are going to claw back what they have already paid you or simply not pay it to you.
How it works
The missed-hours/cancelled shift penalties are typically equal to the value of all the stipends. The contract typically quotes them as an hourly value.
For example, if the lodging stipend, M&IE stipend and travel stipend have a combined value of $22 per hour, then the penalty for missed-hours would be $22 per hour.
How does this pertain to the stipend? If you take the stipend, then it’s much easier for the agency to simply withhold the prorated value of any missed-hours from your paycheck. They can just treat everything as an hourly payment. So, if you don’t work the hours, then you don’t get the payment.
It’s important to note that there are questions over the legality of this practice. The issue is that treating tax-free reimbursements this way may qualify as “wage recharacterization.” However, this doesn’t change the fact that many agencies engage in this practice. Therefore, it’s something travel nurses must consider when making their decision.
By contrast, if the agency is paying for your housing, then they must actually garnish your wages to recoup the costs of housing. There are laws and legal issues that they may run afoul of when they garnish wages.
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As a result, many agencies withhold stipend payments when you miss hours but don’t penalize you if you’re taking the company provided housing. Therefore, you wouldn’t lose money if you took the company housing and missed-hours, but you would lose money if you took the stipend and missed-hours.
Additional Information on Travel Nurse Housing
We hope you found this information useful! If you didn’t get all your questions answered here, then we have many additional articles on travel nurse housing that you will find useful. Here are 3 more in-depth articles on this topic:
- Should you take travel nurse agency housing or find your own?
- How to find your own travel nurse housing
- The Ultimate Guide to Travel Nurse Agency Housing
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