Episode #675: Losing Agency Benefits When Starting Private Practice

Feeling trapped in agency work because of the benefits?

 

In today’s Ask Allison, I’m breaking down what it really looks like to leave an agency job for private practice when health insurance, PTO, and retirement plans feel like the golden handcuffs.

 

We’ll look at the actual numbers—using conservative national averages—so you can see how your take-home pay, time off, and quality of life can change when you’re in control. I’ll also cover how to replace your benefits, what an S Corp can save you in taxes, and why “free” perks at your agency might be costing you more than you think.

 

By the end, you’ll have a clear picture of what’s possible—and the steps you can take right now to get there.

 

Sponsored by TherapyNotes®: Use promo code Abundant for 2 months free

 

 Grab our free tools to grow your practice—weekly worksheets, the Tasky Checklist, and more: www.abundancepracticebuilding.com/links

  Ready to fill your practice faster? Join the Abundance Party today and get 75% off your first month with promo code ASK: www.abundancepracticebuilding.com/abundanceparty

 Have a question for me about practice building? Submit it via our Ask Allison form, and I'll add it to the queue: .css-j9qmi7{display:-webkit-box;display:-webkit-flex;display:-ms-flexbox;display:flex;-webkit-flex-direction:row;-ms-flex-direction:row;flex-direction:row;font-weight:700;margin-bottom:1rem;margin-top:2.8rem;width:100%;-webkit-box-pack:start;-ms-flex-pack:start;-webkit-justify-content:start;justify-content:start;padding-left:5rem;}@media only screen and (max-width: 599px){.css-j9qmi7{padding-left:0;-webkit-box-pack:center;-ms-flex-pack:center;-webkit-justify-content:center;justify-content:center;}}.css-j9qmi7 svg{fill:#27292D;}.css-j9qmi7 .eagfbvw0{-webkit-align-items:center;-webkit-box-align:center;-ms-flex-align:center;align-items:center;color:#27292D;}

Episode Transcript

(00:07):
(Transcribed by TurboScribe.ai. Go Unlimited to remove this message.) Welcome to Ask Allison.
Y'all ask the questions about having a
fun and thriving practice and I answer them.
We have a worksheet for you today so
you can bring this answer into your life.
You can access that at abundancepracticebuilding.com slash
links, where you'll also be able to ask
any questions you have for Ask Allison.
If you want more support, we've got some
free trainings in there too.

(00:28):
If you can't get enough Ask Allison, check
out our YouTube channel for our entire Ask
Allison library.
Welcome back to Ask Allison.
Here's today's question.
I'm currently working in an agency and really
want to transition into private practice, but I'm
feeling stuck because of the benefits.
I have solid benefits right now and the
idea of navigating health insurance and other coverage

(00:49):
on my own feels overwhelming.
I'd really appreciate any advice or insight on
how to handle this transition.
Oh, this is such a thing that keeps
people stuck.
I'm so excited you asked this.
Okay.
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Okay.

(01:51):
So when you're working in an agency and
you want to move into private practice, but
you're feeling stuck because of the benefits, this
is like totally understandable.
Health insurance, PTO, maybe some retirement, that kind
of stuff feels safe when it's provided for
you.
You don't have to make a lot of
decisions in it.
It's decided for you.
The idea of navigating all of that solo

(02:12):
is kind of overwhelming.
So I want to validate that first.
You're not being dramatic.
You're not being reckless.
You're being thoughtful.
And that makes you exactly the kind of
person who can run a private practice well.
So let's unpack this.
Let's talk about the numbers, the mindset, and
the transition so you can stop spinning and
start planning.
Since I don't know your exact situation, I'm

(02:33):
going to use U.S. national averages for
everything because we're going to go into numbers
and money.
And I promise only like a little bit
of math.
Those free benefits that go with your job
are not free.
Yes, on paper, you've got maybe $60,000
salary.
We're using averages, remember, and benefits.
But what are you paying for those benefits?

(02:55):
Is it your time, your energy, your Sunday
nights, and your nervous system, the constant pressure
to meet productivity quotas while getting paid less
than your worth?
Those benefits may technically be free, but they
might be costing you your peace, your health,
your career satisfaction, time with your family.
So let's look at what happens when you
go out on your own.

(03:16):
Let's say you're paneled with insurance companies that
reimburse around $110 per session.
This is the only number that I've changed
from the national averages because I want to
be really conservative here.
$110 per session is below the average private
insurance reimbursement rate.
So if you make more than average in

(03:37):
your job or you don't want to mess
with taking insurance, know that this is kind
of a lowball example.
You can easily make twice as much per
session as a private pay therapist.
You can also see fewer clients than I'm
about to describe, take more time off, etc.
We're going with averages here.
So at $110 per session, you see 25
clients a week, and you take a very

(03:59):
human six weeks off per year.
That's sick leave, that's vacations, that's holidays, that's
all of it.
So here's the math.
25 clients times 46 weeks is 1,150
sessions per year.
1,150 sessions per year times $110 is

(04:19):
$126,500 per year.
So you've just grossed over twice what you're
making now in your agency job.
But before we start popping the champagne and
getting the confetti out, we got to talk
about expenses.
So here's what comes out of that $126
,000.
Business expenses.
The average private practitioner spends on business expenses

(04:41):
with their EHR, their liability insurance, CEs, maybe
some part-time office space.
It's weird because most people have a hybrid
model.
Back in the day, you had to pay
full rent every month for your space, but
it's different now.
So the average business expenses are about $10
,000 per year, which honestly sounds low to
me, but this is maybe average, right?

(05:04):
Health insurance, $7,200 per year.
That's about $600 a month for a individual
plan.
It goes up from there if you're wrapping
your family in.
Retirement contribution, I'm just throwing $15,000 per
year.
That's what you decide to put away, not
what an agency lets you.
I have no idea what matching looks like
for agencies these days.

(05:26):
S-Corp payroll and admin cost.
When you're an S-Corp, and this is
a whole other conversation, we're going to lightly
touch on S-Corps in a minute.
When you're an S-Corp, you have to
pay yourself as if you are an employee,
and you also take dividends as the owner.
So that costs money and administrative costs.
That's about $1,200 a year.

(05:46):
Payroll taxes, so Social Security, Medicare.
On the salary portion, about $10,710 a
year.
There's a lot of numbers.
Stick with me.
I promise I'm going to wrap it in
a bow.
Federal and state income tax, $17,000 to
$18,000 a year.
So let's pause on the S-Corp thing
for a second.
If you're making over $80,000 in net
profit, setting up as an S-Corp is

(06:08):
often a very smart move.
So when you do that, instead of paying
15.3% in self-employment tax on
everything, you can pay yourself a $70,000
a year salary as a therapist who is
employed by your business, and then you can
take $41,000 as distributions, which are not
subject to self-employment tax.

(06:29):
It's a way of cutting down your tax
liability, and that's split along safety thousands.
Okay, let's do the total, right?
Because that's a lot, but I want to
give you receipts.
So after all the expenses and taxes, what
you're likely taking home in this scenario with
a pretty low-paying insurance is $70,000
to $72,000.

(06:49):
That's what you're taking home after taxes, insurance,
retirement, your office, EHR, email, all that.
That's about $20,000 more than you were
taking home after taxes with your $60,000
a year agency job.
And you give yourself six weeks off, and
you have full control over your schedule, and
better retirement options, and you're working nearly half

(07:12):
as many hours.
So no, you didn't give yourself a $60
,000 raise.
You gave yourself a $20,000 raise, six
weeks of paid vacation, and your freaking life
back.
So let's talk about what's replaceable and what's
customizable.
Health insurance.
You can use the marketplace, or better yet,
use an insurance broker.
This is what I do.

(07:32):
I use an insurance broker.
They can often find better plans that aren't
showing up on healthcare.gov, which is the
marketplace.
They get paid by the insurance companies, so
they don't cost you a dime.
So you can find a insurance broker, and
they can get you hooked up.
Retirement.
Accept IRA or a solo 401k.
You get to contribute more than most agencies

(07:54):
match.
Plus, you pick the plan.
If that's overwhelming for you, I highly recommend
just talking to a financial advisor that you
pay hourly, and they can help you talk
through that and even set your own system
up.
PTO.
You get to create your own time off.
In the numbers we just talked through, you
took two weeks off, and you still made

(08:15):
20k more than your current salary.
And that's real paid time off, like off,
off, off.
These are not wild dreams.
These are systems that you can put into
place.
And if you're not currently saving for retirement,
and here we have you putting, I think
we said 15,000 a year into retirement,
what that actually looks like is instead of
$20,000 more per year, you're actually making

(08:36):
35,000 more per year.
But I want you to put money into
retirement.
If this feels scary, that's okay.
Fear doesn't mean don't do it.
It just means do it carefully.
So take your time.
If taking the leap into full private practice
feels like too much, you can start part
-time.
You can see clients on evenings or weekends.
You can build your caseload slowly while keeping
your agency benefits.

(08:57):
You can start a benefits buffer fund to
give you confidence in the transition.
We actually have an entire course in the
Abundance Party about transitioning from full-time agency
work when you've had a part-time practice,
like making that shift.
What I really want you to hear is
that you are not stuck.
You're in transition.
Transitions are messy.
Even if you're on the precipice of that

(09:18):
transition, it stirs so much ugliness.
Yeah.
You are so capable of creating what you
want to create financially, emotionally, energetically.
You're not being unrealistic.
You are being brave enough to ask for
more.
And you deserve more.
We all deserve more than what agencies are
typically able to provide, especially in our current
political situation.

(09:39):
So if you want help building that bridge
out of agency work and into private practice,
come hang out with us in the Abundance
Party.
We've got roadmaps, community, real talk to get
you there.
And if nothing else, I want you to
know you're not alone.
You have options.
I'm rooting for you.
Today's free worksheet is Common Fears.
It is a quick reframe for some of
the early common fears that come up in

(10:00):
the beginning stages of private practice.
DM me the word sheets, and I'll send
you the link to that free worksheet.
You also get all the other free worksheets
when you do that.
If you're listening, that link is in the
show notes.
If you're in the early stages, you need
guidance on those beginning steps.
DM me the word checklist, and I'll send
you our getting started checklist.
That way you know you're things up in

(10:22):
the best legal and ethical ways.
All right.
I wish you luck.
Know that there are options, and I'll talk
to you soon.
If you're ready for a much easier practice,
Therapy Notes is the way to go.
Go to therapynotes.com and use the promo
code Abundant for two months free.

(10:44):
I hope that helped.
If you have questions for Ask Allison, or
you want to get your hands on the
worksheet for this episode, go to abundancepracticebuilding.com
slash links.