How to Decode a Physician Signing Bonus (Without Getting Burned Later)
When you’re a resident or fellow receiving your first job offer, one number often stands out: the signing bonus. Thousands of dollars upfront can feel like a huge win after years of training and tight finances. But a signing bonus isn’t free money — it comes with strings attached that can have long-term consequences.
Before you get too excited, here’s what you need to know about physician signing bonuses, and how to make sure you’re not trading short-term cash for future headaches.
What Is a Signing Bonus?
A signing bonus is a lump sum offered when you accept an employment contract. Employers use it to attract candidates, compete with other offers, and ease relocation or debt pressures for new physicians. Bonuses can range from a few thousand dollars to well over $50,000 depending on specialty, location, and demand.
The Catch: Repayment Obligations
Most signing bonuses are tied to a commitment period. If you leave the job before completing the required time (often two to five years), you may be required to repay the bonus in full — and sometimes with interest.
Example: If you received a $25,000 bonus tied to a three-year commitment but leave after 18 months, your employer may demand the full $25,000 back.
How Bonuses Are Structured
Signing bonuses can be structured in different ways:
- Lump Sum Payment: Paid upfront after signing. Risky if repayment terms aren’t clear.
- Installments: Paid out over your first year of employment, reducing the amount you’d owe if you leave early.
- Forgivable Loan: Technically a loan that’s forgiven over time as you stay employed.
Red Flags to Watch For
- Repayment required even if you’re terminated without cause.
- Repayment obligations that last longer than the actual bonus period.
- Language that doesn’t clearly define repayment triggers.
- Bonuses tied to restrictive non-compete clauses.
Questions to Ask Before Accepting
- How long is the repayment obligation?
- What happens if I’m terminated without cause?
- Is repayment prorated if I leave early?
- Is the bonus tied to my non-compete or relocation terms?
- How is the bonus taxed, and will I need to repay the full gross amount or just the net after taxes?
Making the Bonus Work for You
A signing bonus can be a great benefit when it’s structured fairly. The key is making sure you understand the details and that the repayment terms are reasonable. A $25,000 check isn’t worth it if it locks you into an unhappy situation or exposes you to financial risk.
Before you sign, use our Physician Contract Checklist to review all the details, and consider a professional review through ContractGuard MD. A clear understanding now saves you from costly surprises later.
Frequently Asked Questions
Are signing bonuses common for residents and fellows?
Yes. Many employers use them to attract candidates, especially in competitive specialties or underserved areas.
Do I have to pay taxes on a signing bonus?
Yes. Signing bonuses are considered taxable income. If you leave and must repay the gross amount, you may lose money unless repayment terms account for taxes.
Can signing bonuses be negotiated?
In many cases, yes. You can negotiate the amount, repayment terms, or ask for installment payments instead of a lump sum.
What’s a fair repayment period?
Most are two to three years. Anything longer may be too restrictive for a first job.
