Nannies know having health insurance covered under their benefits package goes a long way. Not only does it provide an incentive to work with a family, but it also provides security for them and their own family. Many nannies are accustomed to paying for their insurance.
Including nanny health insurance in your benefits makes you stand out from a sea of hiring families.
Having a family who offers healthcare for nannies in their benefits is a big attraction for the good quality candidate. Paying for nanny health insurance suggests families understand the value a nanny brings to their family and the benefits they deserve to receive. It also tells a nanny they’re willing to take care of them and encourages them to stay with families long-term.
Families often don’t even know where to start when it comes to health insurance for nannies. As an employer, you may feel overwhelmed having to consider paying for nanny health insurance, but offering nanny benefits like health insurance is a great way to attract and keep the right nanny.
If you’re wondering how to add nanny health insurance to your benefits package, keep reading.
How do nannies get health insurance?
There are a couple of different ways for nannies to receive healthcare coverage. Most nannies pay for their health insurance premiums. However, as employers, families can cover some or all of the costs differently. The few we’ll be discussing here are:
- Qualified Small Employer Health Reimbursement Arrangement (QSEHRA)
- Individual Coverage Health Reimbursement Arrangement (ICHRA)
- Health Savings Account (HSA)
- Paying the insurance company
This isn’t an exhaustive list, as there are quite a few options for covering nanny health insurance — these are simply some of the most common.
How can I pay for nanny health insurance?
We understand how overwhelming considering paying for nanny health insurance can feel. That’s why we’re here to help along the way — to help families navigate all the big and little decisions that come with hiring a nanny.
Read the following options for nanny health insurance below, and find which one might be right for your family.
Qualified Small Employer Health Reimbursement Arrangement (QSEHRA)
A QSEHRA is an excellent option for those who want to contribute to their nanny’s health insurance instead of paying for their premiums. Your contributions are not taxed for either you or your nanny. Your reimbursements won’t be taxed as long as your nanny has a health plan that meets minimum essential coverage.
How does a QSEHRA work? As the employer, you choose at the beginning of the year how much you’d like to contribute and reimburse to a QSEHRA. You can contribute up to $5,850 for a single nanny and $11,800 for a nanny with a family.
The amount you decide to contribute must be reported on your nanny’s W2 form. Your nanny must submit receipts or invoices to receive reimbursements.
Individual Coverage Health Reimbursement Arrangement (ICHRA)
Like a QSEHRA, an ICHRA lets you contribute to your nanny’s health insurance premiums and reimburse their medical expenses. The most significant difference is there are no contribution limits.
Many qualifying medical expenses are covered under an ICHRA, and as the employer, you can choose which ones you’ll reimburse. For example, you can reimburse dental, vision, and doctor visit expenses but not prescriptions.
Your nanny first pays for all expenses and premiums and then receives reimbursements through an ICHRA. Your nanny must provide receipts or invoices of expenses to receive reimbursement.
To have an ICHRA, you must set up documents that outline the plan before moving forward. The reimbursement amounts must be reported on your nanny’s W2 form and are tax-exempt for both you and your nanny.
Health Savings Account (HSA)
If your nanny has an insurance plan with high deductibles, an HSA may be an excellent option to consider. An HSA can be used to cover deductibles and out-of-pocket medical expenses. Contributions made by you into your nanny’s HSA are tax-free.
The HSA contribution limit is $3,850 for a single nanny and $7,750 for a nanny with a family. Unused funds at the end of a year roll over to the following year, which makes this a convenient option for nanny health insurance.
Paying the insurance company
If you would like to cover some or all of your nanny’s health insurance, you can contribute to their insurance premiums by paying their insurance company. Doing so ensures your contributions are tax-exempt.
In fact, contributing to your nanny’s health insurance premium will save you around 10% and your nanny 15-20% on the amount contributed.
As stated on Care.com — “So if you assign $150 of your caregiver’s wages per month to health insurance, you’ll save about $180 annually in taxes, and your caregiver will save around $300.”
However, if you choose to pay toward your nanny’s insurance premiums, consider paying the insurance company directly, as this avoids any potential issues.
Why you should consider health insurance for a nanny.
You may wonder, “Why should I pay for healthcare for my nanny?” and it’s a perfectly valid question. There are two reasons why contributing to your nanny’s health insurance is a good idea.
First, providing a well-rounded benefits package proves to your nanny you care about them. Offering health insurance for your nanny tells them their health is essential to you. When you have a competitive benefits package, including healthcare, you attract and retain high-quality candidates who are serious about their work and the perfect fit for your family.
Second, contributing to your nanny’s health insurance saves money for both you and your nanny since you are not required to pay taxes on those contributions. To truly understand how to navigate offering health insurance to your nanny, we recommend connecting with our preferred payroll provider which can recommend health insurance and nanny payroll resources.
As a nanny placement agency, we help you find the perfect placement for your family. It’s also our job to ensure nannies have the benefits they deserve, including health insurance coverage. If you’re feeling confused, overwhelmed, or stuck navigating nanny health insurance, we can help!
We assist families and nannies in creating a working agreement that’s ideal for both parties, and we’d love to help you too. Contact us here to get started.
