Health Insurance And Your Nanny
It’s no longer surprising to have health insurance plans for household employees. Only businesses with fifty or more employees are required by law to provide health insurance for their employees. That list doesn’t include a majority of nanny employers, yet it’s still done. Why is that?
Well, experienced and qualified nannies are very hard to find, and when you see them, you can be sure they have many other job offers. According to eHealth insurance, health insurance “is an attractive benefit that can help keep and retain talent if you are looking to hire a nanny.”
So, you can still go without a health insurance plan. But if you plan on employing an experienced nanny (and keeping them), you should probably fix one in. If you've decided to get a health insurance plan for your nanny, then you will be wondering how to go about it. We’ve got you covered there.
There are a few routes to take in getting an insurance plan, and we’re going to walk you through some of them.
What Insurance Plan Do I Choose?
There are a lot of insurance plans out there. The trick is to pick out one that would be the most suitable for you and your nanny. First, you need to decide how much you can comfortably spend on the insurance plan. According to data from The Bureau of Labor Statistics, you might spend about an additional 30% of your nanny’s total pay on their benefits. Keep that in mind.
With that decided, you can get to the insurance plan next. You can set up a Health Savings Account (HSA) or a Health Reimbursement Arrangement (HRA). These plans are unique in their ways, but they have one glorious similarity. They are tax-free.
The money you contribute to your nanny’s health plan isn't calculated as part of your income. So, you pay fewer taxes and have more money in your pocket.
That said, let’s take a look at these plans individually.
1. Health Savings Accounts.
Health Savings Accounts are funded through contributions from the employer (you) and the employee (nanny).
They’re basically piggy banks for your nanny that they can use in times of medical emergencies.
Though, you should know that the nanny owns the funds. When their employment with you ends, they will leave with whatever funds are left in the account.
HSAs are quite flexible; you can change the contribution rates anytime, and most times, the nanny gets a debit card to access the funds quickly.
Your nanny can also withdraw the money in an HSA for reasons that aren't health-related, but that would usually attract a 20% penalty fee.
2. Health Reimbursement Agreement.
These are different because here, you pay for everything. The employee doesn’t make any contribution to the funds in the HRA.
However, you own the account. When the nanny’s job is done, they leave, and you still keep your money.
The nanny must have health insurance already before you can create an HRA. The funds in the agreement take care of the premiums, and the nanny gets the funds when she applies for a claim.
There are tons of HRA plans out there, but the most popular ones are the Individual Coverage Health Reimbursement Arrangement (ICHRA) and the Qualified Small Employer Health Reimbursement Agreement (QSEHRA).
The significant difference between these two is that QSEHRAs limit the reimbursement you can give while ICHRAs don't.
It’s always best to be prepared for emergencies, so getting a health insurance plan for your nanny will always be a good choice. And with the tax-free nature of the arrangements, it is pretty cost-effective.
That said, if you still have any questions, be sure to reach out to us. At Elite Nanny Agency, we have professionals to help you with this and any other aspect of getting a suitable nanny for your kids. Our nannies are experienced and have been carefully selected to give your child the best care. Elite Nanny Agency is the nanny agency you can trust.