You have hired a full-time nanny and you are now discussing benefits and your nanny asks for a monthly stipend towards health insurance. You find yourself a bit surprised that your nanny could ask for this benefit, especially when you have offered two weeks paid vacation, five sick days, and mileage reimbursement. Is this standard? Does your nanny really require health insurance? The answer is simple. Yes.
According to GTM Payroll Services, only 10 percent of families offer health insurance to their employees. Offering health insurance, as well as other benefits, can make your job more attractive to potential nannies and attract more educated and experienced nannies to your position. Offering health benefits to your nanny has many advantages, with the most important being a nanny who will stay healthy and feel appreciated by her employers.
How can you offer health insurance to your nanny and ensure that the extra money goes directly towards her insurance company? Here are a few options:
Contribute directly to the nanny's insurance policy. You can contribute directly to the nanny's insurance policy premium and record that money as non-taxable compensation. This means that the amount you contribute towards their health insurance will not be subject to taxes for both you and the nanny. Families who choose to go this route will save up to 20% in taxes. A majority of nannies offer to pay $150-$250 per month towards health insurance.
Enroll in a health insurance policy through the Small Business Health Options Program. If you choose to pay at least 50% of the nanny's health insurance premiums, you can qualify for Health Insurance Tax Credit for Small Employers as long as the annual salary does not exceed $53,000 (as of 2019). Please visit the SHOP website for more information regarding your specific state.
Set up a Qualified Small Employer Health Reimbursement Arrangement. When going this route, you are able to contribute a maximum of $5,150 per employee annually directly to their health insurance premiums. To find out more about this option, visit the IRS website directly.
Although you are not required by law to provide health insurance for your nanny, it's often a great added bonus that ensures your nanny will be more likely to stay with your family long term. There are a few different options on working health insurance benefits into your added contract with a nanny. See below for a few of our suggestions!
After a certain amount of employment. Offering health insurance benefits after employment is a great way to guarantee that not only your nanny will stay committed to the position, but that you will show your appreciation for her hard work and effort by adding health insurance compensation to her benefits. We suggest that after a 60 or 90 day period you add health insurance contribution to her benefit package.
Offer an increase monthly to her premium. You can easily offer your nanny an increase every 30 days until you meet your max amount. For example, start with $50 per month and increase to your max amount of $350 per month. This shows the nanny that you are committed to helping her with her health insurance, but also assists you with slowly adding this into the benefit package, especially if you have not previously offered this and you are adjusting your budget to allow for this.
Offering a monthly stipend towards health insurance is not only a great benefit for your nanny, but it's an excellent tax break for you as well. If your nanny is currently searching for health insurance and does not have one selected, you can visit eHealthInsurance to look for plans together.