How Does Health Insurance for My Nanny Work?
Staying healthy and safe is top of mind for most people living in this country today, so health insurance is an important part of any employment benefits package. But for families employing nannies, knowing how to think about and contribute to a nanny’s health insurance premiums can seem overwhelming. As an employer, you are suddenly handling things that there may be an entire department handling at your own place of work! At Smart Sitting, we get a lot of questions from parents about health insurance, so in this post we will go over the basics to let you navigate this great benefit with confidence.
How much should I contribute to my nanny’s health insurance premium?
One way to think about what to contribute to your nanny’s health insurance premium is to consider how much that person is working for you. Is this the person’s sole income and full-time employment or is this a regular part-time job for your nanny?
For sitters and nannies working a regular, part-time schedule for your family, we normally recommend a contribution of $50-100/month. The nanny can then use this money towards a plan they pick off the marketplace that best suits them. For full-time nannies, we recommend that you contribute at least 50% and ideally 100% of their health insurance premium. Just like with the part-time caregivers, they can then use this sum towards a plan off the marketplace. If they do not already have a plan when they start working with you, so they do not know their exact total, this can be ironed out as you’re finalizing the work agreement (or together with us as we’re getting you all set up).
Rates for health insurance premiums with solid coverage cost on average $600/month for individuals with a full-time income buying a plan off the marketplace. This is the case for most metropolitan areas, while nannies working in smaller communities with lower cost of living may see lower rates for similar plans. The national average is around $488/month for an Affordable Care Act plan. As plans in the marketplace are subsidized according to income, part-time caregivers will likely also see lower monthly premiums, which is why contributing $50-100 really can go a long way.
How does the health insurance contribution factor into taxes?
When you as an employer contribute to your nanny’s health insurance, this dollar amount is considered nontaxable income. This means that neither you nor your caregiver will pay taxes on this sum. For this reason, the sum of your contribution cannot be more than what your employee is paying for the premium. While they do not need to disclose the details of their health care plan, your nanny does need to share a proof of their policy with you. This way you can keep it for your records in case of an IRS audit.
You can read more about nontaxable compensation for one household employee or several in this article from our partner HomePay, who handle everything regarding nanny payrolls and taxes. If you set up your payroll with them when hiring a nanny, they will also make sure your health care contributions are squared away.
Why offer health insurance as a benefit?
“A healthy nanny is a happy nanny”
If you’ve talked to anyone on our team about recruiting a nanny for your family, you’ve no doubt heard us talk about setting up a robust benefits and compensation package as part of your position. Providing a health insurance stipend shows that you are treating this as a real job and in turn attracts those caregivers who are serious about their profession. We’ve seen time and again how a thought-out compensation package translates to longevity in the role. Consider your own job searches - would you commit long-term to a job that did not include any type of health insurance benefit? We have long sought to redefine the childcare industry and elevate the role of caregivers; ensuring that more nannies have health insurance is just one step in that direction.
If you find your nanny through Smart Sitting, we will help you write a health care contribution into your job contract and make sure everything is in writing before a contract is finalized. Our team members are also happy to guide your nanny-to-be through the process of finding a plan on the marketplace and help them calculate costs if they do not already have one. Our aim is always to make sure that both caregivers and families are happy and satisfied at the onset of a working relationship, so that starting on day one of the job, the focus will be making your kiddos happy and your life easier!
It’s as one of our newest parents recently said, “A healthy nanny is a happy nanny.” And we believe that translates to a happy family, too.
If you have any questions regarding health insurance for your nanny, you can always reach out to our team. For more tips and tricks, sign up for our newsletter, or head over to our Instagram and Facebook to continue the conversation.