Updated October 24, 2014 and November 26, 2014
The Affordable Care Act (ACA) or Obamacare implementation took a big step October 1st with the nationwide opening of Healthcare Exchanges or Health Insurance Marketplaces. Household employers and their domestic workers such as nannies and senior caregivers have more questions than answers right now regarding the ACA and what this means for them.
What is new for household employers?
- Employers subject to the FLSA are required to provide written notice to employees regarding the newly opening Health Insurance Marketplaces by October 1, 2013. Domestic (household) employment is specifically addressed in the FLSA and it is prudent for all household employers to comply with this notice requirement. The US Department of Labor provided two sample notice forms, one if you WILL be providing employee health insurance, and one if you WILL NOT be providing employee health insurance.
- While there is no requirement that household employers provide health care insurance or even premium support for their household workers, we continue to believe that providing some premium support is an important component of a household employee’s benefits package.
- (2014 update) Families may provide premium support on a tax free basis for their household employee’s health care insurance. Family contributions to individual health insurance policies are non-taxable to the employee when there is only ONE employe in the household effective January 1, 2014.Families with 2 or more household employees, whether full or part time, may MUST purchase nanny health insurance through the small business health insurance marketplaces (SHOP) in order to keep the benefit tax free. Only insurance purchased through the SHOP qualifies for tax credits.
- Employer tax credits will be available also for employers that meet all of the following conditions. They must have fewer than 25 full-time equivalent employees (FTEs), average annual wages of less than $50,000 per FTE, contribute 50 percent to the total health care insurance premium for each enrolled employee, and purchase health insurance through the Small Business Health Options Program (SHOP) in order to qualify for tax credits. (SHOP exchange openings have been delayed until November 2014. You may purchase SHOP health insurance plans through a broker or agent until that time.) The maximum credit possible in 2014 for a small employer is 50 percent of the employer contribution to qualified health coverage premiums. We are still awaiting guidance from the IRS on the mechanics of claiming the credit for household employers.
What is new for household workers such as nannies and senior caregivers?
- Household Employees are required to obtain health care insurance that meets government standards no later than January 1 March 31, 2014 - exactly the same obligation that other individuals will have. A household employee, or any individual, who does not obtain a qualified health care insurance plan will be required to pay the Individual Mandate Excise Tax on their personal income tax return. For 2014 this tax is $95, rising to $325 in 2015 and $695 in 2016 and going forward.
- Tax credits are available to lower income individuals and families who purchase individual/family health care insurance on the insurance exchanges that will help make the insurance policy more affordable. According to the Internal Revenue Service, "Starting in 2014, individuals and families can take a new premium tax credit to help them afford health insurance coverage purchased through an Affordable Insurance Exchange. The premium tax credit is refundable so taxpayers who have little or no income tax liability can still benefit."
What questions do you have about the ACA?