Employer paid health insurance can be an important nanny recruitment and retention tool. The trick for families is to find a way to pay or contribute to the nanny's health insurance and still meet their nanny's income goals and stay within the family childcare budget. All too often health insurance is not a financial priority, that is until a crisis occurs.
Your children don't just share their bugs with you - your nanny get's sick too! A nanny with access to primary medical care will get necessary medical attention early on, and will likely miss less work as a result.
The special tax treatment of employer paid health insurance can make offering this benefit a win-win for both family and nanny. Most individual health insurance premiums paid by the employer are not treated as income to the employee*. Employers and employees do not need to pay employment taxes on this sum.
Remember, the nanny with health insurance is more likely to obtain preventative care (annual physicals, cholesterol screening, mammograms, PAP tests, etc.) and will often establish a medical relationship she can call upon when acute problems (ear infections for example) arise. A healthier nanny misses less work.
A nanny who receives a health insurance benefit is less likely to change jobs.
Tax credits for employer paid health insurance premiums are currently available to some household employers.
A nanny who qualifies may be able to collect insurance premium subsidies (federal premium tax credits and cost sharing reductions) when purchasing individual health insurance through a public (State and Federal) Exchange.
* Tax rules and regulations surrounding the health insurance industry are in a period of rapid change. HWS encourages employers to seek appropriate professional counsel when establishing health care reimbursement plans and insure that their reimbursement plan remains compliant with current rules and regulations. Some employers may also qualify for tax credits.
HWS provides this information as a courtesy to help you understand payroll tax changes resulting from the ACA. This is not be construed as specific tax or legal advice. Guidance relative to the ACA / Obamacare is subject to revision and this may not be the most current information available.