How to Offer Health Care Benefits to Your Nanny

Mar 29, 2019 | Employee Benefits, Retaining Employees

Offering health care benefits to your nanny is easy and affordable and can carry tax savings for you and your employee.

Health care benefits for your nanny can help you keep your best employees and attract top candidates to your job. Considering just 10 percent of families – according to our latest survey of household employers – offer health insurance to their employees, this benefit will help you stand out among potential employers and establish a professional work environment for your nanny. When we recently surveyed nannies, “poor benefits” was a top reason when they were asked what they liked least about their job.

Also, employees with health care benefits may spend less time being sick or battling illnesses as they’re more likely to see their doctor for annual checkups and when they’re not feeling well. This can help them get on the road to recovery faster and reduce the time they’re sick. An employee without health benefits may be reluctant to get medical attention for an illness due to cost. A healthier employee means fewer days when they call in sick and you’re left scrambling for back-up care or taking a day off of work. Or they’re coming to work with an illness that can easily spread to your children and then throughout your household.

Another advantage for a family and their nanny is tax savings. Health benefit funds can be withheld pre-tax reducing an employee’s taxable wages, which then lowers your employer tax obligation to Social Security and Medicare (FICA) as well as federal and state unemployment taxes. Your nanny will also see a reduction in their FICA tax responsibility.

If you’ve decided to offer health care benefits to your nanny, the next questions are:

What health care benefits are available?
How do I offer them to my employee?

We’ll get into your options below. As for the “how,” GTM Payroll Services can implement any of these options for you and manage the health care benefits offered to your employee.

Learn more about health care benefits for nannies and other household employees including contribution limits and a chart that compares the various types of health care accounts available to you.

Concierge Medicine

With concierge medicine, your employee will have around-the-clock access to a physician by phone, secure messaging or video. They can get answers to simple or complex medical questions, schedule a consult with a physician, and share pictures or videos. It’s perfect for treating ailments like colds, allergies, rashes, and injuries … the types of ailments that may prevent your nanny from coming to work. They can get prescriptions sent to their pharmacy as well. Concierge medicine works with or without traditional health insurance. The best part…it’s only $12/month! Learn more about concierge medicine.

Flexible Spending Account (FSA)

An FSA set up for health care costs allows your employee to be reimbursed for medical, dental, and vision expenses without having to be enrolled in a health insurance plan. FSAs can be funded with up to $2,700 annually in employee pre-tax dollars through regular payroll deductions. Again, this will lower your and your employee’s tax obligations.

Qualified Small Employer Health Reimbursement Arrangement (QSE-HRA)

Similar to a traditional HRA, this account applies to employers with 50 or fewer employees so it’s perfect for families with household help who don’t offer a health insurance plan. A QSE-HRA can be used by your employee to offset the costs of purchasing health insurance through the individual market or the Affordable Care Act health care exchange. It can even be used to help pay for an employee’s spouse’s plan. A QSE-HRA can also cover out-of-pocket medical, dental, and vision expenses. These accounts are funded by you as the employer and tax-free to your employee. Learn more about QSE-HRAs.

Health Reimbursement Arrangement (HRA)

If you have two or more employees and provide health insurance to your workers, you can offer an HRA to help them offset the costs of insurance premiums and/or pay for out-of-pocket expenses.

Health Savings Account (HSA)

An HSA helps your employee cover their deductibles in a high-deductible health care plan as well as out-of-pocket medical, dental, and vision expenses. These accounts can be funded by the employee and/or their employer and are portable so they can remain with the worker even if they move on to a new job. Funds can roll over year-to-year making an HSA a great way to pay for medical expenses in retirement. HSAs can be pre-tax or tax-deductible.

Premium-only Plan (POP)

A POP is paired with a group health care plan and helps your employee purchase this health insurance tax-free. Their health care premium is deducted pre-tax so you and your employee will realize tax savings.

GTM Can Help

Not only do we handle nanny taxes, payroll, and workers’ compensation insurance, we can also help you set up any of these health care programs for your employee. Just call (800) 929-9213 to learn more or to get started.