Health Insurance for a Household Employee

Anyone can be caught off guard by an unexpected illness or injury. Offering health insurance for a household employee benefits both the employee and the employer. Not only does it help employers with recruiting and retaining top-quality nannies and other employees, but it safeguards against future health problems, minimizing surprise illnesses and the resulting absenteeism. For employees, having health care coverage limits out-of-pocket costs, protects assets, and safeguards future earnings.

More importantly, the Affordable Care Act (ACA) requires all individuals to have health insurance or risk being fined. The ACA can be complicated to navigate, especially within the realm of household employment. Here is a quick guide for obtaining health insurance for your nanny or other household employees.

First Steps

Before diving into the complex world of health insurance, there may be a couple of easier solutions.

• How old is your nanny? Your employee may be able to be added to her parents’ policy if she is 26 years old or younger.
• Is your nanny married? If so, it may be more affordable for her to be added to her spouse’s health plan, if the spouse is covered through their employer.

Obtaining Insurance

Individual health insurance plans can be purchased by:

• Visiting your state’s health exchange or the federal exchange if your state does not offer one. See this list of states that have their own exchange.
• Obtaining coverage directly through an insurance company, or by contacting a private exchange site like eHealth Insurance Services.

Can You Cover or Reimburse Your Employee for Premiums?

If your nanny purchases coverage on a state or federal exchange, then by law, an employer may not cover or reimburse for premium payments. If your employee buys coverage through a private exchange or directly from an insurance company, then you can pay part or all of their premiums for them directly if they are your ONLY employee.

If you have more than one employee, you can set up a plan to help cover part or all of their premiums, and receive tax-free benefits. These plans include HRAs, POPs, FSAs, and HSAs. Through these plans, no taxes are paid by either the employer or employee on health care coverage.

Important Rules

• Household employers that also own their own business may want to put their nanny on their business health plan. This is not permitted, because a nanny is not employed by the business – they are a household employee. Insurance companies will likely refuse to pay any benefits if you submit a claim for a household employee through a business insurance policy.
• It’s also important to know that a household employee requesting individual coverage must apply for coverage themselves – the employer cannot submit an application or other paperwork on the nanny’s behalf. The employee must fill out the forms and submit their medical information.
• If you as the employer are applying for a group plan, a group application must be completed by the employer and the employee must sign the enrollment forms.

GTM’s in-house insurance brokerage can guide you through the insurance rules and regulations in your state. For more information, contact us at (800) 929-9213 or get a free insurance quote.