There are a number of reasons why you may want to help your nanny pay for health care expenses.
By making health care more affordable and accessible, there’s a better chance your nanny will seek medical attention for any illness or injury they may suffer. By taking better care of themselves, your nanny will miss less work time and you’re not scrambling for back up coverage or taking time off work.
Health care is also a great recruiting and retention tool for attracting the best-qualified applicants to your open positions and keeping them on board.
However, offering health care benefits can seem intimidating or expensive for a family to offer their nanny. That’s where a qualified small employer health reimbursement arrangement (QSEHRA) comes in.
With a QSEHRA, a household employer provides funds to their employees tax-free for personal medical expenses, including insurance premiums. QSEHRAs are specifically designed for small employers – like households – that don’t offer group health care policies to any of its employees.
They’re easy to set up (GTM will do it for you) and your nanny can use it to defray the costs of:
- Insurance coverage through the healthcare marketplace (even if they qualify for a subsidy)
- Individual health, dental, and vision insurance premiums
- Prescription and nonprescription drugs
- Mileage when traveling to/from eligible health care
QSEHRAs are funded by the employer. You determine the contribution amount up to $420.83/month ($5,050/year) for single employees or $854.16/month ($10,250/year) for employees with a family. There are no minimum contribution requirements.
When you offer a QSEHRA to your nanny, their family is automatically eligible. Even if your nanny is covered under their spouse’s group policy, they can still use QSEHRA funds toward their deductible, copay, and other medical expenses.
Your nanny will receive a debit card to pay for qualified expenses or they can submit receipts to the account administrator to get reimbursed. Unclaimed funds can be rolled over month-to-month and, if you choose, into the new plan year.
All reimbursements are free of payroll taxes for you and your nanny and income-tax-free for your nanny if they are covered by a policy providing minimum essential coverage such as one purchased through the healthcare marketplace.
These tax savings are only available when you set up a QSEHRA. If funds targeted for health care are simply added to your employee’s pay, then it would be considered taxable wages for you and your employee.
Setting up an HRA with GTM is easy and straightforward. We’ll help set up your account and determine the amount you want to contribute as well as provide information about reimbursable medical expenses and submitting claims to your employees. With open enrollment for plans through the healthcare marketplace starting on November 1, now is the perfect time to set up a QSEHRA for your employee. Call (800) 929-9213 to learn more or get started.