What You Need to Know About Health Insurance for Nannies

By Tom Breedlove, Director of Care.com HomePay

The Affordable Care Act has fundamentally changed the way most Americans obtain and pay for health insurance – and that is especially true for nannies and other household employees. Since there is an individual mandate for all citizens to have health insurance (or pay a hefty fine), Open Enrollment is now a big deal every year.

From November 1st through December 15th, nannies can purchase a health insurance policy on the California marketplace to ensure they’re covered beginning January 1, 2018. Nannies that earn less than $48,000 per year can potentially qualify for federal subsidies to lower the cost of their premiums – assuming of course their families are paying them legally.

The other way a nanny can have her health insurance costs lowered is for the family to chip in. Although they are not required to by law, contributing to a nanny’s health insurance premiums benefits both parties because any money paid by the family is considered non-taxable compensation. This means neither the nanny nor the family will have federal or state taxes associated with that portion of the nanny’s pay.

Note: Families that have 2 or more household employees must purchase a group policy through SHOP (at http://www.coveredca.com/forsmallbusiness) if they want their contributions to be non-taxable.

At HomePay, we’re set up to handle health insurance contributions as part of a nanny’s payroll. If you have questions about how this works, or anything else related to payroll or taxes, just reach out to us at (888) 273-3356. We’re happy to help!

Leave A Comment

You must be logged in to post a comment.