Private Nannies and Health Insurance: What Employers Need to Know
If you employ a nanny, you’re not required by law to provide medical insurance. The Affordable Care Act (ACA) only requires large employers (defined as businesses with 50 or more full-time equivalent employees) to offer health insurance to employees.
However, reimbursing part or all your nanny’s health insurance premium and offering benefits like paid time off will help you attract a quality candidate.
A good benefits package can also help reduce turnover since it provides an added layer of security for your nanny—which can save you money in the long run. Also, health insurance premiums are considered non-taxable compensation.
Here are some things to think about and discuss with your nanny:
Determine how much you can afford to reimburse.
Health-related benefits are some of the most expensive, so you’ll need to determine how much is in the budget for medical insurance reimbursement.
According to data from The Bureau of Labor Statistics (BLS), the average employer spends around 30% of an employee’s total compensation on benefits each month. So, if you pay your nanny $20 per hour, expect to spend an additional $6 per hour on benefits.
Health insurance premiums typically start at $350/month and up. You can share the premium cost by writing your nanny a check each month for a certain percentage of the premium or for a set amount (e.g., 75% of the premium or $200/month).
If you plan to use a nanny agency, ask for details about how to handle health insurance premium reimbursements.
Ask about existing coverage.
The ACA allows young people to remain on their parent’s plan until age 26, so ask if your nanny already has health coverage. If your nanny is married, it’s also possible they’re covered on their spouse’s health insurance plan. In this case, you can still reimburse your nanny for part or all their cost for health insurance.
Just be aware that there are certain questions you can’t ask by law, including directly asking about age or marital status.
Discuss the different types of plans available.
There are four different types of health insurance plans: catastrophic care policies, health maintenance organizations (HMO), preferred provider organizations (PPO), and indemnity plans.
- Catastrophic care: These plans cover hospitalization for life-threatening conditions and emergencies. They do not typically provide coverage for doctor visits and other standard services. They’re usually the most affordable health insurance plans because they cover the least.
- Health maintenance organization (HMO): These plans provide full coverage as long as you choose doctors in the HMO network. You typically need a referral to see a specialist, which can delay treatment. HMOs often (but not always) have a lower premium and usually have fewer out-of-pocket costs when used properly, but they also tend to have higher denial rates.
- Preferred provider organizations (PPO): These plans are more flexible and offer greater physician choice, and you can see a specialist without a referral from your primary care doctor. They often have higher deductibles and larger co-insurance rates, and they usually have higher premiums than HMOs.
- Indemnity plans: These plans offer the most flexible choice. You can see any physician at any medical facility. They’re typically the most expensive type of plan.
Your nanny can find a plan on their own through an agent or broker or enroll in a plan through the federal healthcare exchange. For the latter option, most people enroll through the federal exchange at healthcare.gov. However, several states, including California, Washington, and New York, have their own exchanges. Learn more here.
Other types of insurance to consider.
Beyond offering health insurance, there are other types of coverage to consider if you have a nanny or are looking to hire one.
- Workers’ compensation: In most states, you’re required to have workers’ compensation insurance to protect your employee. Workers’ compensation also protects you against liability if your nanny is injured on the job. If you don’t have this insurance, you could end up liable for your nanny’s medical expenses for an on-the-job injury. Workers’ comp will give your nanny access to needed benefits right away, so you can use the money you’d normally pay her to hire temporary back-up care.
Even if your state doesn’t require it, it’s wise to purchase workers’ comp insurance, especially if you decide not to offer health insurance and your nanny decides to go without coverage. Find out if your state requires you to carry it.
- Umbrella insurance: An umbrella policy typically provides $1 million or more in liability protection beyond what’s included in your homeowner’s policy. These policies are generally affordable and protect you in case you’re sued.
- Additional auto insurance: If your nanny drives your vehicles during working hours on a regular basis, you may need to add her to your insurance policy and increase your liability limits. Contact your insurance company to find out the requirements in your state.
There’s no replacement for the peace of mind you gain by protecting yourself financially. Accidents happen, and it’s worth it to be prepared.
Let Us Help You Find Your Perfect Nanny
Staffing at Tiffanie’s is an established household staffing agency that helps families across the country find caring, compassionate, and qualified nannies.
We use a rigorous screening process to carefully select only the most qualified candidates, and we nurture you through the entire process of screening, interviewing, and hiring your perfect candidate. It’s how we’ve earned a reputation as one of the best nanny placement agencies in the country.
Learn more about our process and contact our agency at 866-484-5550 to find a nanny whose experience and demeanor match your family’s needs.