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!
