What’s the Standard: Health Insurance Stipends

Welcome back to What’s the Standard Wednesday, this week on #WTS we are going to discuss Health Insurance Stipends.

Have you considered offering a stipend only to change your mind because it seemed ridiculously confusing? You are not alone! For some reason they powers that be have decided to make domestic workers and their employers jump through hoops. My hope is that by the end of this post, not only will it make more sense, but that more employers decide to offer stipends.

First, let’s talk about why offering a stipend is essential. Everyone should have access to healthcare, and providing healthcare, should be considered part of the cost of being an employer. Employees with health insurance are more likely to seek medical care when necessary instead of waiting until the situation becomes dire. This means your employee is more likely to be healthy. When your employees are healthy they are more productive, happier and can be more dependable.

As nannies, we spend so much time with sick kiddos, and often sick parents, that we are exposed to a wide variety of viruses, bacteria, fungus, and parasites. Being able to afford medical care, is how we are able to continue caring for your family.

How do I provide a Health Insurance Stipend as a nanny employer? Well, this year there are 2 options that allow you to offer a TAX EXEMPT stipend.. These are the QSEHRA (Qualified Small Employer Health Reimbursement Arrangement) or the ICHRA (Individual Coverage Health Reimbursement Arrangement) They are both fairly simple to set up, it just takes a bit of time on both your and the nanny’s part to make sure it’s done correctly. If you don’t take one of these two options, you can still offer a stipend, but it will be taxed as income and you will have to pay employer taxes on that stipend.

This is just one more reason I HIGHLY recommend using a payroll service that will set these up for you. They will be able to tell you which plan is the best option for you and they make sure all the paperwork is done correctly, because no one wants a letter from the IRS.

How do you decide how much a stipend to offer? Well, I would start by asking your nanny candidates what they would like as a stipend and how much their premiums are. If they have a low premium payment, don’t assume that they don’t need a larger stipend. They might have a $5k deductible and have to pay upfront for everything until they hit their deductible. I suggest at least $200-$250/month at a minimum. This should cover close to 50% of a premium for most folks. Covering your nanny’s entire premium is always a great benefit to offer, but I also recognize that it might not be an option for all employers.

Since Health Insurance is a technical thing to set up, I am including links to my favorite resource, they are an awesome company and will gladly answer a few questions and they will also send you a free QSEHRA form to set it up on your own.

Above all, I just want to stress the importance of health insurance for everyone, healthcare is a huge issue for people and not being able to receive care when you need it has a negative impact on both sides of a nanny/employer relationship.

Thanks for reading!

Rachel

Useful Links:

https://www.homeworksolutions.com/knowledge-center/is-health-insurance-for-my-nanny-taxable/

https://www.homeworksolutions.com/knowledge-center/a-great-option-for-nanny-health-insurance-coverage/