Health Insurance Options for Nannies

President Obama’s controversial Affordable Care Act won’t be fully implemented until 2015 or beyond, which means that many Americans are still without health insurance coverage. Some families may opt to provide health benefits to their nannies as part of an employment package, both to generate interest in the post and to help reduce turnover. In other cases, uninsured nannies whose employers don’t plan to extend health coverage may find themselves in need of insurance for preventative care and treatment for illnesses and injury.

Information for Employers That Wish to Extend Health Insurance Benefits to Their Nannies

Almost all states require families that employ domestic workers to provide some form of worker’s compensation insurance to provide for their employee in the event of an injury. These plans cover on-site injuries regardless of fault, contributing to medical bills and providing financial compensation for lost wages as a result of such injuries. These plans do not, however, cover the cost of preventative care, like routine checkups or doctor’s visits for illnesses or non-work related injuries. In order to provide coverage for your nanny’s medical expenses outside of work, which is not required but certainly inspires loyalty and reduces turnover, you’ll need to secure a plan through an insurance company.

Household employers that contribute to premiums for their employee’s health benefits are not required to pay taxes on the contributions, as they’re not considered taxable income by the Internal Revenue Service. You’re also allowed to pay premiums directly to the insuring company, or to give the money to your nanny so that she can put it towards her own premiums, though you will have to keep scrupulous records should you opt to pay your nanny directly.

Employers have two available options for their nanny’s health insurance policies: permanent health insurance and temporary health insurance. Nannies covered under a permanent policy are eligible for renewal each year, regardless of any health conditions that develop over the course of her policy. Should she develop a medical condition while she’s covered under a temporary policy, that condition will almost always be considered a pre-existing condition after her temporary coverage expires. Depending on the length of time that you plan to employ your nanny, each policy has its own pros and cons.

Information For Nannies Seeking Their Own Health Insurance Coverage

While some employers do provide health insurance benefits for their nannies as an added perk, there are a significant number who either can’t afford the added expense or simply choose not to contribute towards her premiums. According to the Excluded Workers Congress, of the estimated 1.8 million domestic employees in the United States, approximately 13% receive health insurance or contributions to the premiums of a health insurance policy from their employers; that means that up to 87% of American household employees do not receive health benefits as part of an employment compensation package. In these situations, nannies are forced to obtain their own coverage in order to offset the costs of routine checkups, preventative care and prescriptions. While employer contributions to health insurance premiums are not considered taxable income, nannies who provide their own coverage are not eligible for the same tax breaks under the current tax laws. Paying for your insurance without contributions from your employer means that you will be taxed on the entirety of your income, and then pay your premiums as an after-tax expense. There are currently no tax refunds or write-offs available for these expenses, so you will be forced to foot the bill on your own.

Being around mildly ill children, heavy lifting and constant activity that is often part of the territory of a nanny’s career can make for quite hazardous working conditions; falling seriously ill or aggravating an old injury can leave you in dire financial straits, should the condition become unbearable and you’re without coverage. Though obtaining health insurance can be quite pricey if your employer isn’t

willing or able to contribute, the cost of forgoing coverage can be exponentially higher in the event of an illness or injury that requires hospitalization. In the end, taking the risk of choosing not to obtain coverage in a line of work that exposes you to communicable illnesses and workplace hazards is a gamble in every sense of the word; one that could prove disastrous.

Additionally, working for a family under an agreement that’s non-compliant with tax and labor laws often leaves

you ineligible for worker’s compensation benefits, depending upon the laws of your individual state. Should you become injured, even while on-duty, their lack of coverage could leave you responsible for the resultant medical expenses. Choosing this illegal and high-risk arrangement is both ill-advised and creates an even greater need for an individual health plan.

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