Should I offer health insurance benefits to my nanny or other household staff? Is this common practice?

Nanny healthcareYes! At Mom’s Best Friend, we seek to provide you with the best advice and most current trends to enable you to make the best hiring decisions! We always advocate that our clients offer health insurance because of the tax advantage to both parties, as well as the peace of mind you receive from caring for your employee and from knowing your employee can get access to the medical coverage they need when they need it.

A 2010 International Nanny Association Survey and Benefits Recap reported that 16.38% of nannies receive insurance paid at 100% and 13.75% receive insurance paid at 50%. While 30% of professional nannies is not a majority, Breedlove & Associates (www.breedlove-online.com), a national tax and payroll firm exclusively for household staff, reports seeing an upward trend in the offering of medical benefits. Perhaps the reason for this trend is greater education of parent employers about the advantages.

Even if you are not in a financial position to cover any of the cost of your employees’ insurance, both parties are still better off reducing the salary by the amount of the insurance premium and then paying the full insurance amount because neither party will pay taxes on that deduction. The type of plan chosen and thus the amount of the premium may determine what contribution, if any, is comfortable for your family’s budget. Just keep in mind that this stipend is tax free dollars allocated to this expense.

You can go about setting this up in a variety of ways.If you are able, you can make your position very attractive by offering this benefit above and beyond the salary negotiated to ‘sweeten the deal” and secure a top caliber candidate. Otherwise, offer to contribute a stipend of a flat dollar amount, to contribute half of the monthly rate, or to provide a separate check for the whole amount in exchange for a reduction in salary of that same amount.Find out from your nanny or household staff if they are currently carrying their own personal policy. If so, ask for a copy of the invoice/receipt from this policy for your files and to get the exact amount. If not, ask him/her to research a desirable policy and provide you with the information so the two if you can discuss together. Most employers do not cover the cost of the spouse and/or child(ren) but make sure the policy allows for these additions, so they are able to cover them at their own expense if desired. Do NOT add these employees to your business payroll or benefit plans, as it is a violation of the law.

Helping out your employees in this way will make them feel valued, viewed as a professional, and secure in knowing they have medical coverage. You can feel secure in knowing that they will be able to get care as needed and thus be more healthy and able to give the most to their position with you. If you have additional questions in this regard, please ask your MBF placement counselor or call Breedlove and Associates at 1-888-BREEDLOVE.

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