When looking to hire the top candidate for your nanny position or retain the caregiver your children absolutely adore, you may need to offer more than a competitive rate of pay. Especially in this tight market for nannies, health benefits can help your job offer get noticed. In a recent survey of nannies by GTM Payroll Services, only one in five caregivers receive health benefits through work. As families compete for the best nannies, offering health benefits is one way to stand out.
On top of the competitive job market, nannies are more aware of the importance of health benefits during the pandemic. For families, this means providing health benefits is no longer a luxury but a near necessity when hiring a nanny.
One way families provide their nannies health benefits is to offer a healthcare stipend. This is a fixed amount on top of their nanny’s regular pay that is supposed to go towards healthcare costs. It is easy for families to go this route, but there are a couple of issues.
First, there is no way to know if your nanny actually puts that extra money toward their healthcare costs. Also, stipends are considered taxable income, similar to a year-end bonus, to you and your nanny. That means you are paying an extra 7.65% in payroll taxes. Your nanny is also paying income taxes on the stipend amount.
Health Benefits Via QSEHRA
There is a better way to offer health benefits through a Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) for your nanny. They are perfect for families with household employees. QSEHRAs are designed for employers with less than 50 workers that do not offer health insurance.
The 2022 contribution rates set by the IRS, allow funding your nanny’s account up to $5,450 for single coverage or up to $11,050 if your nanny has a family. QSEHRAs can reimburse your nanny for health insurance coverage purchased on the individual market or a plan purchased through the health care exchange. Additionally, QSEHRAs can pair with an employee spouse’s plan and aid out-of-pocket medical, dental, and vision expenses. Your nanny will purchase their health insurance or pay their medical costs on their own. Then, they will simply submit those expenses for reimbursement from their account.
Best of all, your contributions to a nanny’s QSEHRA are free of payroll taxes for you and your employee. Reimbursements are also not taxable as long as your nanny has a healthcare plan that meets minimum essential coverage. You can now offer quality health benefits without breaking your budget.
Provide QSEHRA Through GTM Payroll
QSEHRAs are easy to set up and administer through a firm like GTM Payroll Services that has licensed insurance professionals on staff and can help facilitate expense documentation, submission, and reimbursement. If you are interested in learning more about how to set up a QSEHRA for your nanny, call GTM Payroll Services at (800) 929-9213 or email email@example.com.
About The Author
Founded in 1991, GTM Payroll Services is a recognized leader in payroll, tax, insurance, and compliance services for families that employ household help. GTM’s staff of nearly 100 workers includes certified payroll professionals, licensed insurance brokers, PHR-certified human resource managers, employment tax experts, senior HR consultants, and CPAs. Today, GTM processes more than $1 billion in payroll every year for more than 44,000 employees. GTM is an active member of the Association of Premier Nanny Agencies (APNA) and the International Nanny Association (INA). For more information, visit GTM.com/Household.