Written by Brooke Strickland for Nannies Plus
When you hire a new nanny or family assistant to work in your San Francisco, East Bay, Marin or Sonoma County home, it’s essential to not just offer a competitive wage but to also provide recommended benefits, such as healthcare. If you’re not sure what details matter when it comes to coverage for your household employee, here are some things to consider.
Currently, two tax-advantaged healthcare options are available for household employers to offer their employees:
Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) and Individual Coverage Health Reimbursement Arrangement (ICHRA). Tax-advantaged means that the money that you, as the employer, contribute is not subject to employment taxes or income taxes. Both choices are available to small employers that don’t need to provide group health insurance.
The Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) is generally the most accommodating option for families who want to provide moderate support, not to exceed $487.50 per month for a single employee or $983.33 per month for an employee with a family plan. To learn more about the tax advantages of QSEHRA, click here.
The Individual Coverage Health Reimbursement Arrangement (ICHRA) is for employers that want to provide employees with a more comprehensive healthcare package. This option offers higher reimbursement limits and greater flexibility for employees and employers.
How healthcare reimbursements work:
Each option gives the employee the opportunity to purchase their own insurance plan from the marketplace and then be reimbursed by their employer for some or all those expenses. The employee turns in a reimbursement form to you, the employer. Then, you provide the funds, which are usually included in their next paycheck. The money can come directly from you, or you can include this in the payroll service that you use for your employee. It is important to note that at the end of the year, you’re required to report all reimbursements on your employee’s W-2 tax form.
If you need more information or have questions about setting up your benefits package, taxes, and payroll, we exclusively refer our clients to HomeWork Solutions.
To attract and retain a qualified nanny or family assistant, building great benefits into their compensation package is key. Ready to hire your new household employee? Contact us today to start the search. We look forward to helping you find the perfect person to join your family team!