We often get questions from families and nannies about making health insurance part of the overall compensation package. Typcially nannies secure an individual health insurance plan and then the family will pay all or a portion of the monthly premium. There are tax incentives for families and nannies. Here is some more information to get you started:
Health Insurance Premiums Are Considered Non-Taxable Compensation
Because health insurance is critically important, the government uses tax incentives to encourage employers to provide coverage for their employees. Therefore, household employers can provide health insurance premiums and have it be considered non-taxable compensation. This means the entire amount of the premium is tax-free to you and also tax-free to your employee – making it a great way to increase the “take-home” pay for an employee without increasing your out-of-pocket costs.
Health Insurance Tax Credit (New in 2011)
If a family contributes to their employee’s health insurance premiums, they will receive up to a 35% tax credit on those contributions. So, in addition to health insurance being non-taxable to families and nannies, it now comes with added savings for families. For more information, check out Breedlove & Associates.
Insurance Providers
By law, health insurance must be bought through state-licensed providers. Due to the increasing self employment pool in America, more health insurance companies are beginning to offer comprehensive plans for individuals. Because there are still some illegitimate insurance providers in every state, we recommend that you exercise caution and allow ample time to research the various providers in your area. There are also various websites that can be very helpful in comparing plans from different carriers. Here are a few we’ve found.
http://www.ehealthinsurance.com/
http://www.ehealthlink.com/Washington/Default.asp
Coverage Options
Generally, there are four types of health plans (from least expensive to most expensive): (1) Catastrophic Care, which covers hospitalization only; (2) Health Maintenance Organizations (HMOs), which offer full coverage if you utilize their medical facilities and/or their limited choice of physicians; (3) Preferred Provider Organizations (PPOs), which offer full coverage through large physician networks; and (4) Indemnity Plans, which allow patients to see any physician at any medical facility – no limitations at all. Within each of these types of plans, there are numerous options on deductibles, co-pay amounts, prescription benefits, emergency care benefits, etc.
Costs
Unfortunately, getting an accurate quote for an individual health plan involves more than a quick phone call. There are many options and each comes with different levels of coverage and costs. In addition, the individual being covered will be a key factor in the cost of the plan; age, weight, health condition/history, lifestyle, where she/he lives, etc. will contribute to an overall health profile and be used to determine the amount of the monthly premium. Because of the customized nature of the process, it takes a little time to obtain accurate price quotes. For general budgeting, however, you can estimate premiums ranging from $200 per month to more than $350 per month.
Information supplied by Breedlove & Associates. Founded in 1992 – by household employers for household employers – Breedlove & Associates is a full-service, full-support tax & payroll service. They have served more than 11,000 clients and processed more than $1 billion in household payroll. For more information regarding employment taxes call 1-888-273-3356 or visit www.mybreedlove.com
