Employer Paid Health Insurance: Should you be providing this benefit to your nanny?

There’s more to compensating your nanny than simply writing a check for her caregiving services once every two weeks. For instance, did you know that you can provide health insurance benefits to your nanny tax-free?

Although the Affordable Care Act has changed many aspects of income tax legislation, one thing is still certain—employers with household help can cover the cost of their employees’ health insurance policies without increasing their taxes. However, as with most tax laws, there are various caveats.

If you employ only one household employee, the easiest thing to do is have your nanny purchase a policy from any insurer. Subsequently, the amount of any reimbursement you give her for all or part of the monthly premiums will be tax-free, meaning both the employer and employee do not pay taxes on that amount.

If you employ two or more household workers: You must purchase a group policy through the Small Business Health Options Program (SHOP) in order for your contribution to qualify as non-taxable in the eyes of the U.S. government.

If you choose to purchase a policy through SHOP, you may be eligible for an additional tax break through The Credit for Small Employer Health Insurance Premiums, which provides a credit of up to 50% of every dollar contributed as long as the family pays for at least half of the employee’s premium, the average wage for all employees is less than $50,000 per year and the policy is purchased through SHOP.*

Employers with only one employee may also set up a group policy through SHOP to qualify for additional tax credit, but keep in mind that there is an administrative cost to set up and manage the SHOP account.

If you’ve been considering providing health insurance as a benefit to your nanny, now is the time—she’ll need a policy before the open enrollment in the Health Insurance Marketplace ends on February 15^th.

For more information and help navigating through the tax regulation labyrinth, we recommend you contact Breedlove and Associates for additional clarification on your family’s specific situation.

*Source: Breedlove and Associates

Employer Paid Health Insurance: Should you be providing this benefit to your nanny?

There’s more to compensating your nanny than simply writing a check for her caregiving services once every two weeks. For instance, did you know that you can provide health insurance benefits to your nanny tax-free?

Although the Affordable Care Act has changed many aspects of income tax legislation, one thing is still certain—employers with household help can cover the cost of their employees’ health insurance policies without increasing their taxes. However, as with most tax laws, there are various caveats.

If you employ only one household employee, the easiest thing to do is have your nanny purchase a policy from any insurer. Subsequently, the amount of any reimbursement you give her for all or part of the monthly premiums will be tax-free, meaning both the employer and employee do not pay taxes on that amount.

If you employ two or more household workers: You must purchase a group policy through the Small Business Health Options Program (SHOP) in order for your contribution to qualify as non-taxable in the eyes of the U.S. government.

If you choose to purchase a policy through SHOP, you may be eligible for an additional tax break through The Credit for Small Employer Health Insurance Premiums, which provides a credit of up to 50% of every dollar contributed as long as the family pays for at least half of the employee’s premium, the average wage for all employees is less than $50,000 per year and the policy is purchased through SHOP.*

Employers with only one employee may also set up a group policy through SHOP to qualify for additional tax credit, but keep in mind that there is an administrative cost to set up and manage the SHOP account.

If you’ve been considering providing health insurance as a benefit to your nanny, now is the time—she’ll need a policy before the open enrollment in the Health Insurance Marketplace ends on February 15^th.

For more information and help navigating through the tax regulation labyrinth, we recommend you contact Breedlove and Associates for additional clarification on your family’s specific situation.

*Source: Breedlove and Associates

How the California Domestic Worker Bill Affects You and Your Nanny

Overtime compensation can be a touchy subject, and one that both employers and employees can be loath to bring up—especially when that employee is practically a member of your family. But the fact is, nannies are domestic workers, and their overtime wages are mandated by the state of California and the Department of Labor.

You may be aware that as of January 1, 2014 the California Domestic Worker Bill of Rights was signed into effect followed by the U.S. Gov’t Fair Labor Standards Act (FLSA) in January 2015, which means your nanny is entitled to overtime pay. If this is the first you’ve heard of these laws, here’s how it works: Overtime pay is required if your nanny works more than 9 hours in one day or 45 hours in a seven day work week. Should this occur, she should be compensated for those hours at the applicable overtime and double time rate.

There are additional rules and requirements for special cases such as if your nanny is a live-in employee, if your nanny works over 12 hours in one day, nannies providing overnight care, or if she works six or seven consecutive days in a row, and these cases should be discussed with a tax or payroll professional such as Breedlove and Associates.

It is advisable that nannies keep a daily log of hours worked and submit this to the parents at the end of each pay period. This way, there will be no confusion, and both parents and nannies have a record of hours worked and paid.

As with your child’s behavior and schedule, overtime pay and compensation should be something you regularly discuss with your nanny to ensure that you are both remain satisfied with the employment arrangement. After all, if you care for your nanny, she’ll be better able to focus her attention on what matters most to you—your children.

For more information about nanny overtime compensation, contact Breedlove and Associates or Alyce Desrosiers at Chirp Connecting Families and Nannies LLC.

Photo credit: Travis Swan 

How the California Domestic Worker Bill Affects You and Your Nanny

Overtime compensation can be a touchy subject, and one that both employers and employees can be loath to bring up—especially when that employee is practically a member of your family. But the fact is, nannies are domestic workers, and their overtime wages are mandated by the state of California and the Department of Labor.

You may be aware that as of January 1, 2014 the California Domestic Worker Bill of Rights was signed into effect followed by the U.S. Gov’t Fair Labor Standards Act (FLSA) in January 2015, which means your nanny is entitled to overtime pay. If this is the first you’ve heard of these laws, here’s how it works: Overtime pay is required if your nanny works more than 9 hours in one day or 45 hours in a seven day work week. Should this occur, she should be compensated for those hours at the applicable overtime and double time rate.

There are additional rules and requirements for special cases such as if your nanny is a live-in employee, if your nanny works over 12 hours in one day, nannies providing overnight care, or if she works six or seven consecutive days in a row, and these cases should be discussed with a tax or payroll professional such as Breedlove and Associates.

It is advisable that nannies keep a daily log of hours worked and submit this to the parents at the end of each pay period. This way, there will be no confusion, and both parents and nannies have a record of hours worked and paid.

As with your child’s behavior and schedule, overtime pay and compensation should be something you regularly discuss with your nanny to ensure that you are both remain satisfied with the employment arrangement. After all, if you care for your nanny, she’ll be better able to focus her attention on what matters most to you—your children.

For more information about nanny overtime compensation, contact Breedlove and Associates or Alyce Desrosiers at Chirp Connecting Families and Nannies LLC.

Photo credit: Travis Swan