Tax Deductible HRA and HSA for Parents to Offer NanniesProviding benefits for your nanny is a great way to keep her long-term. Benefits that you may want to offer your nanny include: paid vacation (2 weeks minimum); paid Federal holidays (at least six days including New Years Day, Memorial Day, July 4, Labor Day, Thanksgiving, and Christmas); paid sick and personal days; and mileage (which is required by law). Visit www.irs.org for the current mileage rate. Also, standard benefits include maternity leave, (offer three months non-paid maternity leave); a mobile phone and cellular phone usage; a vehicle to drive for personal use; and apartment rent. But, by far, the most desirable benefit for nannies is health insurance.
According to a poll about benefits for nannies by Be the Best Nanny Newsletter health insurance benefits are very important to 72% of in-home caregivers. Forty-percent of the nannies who took our survey admitted they are staying at their current nanny job just to keep their health insurance coverage.
Health insurance benefits are so important to nannies that 57% that took the poll said they would consider accepting health insurance coverage instead of a raise.
Plus, health benefits are not taxed.
Some health benefits to consider include a Health Reimbursement Account (HRA), or a Health Savings Account (HSA).
The parent employer sponsors the tax exempt HRA which reimburses the employee for eligible medical care expenses, as defined by the IRS.
The HSA is a tax-exempt trust established to pay for qualified medical expenses. Both the employer and employee may contribute to the HSA account. Families and nannies can contact many businesses that offer nanny health insurance plans (both short-term and long-term plans).
Visit the IRS web site for more information about HRA and HSA accounts.
Nannies, would you accept health insurance benefits in lieu of a raise?
6 comments:
Absolutely Yes! I have accepted health insurance instead of a raise, because it is a raise. It is a raise that isn't taxed. I would recommend every nanny consider this. Ask the parents because health insurance premiums are too costly for individuals to buy themselves. I don't know anyone who has health insurance that hasn't got it through their employer or husband. It's well worth it.
Yes I would accept health insurance benefits instead of a raise if I didn't already have these benefits. The key is to have your employer send in the premiums then they can be tax deductible, if I write and send the check it isn't tax deductible. I don't know why but that's the way the system works.
Reyna H
NY NY
Yes, and have. That plus tuition and conferences reimbursement.
Good point about tuition and conferences but I really really really need health insurance! Great idea to ask parents for insurance for the raise!
IRS publication 969 compares and contrasts HRAs and HSAs. Easy to print for employer's review,
The family provides me with health insurance. Blue Cross has individual plans. Blue Cross has multiple plans, some a little cheaper, and there is more choice in MDs, but for the same price you have large co-pays. If your nanny is 22 or so, it costs about 50% less, and 50% more if in her 50's. I got all the information off their website. Benefits are not taxed, so I have always preferred health benefits to a raise after 6 months on the job.
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