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Health Insurance for Household Employees - What Parents and Nannies Need to Know

Are you a parent wondering if you have to provide health insurance? Are you a Nanny who does not understand what a deductible, co-pay, or out-of-pocket maximum is? Well, Healthcare Enrollment Season is here and we are thrilled to guide you through,
  • The importance of health insurance,

  • Flexible options for Parents, Nannies, Private Educators, and other Household Employees,

  • Resources to assist Nannies in securing the best health insurance for themselves and their families,

  • and notice that enrollment in the Healthcare Marketplace in the U.S. closes on Wednesday, December 15, 2021.

 

Do nannies need health insurance?

No one plans to get sick or hurt, but illness and accidents happen, even to healthy people. Health insurance protects you financially in the event of a major accident or illness, but also offers preventative care such as cancer screenings, vaccinations, and certain checkups at no additional cost!


Do nanny families offer health insurance?

Employer-sponsored health insurance is a type of insurance that is purchased by an employer and made available to employees and their dependents. It enables an employee (nanny) and employer (nanny family) to share the cost of health insurance premiums. While this is a nice perk, most nanny families do not offer employer-sponsored health insurance. No worries, families can support nannies through the healthcare reimbursement options detailed below!


How else can families support nannies?

There are two types of tax-free health reimbursement arrangements for household employers: Qualified Small Employer Health Reimbursement Arrangement (QSEHRA) or an Individual Coverage Health Reimbursement Arrangement (ICHRA).


For Employers - QSEHRA

Health care reimbursements for part-time and full-time workers are made possible by a QSEHRA, or qualified small employer health reimbursement agreement. QSEHRAs are tax-free health benefits that allow families to reimburse nannies, private educators, or other household employees who are covered by a spouse's employer-sponsored insurance, Medicare, or are uninsured. These payments are typically income-tax-free, payroll-tax-free, and the family sets the maximum amount within the limit allowed by the IRS. With QSEHRA, families can reimburse for the cost of:

  • Health insurance premiums

  • Dental premiums

  • Vision premiums

  • Costs associated with copays and deductibles

  • and any other item listed in IRS Publication 502

There are a few restrictions to remain mindful of. If you have more than one household employee, you cannot vary your reimbursement amount by employee categories, such as part-time or full-time.


For example, if you offer full-time employees a $300/month reimbursement, and would like to offer QSEHRA to a part-time employee, you must provide the same amount, $300/month. Additionally, you cannot offer QSEHRA with an employer-sponsored policy. Learn more about the QSEHRA here.


For Employers - ICHRA

Similar to a QSEHRA, an individual coverage health reimbursement arrangement, or ICHRA, is not subject to payroll or income tax but provides families with significantly more flexibility, including no annual maximums, and individual plans for groups of employees such as $150/month for part-time employees and $300/month for full-time employees. With ICHRA, families can reimburse for the cost of:

  • Health insurance premiums

  • Dental premiums

  • Vision premiums

  • Costs associated with copays and deductibles

  • and any other item listed in IRS Publication 502

Additionally, ICHRA can be offered with an employer-sponsored policy. Learn more about ICHRA here.


 

Whether or not your employer reimburses you, most nannies must obtain health insurance independently. Keep reading to better understand your options and how to secure health insurance for yourself and your family!


For Nannies - Let's start with the basics:
  • What is a premium?

A health insurance premium is a monthly fee you pay for health coverage regardless of whether you utilize the service during that month. If you stop paying the premium, you risk losing coverage.

  • What are deductibles?

A deductible is the amount you pay out of pocket before your health coverage takes effect. For example, if your deductible is $1,000, your medical insurance will not cover the majority of your expenses until you have paid $1,000 out of pocket.


Certain preventative treatments, such as cancer screenings and vaccines, are normally covered at no cost to you before your deductible is met. But services such as specialist visits, surgeries, and in certain circumstances, prescriptions, are out-of-pocket expenses that are only covered once your deductible is paid. The great thing is that each out-of-pocket payment contributes to your deductible!

  • What is an out-of-pocket maximum?

The term "out of pocket maximum" refers to the maximum amount you will spend for medical treatment during the coverage year. This sum includes your deductible, coinsurance, and copayments.


For instance, if your out-of-pocket limit is $4,000, and your deductible is $1,000, you will pay a maximum of $3,000 more within the coverage year.

  • What are copayments?

Copayments or co-pays describe the fixed amount that you pay for medical services or prescriptions after your deductible is met. For example, co-pays of $30 for Specialist Visits and $400 for Emergency Room visits mean you will pay $30 each time you see a medical specialist and $400 each time you visit an emergency room.

  • What is co-insurance?

Co-insurance describes a percentage of the cost of medical services or prescriptions that you pay after your deductible is met. For example, if your coinsurance is 20% for Emergency Room visits and the total cost of your treatment is $900, you will pay $180 (20% of $900) for that emergency room visit.


Let's put it all together!

Let's say the following amounts apply to your plan and the total cost of your treatment is $10,000.

  • Deductible: $1,000

  • Co-insurnace: 20%

  • Out-of-pocket maximum: $5,000

You will pay $2,000 (20% of $10,000) for this treatment. The first portion of the $2,000 goes to your deductible ($1,000) and you have $3,000 ($5,000 - $2,000) left in your out-of-pocket maximum, meaning you will pay an additional $3,000 during that coverage year.


Now, let's take a look at the resources available to you and how to obtain coverage.
  • A Health Insurance Navigator

A Health Insurance Navigator is a person or organization trained to assist consumers, small businesses, and employees with their health coverage search via the Health Care Marketplace. They provide unbiased support and their services are free of charge.

  • A Health Insurance Agent

Health Insurance Agents typically work for a single insurance provider and, as a result, their range of options is limited to a single company. Their services are often free of charge and their premium rates remain consistent across agents.

  • A Health Insurance Broker

Think of a broker as a personal shopper! Brokers typically represent many insurance companies and can provide a broader variety of coverage options. In most cases, the service is free of charge to the consumer, and premium rates remain consistent across brokers.

  • Direct via the Healthcare Marketplace

If you have a good understanding of premiums, copays, deductibles, and coverage terms, you can explore available plans completely independently at healthcare.gov. If you need some additional assistance, Marketplace representatives are very helpful and available 24 hours a day, 7 days per week! You can contact them with specific insurance questions at 1-800-318-2596.


 

When choosing an insurance plan, consider how frequently you visit the doctor or take medication, your health history and future concerns, and even a worst-case scenario to make a comprehensive financial decision regarding your individual needs.

 

Deadline

Nannies have until Wednesday, December 15, 2021, to enroll in or change health insurance for 2022. MarketPlace representatives are very helpful! Give them a call with your questions at 1-800-318-2596. They are available 24 hours a day, 7 days per week.



We hope this advice was beneficial in assisting you in ensuring that your health care needs are met. Press the heart if you found it helpful and share with a nanny or family who you believe it could assist!



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