We’re in the third year of the individual mandate for health insurance, so by now, most nannies know they need to be covered. However, it’s a good idea to go over the details of Open Enrollment and the potential benefits being paid legally has on a nanny’s health insurance premiums.
If you’re single or unable to get coverage through your spouse’s insurance, the federal or state health insurance exchanges are an easy way to purchase a health insurance policy. Open Enrollment began on November 1st and you’ll have until December 15th to enroll if you want your coverage to start on January 1, 2016. However, if you miss this deadline, you still have until January 31st to sign up and be covered beginning in March 2016.
If you already have health insurance, make sure you pay attention to any notices your health insurance company has sent you. Most will automatically renew your policy, but some won’t. You’ll have the opportunity to make adjustments during Open Enrollment, but regardless of how you have health insurance set up, you’ll need to make sure your information is still accurate because any changes in the past year could affect your premiums.
It’s worth mentioning that the penalty for failing to have health insurance continues to increase. This was laid out in the Affordable Care Act to incentivize everyone to have coverage. For 2015, the fine is either $325 or 2 percent of income, whichever is greater. Next year, it increases to 2.5 percent of income or $695. For perspective, someone earning $30,000 per year would face a fine of $750.
Let’s go ahead and assume all nannies will get health insurance. The main advantage to purchasing a policy on the federal or state health insurance exchanges are the subsidies that many nannies will qualify for. These will allow you to get health insurance at a discounted rate. The Kaiser Family Foundation has a great calculator tool that you can use to estimate the subsidy you could receive. It takes into account your income, number of adults enrolling in coverage, number of children, the state you live in, and other factors.
Here’s the kicker; in order to qualify for a subsidy, nannies must be able to document their wages – a.k.a. be paid legally. It’s possible that some nannies are currently being paid under the table because the family they work for is uncomfortable with payroll and taxes or just unwilling to go through the “nanny tax” process. This is a great way to change their thinking. The peace of mind that having health insurance brings is very important and getting coverage at a discounted rate is ideal for many nannies.
When presented with this argument, it’s not unreasonable to think many families will go ahead and put their nanny on the books. Aside from the health insurance subsidy, being paid legally will also reward nannies with Social Security income and Medicare health coverage when they retire, unemployment benefits, disability benefits, and the ability to secure loans and credit.
By Tom Breedlove, HomePay by Breedlove