Health Insurance deduction

[Anonymous]

My nanny has an expensive pre-existing condition, and was unable to qualify for health insurance in the past. She has been using the uninsured clinic at Holy Cross. Under the Affordable Care Act, she and her husband are able to get health insurance for about $300/month. Her husband is a student who works very part time, so is also ineligible for insurance through his job.

If she wants to pay her premium out of her paycheck, can I deduct the $300 for her tax free? How do I do this?

Thanks.

[Anonymous]

Pretty sure you can not do that. I have private insurance. It costs me 150 a month which my mb gives me in cash to cover each month. It's not part of my salary but a benefit. I dont pay taxes on the money. She needs to pay her own insurance with her own money. If you wanted to give her money every month to do that she would probably be very grateful. I think you as her employer can get a tax credit for doing so.

[Anonymous]

Anonymous wrote:My nanny has an expensive pre-existing condition, and was unable to qualify for health insurance in the past. She has been using the uninsured clinic at Holy Cross. Under the Affordable Care Act, she and her husband are able to get health insurance for about $300/month. Her husband is a student who works very part time, so is also ineligible for insurance through his job.

If she wants to pay her premium out of her paycheck, can I deduct the $300 for her tax free? How do I do this?

Thanks.

Have your nanny provide you with a copy of her monthly insurance billing after her premium payment is recorded. You can then write her a check reimbursing her for the exact monthly payment. Note on the check what it is for and keep the bill for evidence. It also is a good idea to have a copy of her policy. You then reduce her paycheck by the premium amount. It is not taxable to you or her. The other way to do it is for you, the employer, to pay the premium directly to the insurer.

[Anonymous]

16:29 again. You would reduce her gross paycheck by the reimbursement amount. Paying part or all of a nanny's health insurance premium is also a way you can compensate your nanny in lieu of a raise/higher paycheck.

[Anonymous]

Anonymous wrote:Pretty sure you can not do that. I have private insurance. It costs me 150 a month which my mb gives me in cash to cover each month. It's not part of my salary but a benefit. I dont pay taxes on the money. She needs to pay her own insurance with her own money. If you wanted to give her money every month to do that she would probably be very grateful. I think you as her employer can get a tax credit for doing so.

The above poster is 100% wrong. You can pay for your employee's health insurance by giving her a separate monthly check. It should not be taxed. You write "health insurance" on the memo line.

Both your salary and your total benefits make up your "compensation package".

Smart employers ask the nanny what she needs, and work from there.

[Anonymous]

No, smart employers decide what kind of compensation they wish to offer. It isn't very hard in this area to find great nannies. Nannies, especially the ones posting here, have unlimited desires for compensation and that can lead to an unfortunate situation of nannies taking advantage of parents.

Health insurance contributions are a great benefit. Many workplaces offer some partial compensation for health insurance and it is a wonderful idea and is especially a great benefit to offer in lieu of a raise if you are already paying above market rates.

[Anonymous]

OP here: Our nanny is quite new; we are nowhere near the point of offering a raise.

My reading of the law is that it is only tax free if I pay it in addition to her regular salary. It would not be tax free if I deducted it from her regular earnings. Is this correct?

I was going to do this as a favor to her, basically, if it would save her money. We might consider paying part or all of it in 6 months when she's due for a raise, but for now, she and her husband will be paying for their own insurance.

[Anonymous]

You could renegotiate her salary package so that she receives a new salary and health care that is equal to her current salary.

[Anonymous]

Anonymous wrote:No, smart employers decide what kind of compensation they wish to offer. It isn't very hard in this area to find great nannies. Nannies, especially the ones posting here, have unlimited desires for compensation and that can lead to an unfortunate situation of nannies taking advantage of parents.

Health insurance contributions are a great benefit. Many workplaces offer some partial compensation for health insurance and it is a wonderful idea and is especially a great benefit to offer in lieu of a raise if you are already paying above market rates.

Tell us how smart you really are.