How can we help our nanny with health insurance this Open Enrollment?

You found a nanny your family trusts, and now you want to take care of them the way they take care of your kids. Helping with health insurance is one of the most meaningful ways to do that, and you can do it tax-free, without buying a group plan.

The two tools that make this work for household employers are the QSEHRA (Qualified Small Employer Health Reimbursement Arrangement) and the ICHRA (Individual Coverage Health Reimbursement Arrangement). With either one, your nanny picks their own plan on HealthCare.gov, your state’s marketplace, or through an independent insurance agent, and your family provides an agreed-upon amount that reimburses them for premiums and other medical costs.

Unlike wages, the money you reimburse through a QSEHRA or ICHRA isn’t subject to employer taxes. You don’t pay Social Security, Medicare, or unemployment taxes on it, and your nanny doesn’t pay Social Security, Medicare, or income tax on it either. That makes a health benefit one of the smartest ways to give a raise or boost total compensation, because every dollar goes further for both of you.

Timing matters. Open Enrollment for 2027 coverage runs November 1, 2026 through January 15, 2027, and your nanny needs to enroll by December 15 for coverage that starts January 1.

Open Enrollment isn’t your only window, either. When an employer offers a QSEHRA or ICHRA for the first time, that’s usually a qualifying life event, which gives your nanny a 60-day special enrollment period to sign up for a plan any time of year

Why does offering nanny health benefits feel so complicated?

You set out to do something kind for your nanny, and suddenly you’re reading about plan documents, premium tax credits, and acronyms that sound like government agencies. Most parents never expected to become a household employer, let alone one who offers benefits. It’s normal to wonder whether you’re setting it up right.

It shouldn’t be this confusing to do the right thing for someone who cares for your family. The good news is that once your plan is set up correctly, it mostly runs in the background, and you don’t have to figure it out alone.

Why is Open Enrollment one of the best times to offer nanny health benefits?

When your nanny applies on HealthCare.gov, the application asks whether their employer offers a health reimbursement arrangement and how much it pays. Settling your plan before your nanny shops means they can choose the right plan and report their premium tax credit correctly the first time, instead of fixing it mid-year.

It’s also a meaningful way to stand out. Health coverage is one of the most common things nannies ask us about, and nanny families who offer it tend to attract and keep experienced, career nannies.

Which is right for our nanny, a QSEHRA or an ICHRA?

We’ve guided household employers through questions like this since 1993, and the choice usually comes down to two things: how much you want to give and what kind of coverage your nanny has. Both are formal reimbursement plans built for small employers that don’t offer group insurance, which describes nearly every nanny family.

The IRS adjusts the QSEHRA limits every year, so check the IRS site or the HWS blog at the change of year. HealthCare.gov explains how each plan affects your nanny’s coverage on its QSEHRA page y ICHRA page.

For most nanny families, we find the QSEHRA is the simplest fit. If your nanny is covered through their spouse’s plan at work, the QSEHRA is also the one that works for them. Families who want to cover more of the cost tend to look at the ICHRA. For a deeper side-by-side, read our full QSEHRA and ICHRA comparison.

What’s different for nanny families?

Here’s the part most general guides skip. Handing your nanny extra money “for insurance,” or paying their premium directly without a formal plan, feels generous, but it isn’t tax-free. It’s wages, which means Social Security, Medicare, and unemployment taxes apply and the amount belongs on your Schedule H (Publicación 926 del IRS). Paying premiums outside a compliant plan can also create penalty exposure under the Affordable Care Act.

The plan documents, and for a QSEHRA, the tracking on your nanny’s W-2, are what protect your family and your nanny and turn those same dollars into a tax-free benefit. And a family with one nanny or a few household employees fits the definition of a small employer for these plans, so you don’t need a business or a group policy to offer one. If you have more than one household employee, you will want to make sure you are offering the benefit fairly to all employees under the rules of a non-discrimination test.

How do we set up a health reimbursement plan before the deadline?

It comes down to three steps:

1. Talk with us. In about 10 minutes, we’ll help you decide between a QSEHRA and an ICHRA and land on a monthly amount that fits your family.
2. Set up your plan. Your plan documents spell out who’s eligible, how much you’ll reimburse, and what counts under the law, and your nanny gets a written notice explaining the benefit and the amount. You can do this yourself, or our partner Take Command handles setup and reimbursements for you and can help you choose the right start date. Promo code HOMEWORK30 takes 30% off standard pricing. Your nanny then reports the benefit on their HealthCare.gov application and enrolls by December 15 for January 1 coverage.
3. We handle the payroll side. Your nanny pays for covered costs like premiums, copays, and prescriptions, then submits proof, and the reimbursement goes out right along with their regular paycheck. Take Command can send QSEHRA or ICHRA reimbursements directly to us to include in your payroll, and we make sure everything is reported correctly on your nanny’s Form W-2 (QSEHRA reimbursements appear in Box 12, code FF, which helps your nanny settle up their premium tax credit at tax time). Alternatively, you can report them directly to us.

If you’re with another payroll provider, check that they can accommodate this. If they can’t, the new year is an easy time to switch.

Is a health benefit a smart way to give a raise?

Dollar for dollar, a health benefit usually goes further. Every $1,000 that runs through a QSEHRA or ICHRA instead of wages saves your family 7.65% in Social Security and Medicare taxes, plus unemployment taxes, and saves your nanny their own 7.65% share plus income tax. Many families pair a health benefit with a raise, or ask their nanny whether they would prefer it in place of one.

A few things to keep in mind for your nanny’s side:

• Your nanny’s hourly rate still has to meet minimum wage and overtime rules on its own. Health reimbursements don’t count toward either.
• Wages shifted into a health benefit don’t count toward your nanny’s Social Security record, so talk it through together rather than quietly trading pay for benefits.
• Agree on a gross hourly rate first, then add the health benefit on top. That keeps the conversation clear for everyone.
• QSEHRA vs. ICHRA for household employees: a detailed side-by-side of how the two plans compare, for families weighing which to offer.

What does it look like when it’s done right?

Your nanny has coverage they chose, and they know exactly what your family contributes. Reimbursements go out with payroll, nothing gets taxed that shouldn’t be, and the W-2 is right in January. You’ve given your nanny something that matters to them, your family is protected, and you didn’t have to become a benefits expert to do it.

Frequently asked questions

Can we just pay our nanny’s health insurance premium directly?

Not tax-free. Without a formal QSEHRA or ICHRA, money you pay toward your nanny’s insurance is treated as wages, and paying premiums outside a compliant plan can create penalty exposure. Setting up a plan is what makes it a tax-free benefit.

What if our nanny is on their spouse’s health plan?

A QSEHRA can still work, since a spouse’s plan through work counts as qualifying coverage, and your family still saves on employer taxes. If your nanny’s spouse already pays for that coverage pre-tax, though, your nanny won’t see additional tax savings. An ICHRA requires your nanny to be enrolled in an individual plan, so it isn’t a fit if they’re only covered through a spouse’s job.

Does a QSEHRA affect my nanny’s health insurance subsidy?

Yes. Your nanny’s premium tax credit is reduced by the monthly QSEHRA amount, and may go away entirely if the benefit is generous enough. That’s why your nanny needs to report it on their marketplace application.

What if we miss Open Enrollment?

You can still offer a benefit. Being offered a QSEHRA or ICHRA for the first time usually gives your nanny a 60-day special enrollment period to choose a new plan.

Go deeper

You hired someone amazing. We’ll handle the rest.

Offering health benefits is one of the kindest, smartest things a nanny family can do, and it doesn’t have to add to your to-do list. HomeWork Solutions has helped household employers since 1993, and a real person on our team will walk you through your options, coordinate with your plan administrator, and make sure everything lands correctly on payroll and your nanny’s W-2. Agendar una consulta gratuita or call us at 1-877-899-3004.