Health Benefits for Your Nanny:
What Nashville Families Need to Know
(And Why It Pays to Offer Them)
If you are searching for a nanny in Nashville, you already understand that finding the right person takes time, intention, and investment. What many families do not realize is that offering health benefits to their nanny can actually cost them very little, and in some cases, it can reduce their total employer expenses while meaningfully improving what they offer a candidate.
At Nashville Nanny Agency, we place a strong emphasis on ethical employment practices and competitive compensation packages. Health benefits are one of the most powerful tools in a family's offer, and they are far more accessible than most people expect.
What Is a Health Reimbursement Arrangement (HRA)?
Families who employ a household worker have the option to offer a Health Reimbursement Arrangement, or HRA. The two most common types for household employers are the ICHRA (Individual Coverage Health Reimbursement Arrangement) and the QSEHRA (Qualified Small Employer Health Reimbursement Arrangement).
Both function similarly: the family contributes a set amount toward the employee's healthcare costs, and those contributions are not taxed on either side. The nanny is not taxed on the reimbursements she receives, and the family benefits from reduced payroll taxes because the nanny's gross wages are lower.
For 2026, families can contribute up to $6,450 per year for a single employee or $13,100 for an employee with a family through a QSEHRA. The ICHRA has no annual contribution cap, giving families greater flexibility.
How a Nanny Can Use These Funds
Once a family establishes an HRA, a nanny can use those funds to:
• Purchase her own individual health insurance through the marketplace or a healthcare exchange
• Pair the benefit with a spouse's existing plan
• Cover qualifying out-of-pocket expenses including dental and vision care
For nannies searching for positions in Nashville, Franklin, Brentwood, or the greater Middle Tennessee area, a family offering this benefit is a meaningful differentiator, and it signals the kind of employer worth committing to long term.
The Real Cost Comparison
Here is where it gets interesting for families.
Take a nanny earning $30 per hour, working 40 hours per week. Without any health benefit, the family's total employer responsibility, including gross wages and employer-side payroll taxes, lands around $67,748 for the year.
Now consider the same family offering the maximum QSEHRA contribution. The nanny's gross wages are reduced by $6,450, and the family contributes that amount directly to her healthcare account. Her take-home compensation, wages plus the benefit, actually increases. And the family's total employer responsibility drops to approximately $67,255 because both parties are paying less in taxes on lower gross wages.
The nanny takes home more. The family pays slightly less. That is a rare scenario in employment, and it is entirely legal and straightforward to implement.
Why a Stipend Is Not the Same Thing
Some Nashville families offer a monthly healthcare stipend to their nanny, thinking it accomplishes the same goal. It does not. A cash stipend is considered taxable wages, which means both the family and the nanny pay taxes on it. An HRA is pre-tax, making it a structurally superior option for both parties.
If you are currently offering a stipend, it may be worth revisiting that structure.
An Additional Benefit Worth Knowing
Beyond healthcare, families can also make tax-free contributions of up to $5,250 per year toward a nanny's qualified educational expenses, including tuition and textbooks. For families employing a college student or a nanny actively pursuing early childhood education credentials, this is a benefit that can make a real difference in her life and in your recruitment appeal.
A Note on Minimum Wage Compliance
Reducing gross wages to accommodate an HRA contribution does not exempt families from minimum wage requirements. You must still meet or exceed the applicable federal, state, or local minimum wage. For most Nashville and Middle Tennessee employers, this is straightforward, but it is worth confirming before structuring an offer.
What This Means for Your Nanny Search
The families we work with at Nashville Nanny Agency are thoughtful employers. They understand that attracting a highly qualified nanny candidate in a competitive market means offering more than a paycheck. Health benefits signal respect, stability, and investment in the person who will be woven into the daily life of their household and their children.
If you are beginning a nanny search in Nashville, Brentwood, Franklin, or surrounding areas, or if you are a nanny candidate evaluating what a strong offer looks like, our team is here to guide you through every detail.
We make household staffing feel effortless, because the right placement deserves nothing less.
Ready to Put This Into Practice?
Setting up an HRA or navigating the tax side of household employment does not have to feel overwhelming. Nashville Nanny Agency is proud to partner with two trusted resources in the household employment space: Homework Solutions and GTM Payroll Services. Both offer specialized expertise in nanny taxes, payroll compliance, and benefits administration, and both provide a free consultation to get you started.
If you are ready to structure a competitive, compliant offer for your nanny, we encourage you to reach out to our partners directly. They are the best in the business, and they will make sure you are set up correctly from day one.
Reach out to Nashville Nanny Agency today to begin your search or learn more about best-in-class compensation practices for Nashville household employers.