Yes, you can offer an HRA (ICHRA or QSEHRA) to a nanny or household employee if they are your W-2 household employee and meet the plan’s eligibility rules, including having qualifying health coverage for ICHRA.
Can you offer an HRA to a nanny or household employee?
Yes — household employees can be eligible for an HRA.
A nanny or household employee can receive HRA benefits if:
They are legally classified as your W-2 household employee
You are acting as a household employer
The HRA is set up under compliant ICHRA or QSEHRA rules
In this case, the nanny is treated the same as any other employee under the HRA rules.
What type of employment qualifies?
Household employee status is required
To participate in an HRA, the worker must:
Work under your direction (you control hours and duties)
Use your tools or work in your home
Not operate as an independent contractor
This includes roles such as:
Nanny or childcare provider
Housekeeper
Caregiver
Other domestic household staff
If the worker is not a W-2 employee, they are not eligible for an HRA.
What expenses can be reimbursed?
Eligible reimbursements include:
Individual health insurance premiums (ICHRA & QSEHRA)
Qualified medical expenses (if allowed under plan design)
Dental and vision premiums (if included in plan design)
Not eligible for reimbursement:
Medical expenses without insurance coverage (required under MEC rules)
Cash wages instead of reimbursement
Any expenses not approved under the employer’s HRA plan design
Key compliance rule for household employers
You must treat household employees like formal employees.
If you offer an HRA to a nanny:
You are considered a household employer under IRS rules
You may have payroll, W-2, and tax reporting obligations
Reimbursements must follow substantiation rules (proof required before payment)
Failure to follow these rules can result in:
Loss of tax-free reimbursement status
Plan noncompliance