How the Biden Administration Could Affect Families and Nannies

Jan 29, 2021 | Child Care, Parenting Advice, Payroll, Taxes & Labor Laws

Biden administration could affect families and nannies

It’s a new year, and we have a new President, which means new policies are on the way. Our payroll partner GTM Payroll Services takes a look at how legislation from the Biden administration could affect families and nannies.

With President Biden now in the White House, what does this mean for families and the nannies they employ for in-home child care? Here we will look at some of his proposals and plans to see how a Biden Administration may impact families and nannies.

At this point, it may be too early to say if his proposals including a stimulus package in response to the pandemic will get through Congress.

Stimulus package

Biden has proposed a $1.9 trillion stimulus package in response to the ongoing COVID-19 pandemic. And there may be more to come. He says he will recommend another round of economic measures in response to the pandemic during an address to Congress in February.

Direct economic impact payments

Biden’s stimulus package includes an additional $1,400 in direct economic impact payments on top of the most recent $600 payments.

Past payments included only child dependents. Biden wants to add payments for non-child dependents, including college students and elderly parents living with their adult children. If you can claim these dependents on your tax return, you could get an additional $1,400 per dependent.

Unemployment insurance

The proposal also includes an unemployment insurance supplement of $400 per week extended through September 30 (or longer if the pandemic continues to limit employment opportunities). This is an increase from the current $300 supplement set to expire on March 14. Biden also wants to extend unemployment benefits for those who have exhausted their regular benefits.

Of course, nannies and other household employees need to be paid legally in order to be eligible for unemployment benefits.

COVID-19 Vaccines

Biden has said he wants to accelerate vaccinations and is proposing $20 billion for a national vaccination program. This could mean nannies will be eligible for the vaccine sooner rather than later. Families will need to decide if they want to require their nannies to get the COVID-19 vaccine.

School funding

The stimulus package calls for $170 billion in funding for education, including $130 billion for K-12 school reopenings. In addition, Biden directed the Departments of Education and Health and Human Services to collect national data on school closures and provide guidance on reopening. His plan also includes ramped up testing for schools and allowing them to use disaster relief funds from the Federal Emergency Management Agency for COVID-related expenses like personal protective equipment, sanitation, improved ventilation, reconfigured classrooms, and upgraded technology.

The administration says it “will work to ensure that testing materials, support for contact tracing, and vaccinations for teachers are equitably provided to support in-person care and learning.”

Paid leave

In 2020, the Families First Coronavirus Response Act required household employers to provide paid sick and family leave to their employees for qualified reasons related to the pandemic. In return, families could take a dollar-for-dollar tax credit for any provided paid leave. The most recent stimulus package extended the tax credits but did not make paid leave mandatory.

Biden wants to make paid leave required once again and provide more than 14 weeks of paid leave for:

  • parents when a child’s school or daycare is closed
  • those who have or are caring for loved ones with COVID-19 symptoms or are quarantining due to exposure
  • those who need to take time to get the vaccine

The proposal would provide a maximum paid leave benefit of $1,400/week. Household employers would be eligible to have the cost of paid leave reimbursed. Again, household employees need to be paid legally in order to be eligible for paid leave and for families to take the tax credit.

Tax credits

Biden proposes to expand the Child and Dependent Care Credit for one year. Currently, if your children are younger than 13, you are eligible for a 20 percent to 35 percent credit for up to $3,000 in child-care expenses for one child or $6,000 for two or more. A nanny’s wages, when paid legally, are considered a child care expense. Under Biden’s plan, families would get a refundable tax credit for up to 50 percent of their childcare costs for children under age 13. The credit cannot exceed $4,000 for one child or $8,000 for two or more children. To receive the full 50 percent credit, a family needs to make less than $125,000 a year. All families making up to $400,000 would receive at least a partial credit.

Biden would also like to expand the Child Tax Credit, which is currently worth $2,000 per child age 16 or younger. The credit starts to phase out as family income rises above $400,000 on joint returns and above $200,000 on single and head-of-household returns. Biden wants to make the credit fully refundable, increase it to $3,000 per child ($3,600 for a child under age 6), and allow the credit for 17-year-old children.

Health care

Affordable health care is a concern for many Americans including nannies and other household employees who may not have access to health insurance plans typically offered to workers in the traditional workforce.

Currently, the Affordable Care Act (ACA) – passed under the Obama Administration when Biden was vice president – faces challenges in the U.S. Supreme Court. If the ACA is struck down, the Biden administration would be expected to work toward a replacement. However, if the ACA is upheld, then Biden is expected to move forward with expanding the ACA. These incremental expansions include offering a public option and expanding Medicaid and Medicare.

One of Biden’s core proposals is to offer a public option to compete with private markets. The public option would sit on Marketplace exchanges alongside private plans and be available to the public. Biden also intends to expand coverage to Medicaid at the state level as some governments and state legislatures have taken actions against the ACA’s expansion of Medicaid eligibility. Biden’s plan would seek an expansion aiming to provide access to almost five million additional individuals who would be eligible for Medicaid. His plan would also ensure that the proposed public option covers the full scope of Medicaid benefits.

States that have already expanded Medicaid would have the choice of moving the expansion population to the public option as long as the states continue to pay the cost of covering those individuals. Biden’s plan would be intended to ensure that people making below a designated percentage of the federal poverty level are covered. To help expand Medicaid participation, he hopes to create programs that allow automatic enrollment for eligible participants.

Biden hopes to ease the burden on individuals enrolling in health care by expanding tax credit eligibility for individuals who enroll in coverage through the Marketplace. Current requirements to receive tax subsidies include a household income no higher than 400 percent of the federal poverty level (FPL). Biden’s plan proposes eliminating the current income cap on eligibility, offering more individuals access to these tax credits.
Biden also hopes to put a cap on what is paid toward health coverage. He proposes to lower the income cap that is put toward health care premiums from 9.86 percent to 8.5 percent.

Paid leave

Paid sick leave is expanding on the state level with nine states and Washington, D.C. providing (or have a plan in place to provide) some sort of paid time off for qualified family and/or medical reasons. Biden has pushed for 12 weeks of paid family and medical leave. The Family and Medical Insurance Leave (FAMILY) Act would expand the qualified reasons for taking paid leave and opens eligibility to more workers. Biden supports many components of the act but has not fully endorsed it.

Minimum wage

As with paid sick leave, many states and cities are increasing their minimum wage rates. Some have reached (and a few have exceeded) $15/hour with others planning to reach that rate in the next few years.

Biden wants to increase the federal minimum wage to $15/hour by 2026. Currently, this rate is $7.25/hour and has not seen an increase since 2009. Twenty-nine states and Washington, D.C. already have a minimum wage that’s higher than the federal rate.

Biden’s proposal would be one of the most significant increases to the federal minimum wage in history.

Household employees – like nannies, in-home senior caregivers, and housekeepers – are required by the Fair Labor Standards Act – to be paid the highest applicable minimum wage rate. Since the federal rate has not changed in some time, state and local rates become the enforced rate.

Student loans

Biden has told the U.S. Department of Education to extend a pause on federal student loan forbearance. Borrowers will not be required to make payments or accrue interest through the end of September. Federal student loan payments and interest have been suspended since March 2020, but this was set to expire on January 31.

National Domestic Workers Bill of Rights

No discussion of the Biden Administration can exclude the influence Vice President Kamala Harris may have on policies. In particular, when Harris was a senator from California, she helped introduce the National Domestic Workers Bill of Rights. The legislation would ensure the rights and protections of millions of household employees throughout the country. At the time, she said “domestic workers are one of the fastest-growing workforces in our country. They provide essential care and support to aging parents, people with disabilities, children, and homes. However, our nation’s domestic workers have not been afforded the same rights and benefits as nearly every other worker, and it’s time we change that.” It is worth watching whether a national domestic worker protection law gains traction with Harris now part of the Biden administration.

If you have questions or concerns about unemployment insurance, paid leave requirements, tax credits, and all the obligations that come with paying your nanny legally, contact GTM for a free consultation.

And if you need child care, senior care, housekeeping, pet sitting, or any other home services, contact us at (518) 348-0400 and let us know how we can help!

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