Nanny Benefits Package: PTO, Health Insurance & More

A strong benefits package is often what separates a family that keeps their nanny for years from one that experiences constant turnover. Nannies are professional caregivers, and they evaluate job opportunities the way any professional does — by looking at the total compensation picture, not just the hourly rate.

This guide covers what benefits are standard in the nanny industry, what is legally required, and how to structure a package that attracts top-tier candidates without breaking your budget. Document all benefits clearly in your nanny contract.

Standard Nanny Benefits Overview

Paid Time Off (PTO)

Vacation Days

The nanny industry standard is 5 to 10 paid vacation days per year. Many families start at 5 days for the first year and increase to 10 days after two years of employment. Define in your contract whether vacation days accrue monthly or are front-loaded at the start of each year, and whether unused days carry over or are forfeited.

Sick Leave

Many states and municipalities mandate paid sick leave for household employees. Even in jurisdictions without a mandate, providing 5 to 7 paid sick days per year is standard practice. This protects your children from exposure to illness and provides your nanny with income stability when they cannot work.

Paid Holidays

Most nanny positions include 6 to 10 paid holidays per year. Common paid holidays include New Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving, the day after Thanksgiving, Christmas Eve, Christmas Day, and one or two floating holidays. If your nanny works on a designated holiday, the standard practice is to pay time-and-a-half or offer a substitute day off.

Guaranteed Hours

Guaranteed hours mean you pay your nanny for the full agreed-upon schedule even if you need fewer hours in a given week. If your nanny is scheduled for 40 hours per week and you take a family vacation for a week, your nanny still receives their full week's pay.

This is the most important non-wage benefit you can offer. Nannies rely on consistent income to pay rent and bills. Without guaranteed hours, your nanny's income fluctuates with your schedule changes, making the position financially unstable and increasing the likelihood they will seek more predictable work.

Health Insurance

Household employers are not required to provide health insurance under federal law (the ACA employer mandate applies only to employers with 50 or more full-time employees). However, offering a monthly health insurance stipend is increasingly common and is a powerful retention tool.

Typical approaches include:

• Monthly stipend: $200 to $500 per month toward a marketplace or private insurance plan
• Reimbursement arrangement: Reimburse documented insurance premiums through an Individual Coverage Health Reimbursement Arrangement (ICHRA)
• Full premium coverage: Less common but offered by some high-paying families, especially for experienced or specialized nannies

Tax note: Health insurance stipends paid as additional cash compensation are taxable income. An ICHRA allows tax-free reimbursement when structured properly. Consult with your tax professional about the best approach. See our nanny tax guide for more on how benefits affect your tax obligations.

Year-End Bonus

A year-end bonus of one to two weeks' gross pay is standard in the nanny industry. This is typically given in December and is separate from any holiday gifts. The bonus is taxable income and must be included in your nanny's W-2. Some families offer a flat bonus ($500 to $1,500) or tie the bonus to performance or tenure.

Mileage and Transportation

If your nanny uses their personal vehicle for work-related driving (school pickups, activities, errands), you should reimburse mileage at the IRS standard rate of $0.725 per mile for 2026. Mileage reimbursement at or below the IRS rate is not taxable income. Some families provide a gas card or monthly transportation allowance instead.

Professional Development

Investing in your nanny's professional growth benefits your family directly. Common professional development benefits include:

• Paid CPR and First Aid certification (and renewals)
• Annual professional development stipend ($200 to $500) for courses, workshops, or conferences
• Paid time off for training

Structuring Benefits by Tenure

Many families use a tiered approach that increases benefits over time to reward loyalty:

Review benefits annually during performance reviews and adjust as appropriate when giving raises.