Considering that that is a parent you've had previous issues with, I wouldn't worry about it. You have the right to take vacations. They have the right to leave their child with you or go elsewhere. You gave them more than 2 months notice. That's enough time for them to find an alternative arrangement.
As for insurance for an employee, that depends on the policy. You have to ask your insurance provider about that. I will be getting insurance that does cover that because I plan to have a part time helper for outtings, days I need to take off, and just to give the children a female adult figure now and then.
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