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DCAP Offers More Than You Think

The BASE® Dependent Care Assistance Plan, also known as a Dependent Care FSA, is a plan established by an employer that allows employees to set aside money from each paycheck, on a pre-tax basis, to pay for qualifying dependent care.  This money can help for qualifying dependent care expenses such as daycare, preschool, and before and after-school care...

...But did you know that it also helps to pay for elder care?

By the year 2040 (that's only 23 years from now) the percentage of people aged 65 and older will have nearly doubled to 22%, up from 13% in 2010.  Yet, the past few years has seen little growth in the number of employers offering benefits for employers who care for older and disabled relatives (Innovative Employers Enhance Caregiver Benefits). 

In a study by ReACT, a coalition of more than 40 companies and non-profits dedicated to addressing the challenges faced by employee caregivers and reducing the impact on their employers, on Emory University in Atlanta, revealed that 15% of respondents were currently taking care of an adult family member.

"Nearly 60% of those people expressed concern about managing the care of an adult loved one in the next one to three years," explains Audrey Adelson, Emory's manager of work-life.  (Innovative Employers Enhance Caregiver Benefits).

Do you, or your clients, know that by implementing this BASE® 125 Cafeteria Plan into their business, their employees will not have worry about the costs of taking care of their mother, father, or spouse?

Dependent care to many employees or employers equates to daycare, so how can it be used for elder care?  Keep reading!

Who is eligible to use DCAP for elder care?

  • A participant must be at work during the time the eligible dependent receives care
  • Participants must have a spouse, or a dependent parent who is physically or mentally unable to provide for his/her own care

Who is considered an eligible senior dependent for reimbursement?

  • Your spouse, or a dependent parent, who is mentally or physically incapable of caring for himself/herself and who lives with the participant for more than half of the year

What kind of care is eligible for reimbursement?

  • Inside or outside the home by anyone other than the member's spouse
  • In a dependent care facility which meets all applicable state and local regulations
  • By a housekeeper whose services include, in part, providing care for a qualifying individual

No matter what the company, or size, the Dependent Care Assistance Plan is a reality.  The employer is able to offer an enhanced benefits package that can help with recruitment and retention of employees, and financial benefits from the reduction of the employer's share on payroll taxes.  The employee gets the peace of mind they deserve; continuing to work and establishing funds to help pay for the cost of dependent care.  Since these funds are transferred on a pre-tax basis, the employee is able to increase their take-home pay. 

Contact BASE® today to learn more about this and other money saving benefit strategies by visiting our website or calling 1-888-386-9680.

Executive Order Aims to Expand HRA

In dealing with Health Reimbursement Arrangements on a daily basis, BASE® is interested to learn where the proposed expansion of HRAs will lead.  Around since 1954, Health Reimbursement Arrangements have long been a viable option for affordable healthcare.

HRAs have continued to evolve, but the tax-advantaged plan operates on the principle of providing more flexibility and choice regarding employee healthcare when employers establish these account-based arrangements.

According to the White House website:

The order directs the Departments of the Treasury, Labor, and Health and Human Services to consider changes to Health Reimbursement Arrangements (HRAs) so employers can make better use of them for their employees.

  • HRAs are employer-funded accounts that reimburse employees for healthcare expenses, including deductibles and copayments. 
  • The IRS does not count funds contributed to an HRA as taxable income.
  • Expanded HRAs could potentially give American workers greater flexibility and control over how to finance their healthcare needs.

Implementing Change

None of the proposed changes would take effect immediately.  In fact, the Executive Order gives the Secretaries of the Treasury, Labor, and Health and Human Services 120 days just to propose new regulations or revised guidance.  These proposed regulations or revised guidance are just that, simply recommendations to increase the usability of HRAs, to expand employers’ ability to offer the tax-advantaged plan to employees.

The hope is to further simplify current regulations, while making HRAs even more helpful when it comes to covering the cost of healthcare.  In turn, the idea is that HRAs will only further expand the range of health care options.

Moving Forward

The Executive Order focuses on three main areas for improvement for the “near term”.  Meaning, things will remain status quo through the end of the year, due to the time it will take to propose regulations, and also taking into consideration the Secretaries will need to consider and evaluate public comments on the proposals.  

At the end of the day, BASE® is already offering a variety of HRAs to employers of all sizes to assist in financing their healthcare “to the extent permitted by law” and “supported by sound policy”.  We welcome the expansion, and the idea of further simplifying an already great resource for employers and their employees to make healthcare more affordable.

If you aren’t familiar with all of the HRA options currently available, call 1-888-386-9680 to learn how HRAs provide flexibility, choice, and affordability when it comes to healthcare.