BASE^® Blog

For so many, the cost of putting children in daycare, nursery school, or care for an aging parent can be a significant expense.  But employers can help by providing the BASE® Dependent Care Assistance Plan (DCAP) to help employees pay for their eligible child and dependent care expenses.  Employers offering this type of benefit are allowing employees to be reimbursed with tax-free dollars for eligible dependent care expenses so that the employee and his or her spouse may work.

The BASE® DCAP allows employees to use tax-free dollars to pay for their employment-related dependent care expenses.  No matter the dependent care service, children, disabled spouse, or legal dependents, the BASE® DCAP provides additional financial assistance to take care of dependents (children, disabled spouse, or legal dependents), tax-free. 

What are eligible expenses? 

In general, expenses that are in connection to keeping the participants gainfully employed, such as…

• Before and after school programs
• Daycare
• Adult and elderly care programs

What are ineligible expenses? 

In general, expenses that have nothing to do staying gainfully employed, such as...

• Schooling for a child in kindergarten and above
• Babysitter when the participants want to go to out for dinner and to the movies on a Friday night
• Payment for care when the participant is not legally responsible for the child or adult requiring care

Even though the BASE® DCAP is considered an employer-provided plan, the pre-tax contribution from the employees not only reduces the employee’s payroll taxes, it also reduces the employer’s share of payroll taxes resulting in a financial benefit for the employer too.  The employees can continue to work, establish funds, and pay for their dependent care costs.  With the funds being transferred on a pre-tax basis, employees save on federal, state, Social Security, and Medicare taxes, thus the employees will also see an increase in their take-home pay. 

The BASE® DCAP helps the employer enhance their benefits package by helping make dependent care more affordable for their employees.  The addition of this benefit can help recruitment and retention of employees.  Click here to watch a short video and learn more about the BASE® DCAP or call 888.386.9680.

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With the continual rise in health care costs, employers of all sizes, are looking for ways to maximize the business’ tax savings and helping their employees save on their health care expenses.  When it comes to building a health benefits package, there is no one-size-fits-all.  Employees want a simple, flexible way to help pay for qualified health care expenses, without having to always be enrolled in the employer’s traditional group health plan. 

The BASE® Excepted Benefit Health Reimbursement Arrangement (EBHRA) allows employers of all sizes, who offer a group health plan, to reimburse their employees up to an additional $1,800 for premiums paid towards excepted benefits not included in the employer-sponsored group health plan and other qualified out-of-pocket health care expenses.  This HRA is for employees that have been offered the employer-sponsored group health plan, however they are not required to enroll in the plan to participate in the EBHRA. 

How does it work?  Check out the example below!

David is the CEO of an Engineering Firm and has 18 employees, with 15 enrolled in the group health plan.  David wants to find more ways to maximize his business’ tax savings, while also expanding benefit options to help retain and recruit top talent in the engineering industry.  David calls BASE® and enrolls in the EBHRA.  Regardless of the state of enrollment in the group health plan, David offers all 18 of his employees the option to enroll in the EBHRA with the same terms and conditions.  David decides to provide each of his employees with an additional $1,800 to put towards excepted benefits for the year, which amounts to $150 per month. 

The EBHRA is another way for employers to maximize savings and tax benefits with all reimbursements being 100% deductible as a business expense and is a great option for expanding benefits when group health insurance is offered.  The additional money helps employees pay for those excepted benefits such as COBRA, dental, vision, short-term medical plans, and other qualifying out-of-pocket health care expenses with reimbursements as nontaxable income to the employee. 

For more information on the BASE® Excepted Benefit HRA, call 888.386.9690 or visit the www.BASEonline.com.

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