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
- 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.