These plans cover expenses for a child, adult dependent, or elder family member, providing peace of mind for employees. With nearly half the U.S. workforce caring for either a child or dependent adult – or both – a DCA account is an attractive recruitment and retention tool.
Employees may contribute up to $5,000 per family each year. These contributions are pre-tax, allowing the employee to save on their personal taxes while also reducing the company’s payroll tax expenses. A rollover of up to $500 or a three-month grace period is available, allowing greater flexibility. Employees must be W2 and offered major medical.
A dependent child is defined as under the age of 13 who lives with the parent at least half the year. An adult dependent may be a spouse, parent or adult child with a disability. Covered expenses are those that are incurred to care for the dependent while the employee is at work. They include:
- Nursery or preschool tuition
- Before/after-school care
- Summer day camp