Dependent Care Account (DCA)
Save money on payroll taxes while providing your employees with a valuable benefit offering they need.
To be able to work every day, many of your employees likely rely on day care or home aide services to care for their loved ones. Help lessen the financial burden of these services, while realizing major tax savings, when you offer your employees use of a dependent care account (DCA).
By allowing employees to set aside pre-tax dollars, these accounts can help pay for costs associated with the daily care of an eligible child, elderly parent, or other dependents that are unable to care for themselves. And since the money is deducted pre-tax, the taxable income of those who participate is reduced -- providing you with a lessened payroll, and a decrease in taxes paid.
What expenses are eligible?
Eligible expenses include:
- Day care
- Before and after school programs
- Babysitting in your home by someone who is not your dependent
- Care for a dependent adult (eldercare)
- Nanny, nursery school, or pre-school expenses
DCAs can NOT be used for the following expenses:
- Expenses not directly related to custodial care, such as administrative fees, supply fees, food/meals, entertainment, etc.
- Education tuition for grades Kindergarten and above
- Overnight camp
- Custodial care that is not for the express purpose of allowing the employee to work (e.g., babysitting while the employee goes out to dinner)
How does it work?
The DCA is an add-on to the healthcare flexible spending account plan. It allows employees to make payroll deductions and then use those funds to pay for child care (up to age 13) or adult care services while the employee is working. The maximum annual election per the IRS is $5,000. The employee’s election amount is only available as deductions occur -- allowing for minimal risk to the employer.
Employees will elect a total dollar amount to contribute to their account during the open enrollment period. The election amount will be deducted in equal increments from each of paycheck on a pre-tax basis and deposited into their DCA account.
Multiple, easy-to-use options for access and management of your employees’ DCA funds.
Quickly and conveniently pay for eligible expenses, without the hassle of filing a manual claim. With the MyAmeriflex Card, participants can access their DCA funds instantly when they swipe their card at eligible merchants. Should the vendor not accept Mastercard, a one time “express” claim form can be completed, and the claim will automatically process the funds each pay period.
Convenience and award winning customer-service – right at their fingertips! With the MyAmeriflex Mobile App, participants can access their account from anywhere. Check balances, file a claim, or check on the status of a reimbursement, all from their mobile phone.
Account management just got easier. By logging into MyAmeriflex, participants can gain access to resources aimed at helping them maximize the value of their DCA plan. In addition to managing all aspects of their account, they can also access interactive how-to’s, spending calculators, and more.