What Is The Dependent Care Assistance Program?
DCAP is an innovative way for you to save tax dollars while converting part of your salary into tax-free benefits. The advantage is tax savings. Since this program uses pre-tax dollars for reimbursement of dependent care expenses, you reduce your income taxes by reducing your taxable salary.
What Expenses Qualify For DCAP?
- Expenses paid for the care of a dependent under age 13
- Expenses paid for the care of another dependent who is physically or mentally incapable of caring for him/herself, including elderly day care
How Does The Plan Work?
Before the start of each plan year (01/01 – 12/31), you will be able to elect to have some of your upcoming wages paid to the plan. These amounts will be placed in a special account called a “reimbursement account”, which must be set up in order to pay for the benefit you have chosen. The portion of your pay that is deducted is not subject to Federal, State, FICA or SDI taxes; however, if you participate in this plan, you may not be able to claim a Federal Income Tax Child-Care Expense Credit on your tax return. During the course of the plan year, you may submit requests for reimbursement of expenses you have incurred. The administrator of this plan will provide you with forms for submitting reimbursement requests. Requests for reimbursement are processed within 72 hours; a check will be sent to you.
When Do I Make An Election For This Plan?
You must elect to participate in this plan within 30 days of your date of hire, within 30 days of the birth or adoption of a child, or during the annual open enrollment period, normally during the month of November. IRS regulations require that employees participating in this plan must re-elect each calendar year. If you do not re-elect during the normal open enrollment period each year, then you will be required to wait until the next open enrollment period to participate in this program. Election of this program is for the entire calendar year.
May I Change My Elections During The Plan Year?
Generally, you cannot change your election once the plan year has begun, except where IRS regulations allow. If you have a family status change, you may be able to change your election, provided you meet the IRS criteria.
Is There A Fee For This Plan?
Currently, the employee is required to pay an after-tax fee of $3.00 per payperiod. This fee is subject to change each plan year.
What Happens If I Don’t Spend All My Plan Contributions?
Any monies left in your reimbursement account at the end of the plan year will be forfeited. Qualifying expenses that you incur late in the plan year will be paid before any amount is forfeited; however, you must make your request for reimbursement no later than 90 days after the end of the plan year. Because you could forfeit amounts in your account, it is very important that you decide CAREFULLY AND CONSERVATIVELY how much to contribute for the plan year. Contact United Administrative Services at (408) 279-3131 or Benefits Administration at (408) 299-5880 for more information on qualifying family status changes or for forms and brochures.