Learn about the Dependent Care Assistance Program (DCAP)

If you’re an active state employee, you can save money by paying for qualifying dependent care expenses on a pre-tax basis.

The Dependent Care Assistance Program (DCAP) is for daycare and before and after school care expenses. It allows you to pay for qualified dependent care expenses on a pre-tax basis for a child under age 13 and/or an adult dependent. By enrolling in the DCAP, you will have some of your paycheck deducted to contribute to your DCAP account.

For example, if you were a taxpayer in a 28% income tax bracket, contributing $5,000 to the DCAP would save you an estimated $1,400 in federal and state taxes.

With DCAP, you can pay for expenses and then submit a claim form (with a provider’s signature) to receive a reimbursement by check or direct deposit, depending on which option you choose.

Eligible & ineligible expenses

Eligible DCAP expenses are:

  • Care for dependent children up to 13th birthday
  • A person of any age who can be claimed as a dependent on federal income tax return and who is mentally or physically incapable of self-care (includes elder care)
  • Child care at a daycare center, day camp, nursery school or by a private sitter
  • Before and after-school care
  • Housekeeper caring for an eligible dependent
  • Au Pair placement fees and weekly stipend

Ineligible DCAP expenses are:

  • Education or tuition fees (kindergarten and beyond)
  • Late payment fees
  • Overnight camps
  • Agency fees for finding a care provider
  • Sports lessons, field trips, clothing
  • Mileage reimbursement to/from the care provider

Eligibility & monthly fee

If you’re an active state employee who is eligible for GIC health benefits, you’re eligible to enroll in the HCSA. You must also work at least 18.75 hours in a 37.5-hour work week or 20 hours in a 40-hour work week (half-time) to be eligible.

For the 2018 fiscal year, the monthly administrative fee for HCSA alone, DCAP alone, or HCSA and DCAP combined, is $2.50 on a pre-tax basis.

Open enrollment

Open enrollment for Flexible Spending Account benefits will take place April 4 - May 2, 2018 for fiscal year benefits effective July 1, 2018. In a tax year, you can elect to contribute a DCAP contribution of up to $2,500 if married and filing separately, or $5,000 per household. For online re-enrollment instructions, refer to the FSA forms page.

New state employees and employees who have a qualifying status change during the year may enroll for partial-year benefits. For DCAP, coverage begins on the first day of employment.

Qualifying status changes include:

  • Child reaching age 13
  • Starting or stopping school that changes the hours of care needed
  • Changing from half day to full day of school
  • Change in provider (not a relative)
  • Change in cost charged by provider (not a relative)
  • Change in residence resulting in change in need for daycare
  • Change in daycare provider/cost

If you are already an enrolled participant who wants to re-enroll, you must re-enroll each open enrollment period online.

Reimbursement

You can file claims for reimbursement (using a DCAP claim form) as you incur qualified expenses. You can also use ASIFlex’s online tool and mobile app to quickly submit claims. As required by the IRS, make sure to keep copies of all HCSA receipts with your tax documents.

Additional Resources

2.5 month grace period

The IRS has a strict “use-it-or-lose-it” rule because of the tax benefits of FSAs. That means if you have any money left in a pre-tax account at your plan’s year end, that money is gone. However, you still have a 2½ month grace period to use your benefits. For the 2018 fiscal year, you have until September 15, 2018 to incur claims and until October 15, 2018 to submit claims for reimbursement.

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