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HSA Administration Company, Clarity Benefit Solutions, Explains How Dependent Care Plans Can be Used to Cover Summer Child Care

HSA administration company, Clarity Benefit Solutions, explains how dependent care plans can be used to help parents cover the cost of child care during the summer.

Summer is an exciting time for families, since the weather is ideal and the kids are out of school. However, this raises the challenge of childcare for working parents. Many parents think the only way to provide childcare during the summer is to use their PTO and pay high out-of-pocket costs for activities and day cares. But dependent care plans allow parents to provide care for their families while they work.

With a dependent care plan, employees set aside pre-tax dollars up to $5,000 to pay for daycare, nannies, summer camp, and other childcare activities. They have three options for employees to pay for care: either take a photo of their receipt and submit a mobile claim for reimbursement, set up direct payments from their Dependent Care Plan accounts to pay providers, or use a Dependent Care Plan-specific debit card to pay for eligible expenses. Although instant claim options like debit cards and direct provider pay are convenient, it is still important to keep all receipts and paperwork for tax filing purposes.

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Employers should take the time to properly educate their employees so they can make the most of this benefit. They should clearly communicate what type of care is eligible. For example, tuition for a day camp is a qualifying cost, but not a sleepaway camp. Also, there may restrictions on the age of the children for which care costs can be covered. Employers should be sure to clearly communicate all rules and restrictions.

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Dependent Care Plans for child care can also benefit the employer. Employees take fewer unplanned PTO days when they can secure reliable care for their children. This effectively increases employee productivity. Also, when an employer offers a program like this, it shows their employees that they care about their concerns and priorities. That makes employers happier and more engaged with the company.

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