DCAP Frequently Asked Questions
- How does the plan work?
- What happens after I’ve enrolled?
- Who qualifies as a dependent?
- Who qualifies as a provider?
- What expenses are eligible for reimbursement?
- How do I request a reimbursement?
- Where do I get the reimbursement claim form?
- How much will my monthly reimbursement be and when will I receive a check?
- When is the money deducted from my payroll?
- If I overestimate my monthly payroll deduction, will I be refunded excess money in my account at the end of the benefit year?
- What is the most I can have excluded from my income using the Dependent Care Assistance Plan in a calendar year?
- If I Enroll in the DCAP, does this eliminate my ability to take the IRS Child/Dependent Tax Credit?
- Will this program give me a bigger tax break than the federal tax credit?
- What should I know about completing the Dependent Care Assistance Plan claim form?
How does the plan work?
When you are enrolled in the Dependent Care Assistance Plan (DCAP), money is deducted from your check each month. This deduction reduces your taxable income. A DCAP reimbursement account is established in your name. After you receive a bill or a receipt, statement or billing for your dependent daycare services, you may request reimbursement from your account. The care provider’s signature must either be present on the claim form or on an attached invoice; or original backup must be provided if no provider signature is available. You will receive a check for your monthly expenses or the amount in your account, whichever is less.
What happens after I've enrolled?
Once enrolled, half of your monthly contribution amount is deducted pre-tax, from each of two paychecks. The DCAP must receive a full month’s contribution prior to allowing a reimbursement. Once your full month’s contribution has been received, the DCAP verifies your monthly contribution and posts it to your account the first week of the following month. These contributions are then available in time for a mid-month reimbursement to be issued (approximately the 15th of the month following the month deducted from your gross pay), provided sufficient claim forms are received by the plan on or before the 5th of the month for eligible day care expenses you have already incurred.
For example: Payroll deducted from your July paychecks would be credited to your account the first week of August and reimbursed mid- August provided sufficient claims are received by August 5.
Who qualifies as a dependent?
Qualifying dependents are considered to be:
- your child who was under age 13 when the care was provided and for whom you can claim a federal tax dependent exemption; or
- your spouse or other individual who relies upon you for more than half of their financial support, is mentally or physically unable to care for themselves, and spends at least eight hours per day in your home.
IRS Publication 503 (Child and Dependent Care Expenses) also explains the exception to the exemption rule for children of divorced or separated parents.
Who qualifies as a provider?
Daycare services can be provided inside or outside your home and do not necessarily have to be provided by a licensed daycare facility. Care cannot be provided by a dependent under the age of 19. A more detailed description can be found in IRS Publication 503 and the Optional Benefits Information Booklet.
What expenses are eligible for reimbursement?
The IRS considers dependent care expenses eligible for reimbursement when they are for qualifying care of eligible dependents and the care allows an employee and their spouse (if married) to work, look for work or attend school full-time.
How do I request a reimbursement?
- Provider’s name, address and Tax Identification Number (TIN) or Social Security Number (SSN). The TIN or SSN is especially important because you will have to provide the information when you file your tax return. If you don’t, the amount you were reimbursed for that provider’s services will be taxable.
- Name of the dependent who received the care and his or her relationship to you
- Period covered and charges
*The Request for Reimbursement form has a section which can be used in place of a separate invoice.
Claims over $25 will be reimbursed up to the amount of your request. If there isn’t enough money in your account to pay the full amount, you’ll be reimbursed up to your account balance. The remainder will be paid later, after there is a sufficient balance. If you submit a claim for $25 or less, you will be reimbursed only after your accumulated claims exceed $25. Final claims submitted after the end of the benefit year will be reimbursed, regardless of the amount, up to the balance in your account.
Where do I get the reimbursement claim form?
Download the DCAP reiumbursement claim form on our claim forms page.
How much will my monthly reimbursement be and when will I receive a check?
The plan will reimburse your claim(s) up to the amount remaining in your account at the time of processing. A reimbursement cannot made for expenses not yet incurred or for expenses in excess of the contributions in your account. Excess claims will be reimbursed once your account balance is sufficient to cover them. The plan will issue reimbursements for less than $25 only at the end of the benefit year. Reimbursements are processed and issued twice a month (approximately mid-month and end-month). If you wish to be reimbursed mid-month, your claim must be received by the 5th. Claims received after the 5th but by the 20th will be reimbursed at the end of the month. Please refer to the claim form for further important details and claims processing instructions.
When is the money deducted from my payroll?
The amount you designate for your monthly Dependent Care Assistance deduction is split in half and deducted from payroll checks issued during the month. Reimbursement checks are issued following the deductions, once a month on the first Thursday.
If I overestimate my monthly payroll deduction, will I be refunded excess money in my account at the end of the benefit year?
No. The DCAP is subject to the “use-it-or-lose-it” rule. Dependent Care Assistance payroll deductions may only be used for dependent care provided during the same benefit year. You have 60 days after the end of a benefit year to file a claim. Excess funds in your account at the end of the benefit year will be forfeited.
What is the most I can have excluded from my income using the Dependent Care Assistance Plan in a calendar year?
The lesser of:
- the total amount of qualified expenses incurred during the year;
- your earned income;
- your spouse’s earned income; or
- $5,000 ($2,500 if married filing separately).
If I Enroll in the DCAP, does this eliminate my ability to take the IRS Child/Dependent Tax Credit?
Expenses over and above the DCAP maximum contribution limits may or may not qualify for the IRS tax credit. This is covered under “Dollar Limit” in IRS Publication 503 and on IRS Form 2441 (Child and Dependent Care Expenses). In general though, this depends upon your number of eligible dependents and the total you and your spouse (if married) contribute through this and other similar plans. Please Note: The IRS does not permit double dipping.
Will this program give me a bigger tax break than the federal tax credit?
This usually varies for each person. You should fill out IRS Form 2441 (Child and Dependent Care Expenses) to see which would benefit you more (use IRS Publication 503 as a guide). The Division of Retirement and Benefits does not give tax advice. It is your responsibility to contact a tax advisor as necessary for your particular situation.
What should I know about completing the Dependent Care Assistance Plan claim form?
If you have more than one bill, file all the month’s bills together. If you have more than one care provider, you may submit more than one claim.
The care provider’s name must be filled in on the claim form each time, but their address and tax ID number only needs to be completed once each benefit year.
The care provider must either sign the claim form or you must attach an invoice, receipt, or statement (backup) from the provider. If the provider’s original signature is present on the claim form, no additional backup is required. If the provider doesn’t sign the claim form, original backup from the provider must be attached which includes the provider’s name, address, tax ID number, the name of your dependent(s), dates care was provided, and the charges. Photocopies or faxes of backup submitted must be signed by the provider.
The reimbursement claim form may be faxed to meet the 5th or 20th cutoff, but if the claim amount exceeds $999.00, the original form must be received before the reimbursement check will be released for mailing.
Web Version revised 7/12