Are you a benefits-eligible employee seeking ways to manage your dependent care expenses? The Dependent Care Assistance Program (DCAP) offers a valuable solution for employees in state agencies, higher education institutions, and community or technical colleges. This program allows you to allocate pre-tax funds from your paycheck to cover eligible dependent care costs, significantly reducing your taxable income.
Who is Eligible for DCAP?
Eligibility for the Dependent Care Assistance Program (DCAP) is specifically for PEBB benefits-eligible employees working within:
- State agencies
- Higher education institutions
- Community or technical colleges
It’s important to note that DCAP eligibility is not determined by your medical plan choice. You can enroll in DCAP regardless of your medical plan.
Important Exclusion: Employees of cities, counties, ports, tribal governments, water districts, hospitals, and similar entities are not eligible for DCAP benefits.
How the Dependent Care Assistance Program Benefits You
Dependent care expenses, whether for children or elder care, can be a substantial financial burden for families. The DCAP is designed to alleviate this strain by enabling you to use pre-tax dollars for eligible care expenses. This benefit is available while you, and your spouse or state-registered domestic partner, are working, attending school full-time, or actively seeking employment.
Eligible expenses under DCAP include a range of dependent care services such as:
- Elder day care services
- Babysitting and nanny services
- Day care facilities
- Preschool programs
- Registration fees associated with these care services
By setting aside funds through DCAP, you effectively lower your annual taxable income. Your elected contribution is deducted from each paycheck before taxes are calculated. This pre-tax deduction means you avoid paying FICA taxes (7.65%) and federal income tax (up to 37%, depending on your tax bracket) on the amount you contribute to your DCAP. This can lead to significant tax savings over the year.
To qualify for DCAP, a dependent must meet specific criteria:
- Child Care: Must be age 12 or younger and reside with you.
- Elder or Disabled Dependent Care: Must be age 13 or older, physically or mentally incapable of self-care, and live in your household for at least eight hours per day regularly.
For deeper insights into maximizing healthcare savings with DCAP and Flexible Spending Accounts (FSA), consider listening to the DRS podcast episode, “Fund Your Future DRS podcast episode: Save on healthcare costs with FSA and DCAP”.
Enrollment in the Dependent Care Assistance Program
Important Note for University of Washington and Washington State University Employees: Enrollment for these institutions is managed through Workday.
You can enroll in the Dependent Care Assistance Program during several key periods:
Open Enrollment Period
This is the annual period when all eligible employees can enroll in or make changes to their benefits, including DCAP.
Initial Benefits Eligibility
When you first become eligible for PEBB benefits as a new employee, you can enroll in DCAP at that time.
Special Open Enrollment Events
If you experience a qualifying life event, such as marriage, divorce, birth, adoption, or death in the family, you may be eligible for a special open enrollment period to enroll in or modify your DCAP election. Your enrollment change must be directly related to the qualifying event.
Annual Enrollment is Required: Participation in DCAP is not automatic year-to-year. To continue benefiting from the program, you must actively enroll each plan year during open enrollment.
Contribution Limits for DCAP
The Dependent Care Assistance Program has specific contribution limits to be aware of:
- Minimum Contribution: The lowest amount you can contribute to DCAP is $120 per plan year.
- Maximum Contribution:
- $5,000 annually for single individuals or married couples filing jointly.
- $2,500 annually for each married individual filing separately.
Utilize the Tax Savings Calculator provided by Navia Benefit Solutions to estimate your potential tax savings based on your contribution.
Election Changes: Generally, you cannot alter your elected contribution amount once the plan year has started. Exceptions are made only for qualifying events that trigger a special open enrollment, such as birth, adoption, marriage, or divorce. Any change must be consistent with the qualifying event.
Submitting Claims for Reimbursement
To receive reimbursement for eligible dependent care expenses incurred, you need to submit a claim. Eligible expenses are detailed here. Navia Benefit Solutions provides multiple convenient methods for claim submission:
- Online Portal: Submit claims quickly and easily through the Navia Benefit Solutions website.
- Navia Benefits Debit Card: For direct payment of eligible expenses at participating providers.
- Mobile App: Use the Navia mobile app available for both iPhone and Android devices for on-the-go claim submissions.
- Email: Send your claim documentation to Navia claims.
- Fax: Fax your claims to 425-451-7002 or toll-free at 1-866-535-9227.
- Mail: Send claims via mail to Navia Benefit Solutions, PO Box 53250, Bellevue, WA 98015-3250.
You can begin submitting claims for expenses incurred from January 1st of the plan year onwards. However, reimbursement is limited to the funds currently available in your DCAP account at the time of the claim. Ensure that the services have already been provided before submitting your reimbursement request.
DCAP Fund Usage Deadline
It is crucial to understand the deadlines associated with your DCAP funds:
- Expense Deadline: Eligible dependent care expenses must be incurred by December 31st of each plan year.
- Claim Submission Deadline: All claims for reimbursement must be submitted to Navia Benefit Solutions no later than March 31st of the following year.
Your DCAP account remains active until March 31st of the following year, provided you enroll for the subsequent year.
Fund Forfeiture: If you do not re-enroll for the following year and have a remaining balance in your account after March 31st, these funds will be forfeited to the Health Care Authority according to IRS regulations. Forfeited funds cannot be reclaimed.
What Happens to DCAP Funds Upon Coverage Termination?
If you leave your employment and have unspent DCAP funds, you can still submit claims for eligible expenses incurred up to December 31st of the plan year, through the claims run-out period ending March 31st of the following year. These expenses must be related to enabling you (and your spouse/partner if applicable) to work, look for work, or attend school full-time. Claim reimbursement is capped at your remaining account balance. It is important to note that DCAP does not offer continuation coverage rights beyond this period.
For comprehensive details on coverage termination and related information, consult the DCAP Enrollment Guide on Navia’s website. For further assistance, contact Navia Benefit Solutions directly at 1-800-669-3539 or via email.
