Childcare and eldercare expenses can significantly strain family budgets. The Dependent Care Assistance Program (DCAP) offers a valuable solution, enabling eligible employees to allocate pre-tax funds from their paychecks to cover these essential costs. This guide, brought to you by carcodereader.store, your automotive and employee benefit resource, will provide a detailed overview of the DCAP benefit, helping you understand its eligibility, advantages, enrollment process, and utilization.
Who is Eligible for DCAP?
The DCAP benefit is exclusively available to PEBB (Public Employees Benefits Board) benefits-eligible employees. Eligibility extends to individuals working within:
- State agencies
- Institutions of higher education
- Community and technical colleges
It’s important to note that your choice of medical plan does not affect your DCAP eligibility, and you can enroll in DCAP concurrently with any medical plan within the same year.
Please be aware: Employees of city, county, port, tribal governments, water districts, hospitals, and similar entities are not eligible for the PEBB DCAP benefit.
How DCAP Reduces Your Expenses
Dependent care can represent a substantial financial burden for families. DCAP is designed to ease this burden by allowing you to set aside pre-tax funds to pay for qualifying dependent care expenses. This program is beneficial when you, and your spouse or state-registered domestic partner, are working, attending school full-time, or actively seeking employment.
Eligible dependent care expenses under DCAP include:
- Daycare for children
- Preschool
- Babysitting services
- Elder daycare
- Registration fees associated with care
The primary advantage of DCAP lies in its tax-saving mechanism. By electing to contribute to DCAP, you reduce your annual taxable income. Your elected contribution is deducted from each paycheck before taxes are calculated, meaning you avoid paying FICA taxes (7.65%) and federal income tax (which can be up to 37%) on the contributed amount. This pre-tax benefit can lead to significant savings throughout the year.
To qualify for DCAP, a dependent must meet specific criteria:
- For children: Be age 12 or younger and reside with you.
- For older dependents: Be age 13 or older, physically or mentally incapable of self-care, and reside in your household for at least eight hours each day on a regular basis.
To gain further insights into optimizing healthcare costs using FSA and DCAP, consider listening to the Fund Your Future DRS podcast episode: Save on healthcare costs with FSA and DCAP.
DCAP Enrollment: Step-by-Step
Enrolling in DCAP is straightforward, but the process varies slightly depending on your employment and enrollment period.
Important Note: Employees of the University of Washington and Washington State University must enroll via the Workday system.
Enrollment Opportunities
You can enroll in DCAP during several key periods:
- Open Enrollment: This annual period allows all eligible employees to enroll or re-enroll in benefits, including DCAP. Make sure to actively choose DCAP during open enrollment each year, as enrollment does not automatically carry over.
- Initial Benefits Eligibility: When you first become eligible for PEBB benefits as a new employee, you can enroll in DCAP as part of your initial enrollment.
- Special Open Enrollment Events: Certain qualifying life events can trigger a special open enrollment period, allowing you to enroll in or modify your DCAP election. Common qualifying events include birth, adoption, marriage, divorce, or death of a dependent. Any enrollment changes must be directly related to the qualifying event.
Contribution Limits and Amounts
The DCAP program has specific guidelines regarding contribution amounts.
The minimum annual contribution to DCAP is $120.
Maximum annual contribution limits are set by the IRS:
- $5,000 annually: For individuals who are single or married couples filing jointly.
- $2,500 annually: For each married individual filing separately.
To estimate your potential tax savings with DCAP contributions, Navia Benefit Solutions provides a helpful Tax Savings Calculator.
Important Note: Once the plan year commences, you generally cannot alter your elected contribution amount unless you experience a qualifying event that triggers a special open enrollment.
Submitting DCAP Claims for Reimbursement
To receive reimbursement for eligible dependent care expenses, you will need to submit a claim. Ensure the expenses are eligible and incurred during the plan year. You can submit claims through various convenient methods:
- Online Portal: Access your account and submit claims through the Navia Benefit Solutions website.
- Navia Benefits Debit Card: For point-of-service payments at eligible providers.
- Mobile App: Utilize the Navia Benefits mobile app available for both iPhone and Android devices.
- Email: Submit your claim forms to Navia claims.
- Fax: Fax your claim documents to 425-451-7002 or toll-free at 1-866-535-9227.
- Mail: Send claim forms via postal mail to Navia Benefit Solutions, PO Box 53250, Bellevue, WA 98015-3250.
You can start submitting claims for expenses incurred from January 1st onwards each plan year. Reimbursement is limited to the funds available in your DCAP account at the time of claim submission. Importantly, services must have been rendered before you can request reimbursement.
DCAP Funds Deadline and Forfeiture
It is crucial to understand the deadlines associated with DCAP funds. Eligible dependent care expenses must be incurred by December 31st of each plan year.
All claims for reimbursement must be submitted to Navia Benefit Solutions no later than March 31st of the following year. Your DCAP account will automatically close on March 31st unless you re-enroll for the subsequent plan year.
Any funds remaining in your account after March 31st, and if you did not re-enroll for the following year, will be forfeited to the Health Care Authority, as mandated by IRS regulations. Once forfeited, these funds are no longer accessible to you.
DCAP Funds After 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 on March 31st of the following year. The expenses must have allowed you (and your spouse if applicable) to work, attend school full-time, or seek employment. Claims are limited to your remaining account balance. Note that DCAP does not offer continuation coverage rights after employment termination.
For comprehensive details about coverage termination and other DCAP related information, refer to the DCAP Enrollment Guide on Navia’s website. For direct assistance, contact Navia customer service at 1-800-669-3539 or via email.
This guide provides a comprehensive overview of the Dependent Care Assistance Program. By understanding and utilizing DCAP effectively, eligible employees can achieve significant savings on dependent care expenses, enhancing their financial well-being.
