FlexOptions Dependent Care Assistance Program (DCAP)

Adds Value, Saves Taxes, Mutually Beneficial.

How Does It Work?

The Dependent Care Assistance Program (DCAP) maximizes tax savings for those employees who pay for qualified child and adult day care, by decreasing payroll taxes through pre-tax contributions. With DCAP, employers can provide a value-added benefit that can increase employee satisfaction, reduce turnover, and minimize absenteeism due to dependent care related issues.

As an employee self-directed plan, employees decide how much of their salary should be set aside before taxes are calculated. The requested amount is then deducted from their paychecks every period and set aside to help subsidize payments for dependent care. Employees can pay for dependent care with the CoPower Benny® prepaid MasterCard® card or they can submit claim forms for reimbursement by check or direct deposit.

Invaluable Rewards.

With a maximum pre-tax contribution of $5,000 for married couples filing jointly, employees are able to pay for the following:

• Child care through Kindergarten
• Before and after school care to the age of 13
• Summer day camps
• Adult daycare for a spouse or dependent

Administration Made Simple.

CoPower provides the claim substantiation and administration required to stay in compliance with federal laws. Employees must submit receipts to CoPower Financial for validation, but the CoPower prepaid MasterCard card eliminates reimbursement waiting periods by paying for qualified expenses instantly!

Stay in Compliance.

Key rules that govern DCAP plans include:

• Use it or lose it—Any DCAP funds that have not been claimed within 90 days after the end of the plan year are forfeited to the employer.

• Mid-year election changes can be made with a qualified change in status, such as the birth or adoption of a child or a change in employment status.

• Continual payment on claims—Claims are paid as funds are available. If a claim is larger than the available funds, CoPower Financial will continue to pay on the claim as funds become available, so there is no need to submit multiple claims.

DCAP—A Win-Win Situation.*

By contributing just $250 per month to a DCAP account, an employee can save almost $1,000 per year in payroll taxes and save their employer $230 per year in FICA taxes!

Without DCAP   With DCAP $5,000 Monthly Salary $5,000 $0 Monthly Pre-tax DCAP Contribution $250 $5,000 Taxable Income $4,750 $1,633 Federal Taxes $1,551 $3,367 Take-home Pay $3,199 $250 After-tax Dependent Care Expenses $0 $3,117 Net Income $3,199

This table is based on a federal tax bracket of 25% and FICA at 7.65%.