With the support of the American Business Coalition, Corporate Voices has been working with key members of both House and Senate to increase the contribution limit on Dependent Care Flexible Spending Accounts (DCFSA) to $7,500. The limit on DCFSAs has remained at $5,000 since 1986. If the limit were to be raised to $7,500, the incremental cost savings to an employer would be $191.25 per employee , which results in a total of $573.75 per employee. If you have a workforce of 20,000 and with a low take-up of six-percent (1200 employees) and everyone takes the full $7,500 – an employer would save $688,500 in payroll taxes. If an employer could increase DCFSA utilization to ten-percent, an employer could save over $1M.
Key Legislation
- Child and Dependent Care FSA Enhancement Act (S. 435)
Sponsor: Sen. Richard Burr (R-NC)
This bill will amend the Internal Revenue Code to increase to $7,500 the amount of employer-provided dependent care assistance that an employee may exclude from gross income. Allows an annual inflation adjustment to such increased amount after 2011.
- Right Start Child Care and Education Act of 2011 (S. 160 & H.R. 1728)
Sponsors: Sen. Barbara Boxer (D-CA) & Rep. C.A. "Dutch" Ruppersberger (D-MD2)
This bill will amend the Internal Revenue Code of 1986 to increase the credit for employers establishing workplace child care facilities, to increase the child care credit to encourage greater use of quality child care services, to provide incentives for students to earn child care-related degrees and to work in child care facilities, and to increase the exclusion for employer-provided dependent care assistance.
- Expanding Dependent and Child Care Act of 2011 (H.R. 2481)
Sponsor: Rep. John Yarumth (D-KY3)
This bill will amend the Internal Revenue Code to increase to $7,500 the amount of employer-provided dependent care assistance that an employee may exclude from gross income. Allows an annual inflation adjustment to such increased amount after 2012.