What are dependent care assistance programs?

Dependent care assistance programs (DCAPs) can help employees manage their financial obligations with regard to caring for an adult dependent. Under DCAPs, employees may set aside up to $5,000 of their pre-tax salaries into their DCAP accounts to pay for dependent care expenses. These amounts are tax-free but may be used to pay only for eligible dependent care expenses, such as daycare, and only for eligible dependents.

Why do employees need them? Employees who arranged dependent care for their children are now arranging care for their parents or other elderly relatives. In a situation charged with emotional and psychological overtones, adults reverse roles with their parents.

Individuals responding to their elderly relative's demands are in a stress-producing position. Caregivers are juggling the emotional and physical needs of the elderly relative with a career, family responsibilities, or both.

Disruption of work. Employees caring for elderly relatives provide an assortment of services, some of which can take place only during normal working hours. This means the employee must take time off from work, resulting in a loss of pay and a disruption in his or her own work routine.

Attention spans of the caregivers may be reduced while they are at work. They may telephone often to check on the elderly relative's well-being. This practice is particularly costly if the caregiver is supervising an elderly relative out of town or out of state and calling long-distance. Managers begin to view these employees as less reliable or less productive.

Employees providing care to elderly relatives spend much of their care giving time doing housekeeping and providing transportation. Typically, these actions are not reimbursed under most long-term care insurance policies.

Modification of hours. Some employees modify their hours at work (using part-time or flextime alternatives, if available) or take an unpaid leave of absence to accommodate the needs of an elderly relative. In some cases, employees use their sick days to care for an elderly person.

Terminating employment. Quitting their jobs ends up being the solution for some employees. Unfortunately, these options cause the employee to lose income and compromise seniority, retirement and insurance benefits, and perhaps, future promotions or employment.

Reprinted with permission. © CCH