Dependent Care Account (DCA)
Set aside tax-free money for daycare and dependent care services
Overview & Eligibility
Employees who enroll in a dependent care account (DCA) experience tax savings on expenses like daycare, elderly care, summer day camp, preschool, and other services that allow the employee to work full time. Employers also save on FICA and Social Security taxes for every employee who contributes to a DCA.
Employers with a major medical or group health plan can offer a DCA to their employees. Employees are not required to participate in the employer’s health plan in order to enroll in a DCA.
2023 Contribution Limit:
Single – $2,500
Family – $5,000
This is the maximum amount that can be contributed to a DCA each year per the IRS.
The Value for Employees
Employees can use a DCA to pay for qualifying expenses such as daycare, summer day care, elder care, before and after school programs, and pre-school.
Employees will receive an Ameriflex Debit Mastercard® linked to their DCA. They can use their card for eligible purchases everywhere Mastercard® is accepted. Account information can be securely accessed 24/7 online and through the mobile app.
Every dollar an employee contributes to a DCA lowers their taxable income. Let’s say an employee earns $40,000 a year and contributes $4,000 to a DCA. That means only $36,000 of their income gets taxed.
The Value for Employers
Since contributions to DCAs are taken out pre-tax, no payroll taxes are due on the amounts employees contribute to the DCA.
71% of working parents want their employers to offer child care benefits. Helping employees save money on essential services such as daycare and pre-school can aid in employee retention and recruitment.
Healthcare is complicated. The Ameriflex Client Relationship Team is eager to answer questions and provide assistance. Our 85+ Net Promoter Score (NPS) far exceeds the healthcare average.