Why Employers Should Offer a Dependent Care FSA

Recent research from the U.S. Department of Agriculture indicates that the average cost of raising a child has increased $31,000 since 1960, while daycare and nursery rates have grown 175% since 1990.

That’s right…this is not your grandparents’—nor your parents’—cost of care.

Putting these numbers further into perspective, the study—which accounted for inflation rates and income growth over time—identified that child care expenses grew by 16% over the course of six decades, far outpacing the rate of growth for housing* and transportation, during the same period of time (5% and 9%, respectively).

A Tax-Friendly Option for Working Families

What measures can an employer take in providing their employees with relief? We’ve previously identified that 67% of companies offer a dependent care flexible spending account (FSA). And for the remaining 33% that may still need some convincing around the pre-tax perk…? Well, those tax-friendly funds have a high value of return in the form of dependable care coverage for working families, whether your employees require eligible care options for their children, or any dependents deemed incapable of caring for themselves.

Reliable care for your employees’ dependents ultimately translates into reduced work absenteeism, meaning more workforce productivity and protection from monetary losses for the business. Furthermore, reliable coverage cuts back on employee turnover. On a similar note, a robust benefits package, including a dependent care FSA, goes a long way in boosting employee morale, which has a direct impact on retention rates

Test Your Dependent Care FSA IQ!

Employers, that sounds great, right? Okay, let’s make it sound even better and let the numbers do the talking—in the form of a quick quiz:

(Hover to reveal answer options!)
(Click on the boxes to reveal the answer options!)


U.S. businesses lose over ______ annually due to missed employee workdays attributed to child care breakdowns.

A) 4 million
B) $40 million
C) $400 million
D) $4 billion


Access to reliable child care can reduce employee turnover by _____.

A) 20%
B) 40%
C) 60%
D) 80%

Okay, we agree—those were some pretty challenging questions. Let’s step back from the broader dependent care benefits and mix in some of the basics to help your score:


A dependent under the age of ___ would count as a deduction under IRS Code 151(c).

A) 13
B) 14
C) 15
D) 16


Summer and holiday day camps are considered eligible dependent care expenses.

A) True
B) False

Ready to learn how you fared?

Check out our quick read, “Dependent Care FSAs: The Quick Guide to Offering Dependent Care Assistance, Tax Free.” The answers are within!

Download Here
*Housing remains an overall higher expense—child care is the third-largest expense in the family budget, behind food and housing, according to the U.S. Department of Agriculture.
By |2019-11-04T09:21:58-05:00October 25th, 2019|DCAPs, Employer Posts|
Disclaimer: ConnectYourCare does not provide tax or legal advice. This information is not intended and should not be taken as tax or legal advice. Any tax or legal information in this notice is merely a summary of ConnectYourCare’s understanding and interpretation of some of the current tax regulations and is not exhaustive. You should consult your tax advisor or legal counsel for advice and information concerning your particular situation before making any decisions.

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