Sample Dependent Care Assistance

Sample_Documents

DISCLAIMER: This is a sample template provided for informational purposes only. It does not constitute legal, tax, or financial advice. Organizations should consult their own legal and tax advisors and tailor this document to reflect their specific business needs, geographies, and applicable laws.

Document Header

Document Title	Dependent Care Assistance Program (DCAP) Policy and Administration Guide for <Company Name>
Document Type	Dependent Care Assistance
Category	Benefits & Wellness
Version	v<Version Number>
Effective Date	<Date>
Last Reviewed	<Date>
Next Scheduled Review	<Date> (e.g., annually each <Month>)
Document Owner	Total Rewards (Benefits) at <Company Name>
Approver(s)	HR Leadership, Finance/Payroll, Legal/Compliance at <Company Name>
Geographic Scope	<Country> with provisions for additional jurisdictions as approved
Related Documents	Flexible Benefits Policy, Leave of Absence Policy, Payroll Handbook, Records Retention Schedule

Purpose and Objectives

The purpose of this document is to define the policy, governance, and administration of the Dependent Care Assistance Program at <Company Name>. This guide is intended for Total Rewards and cross-functional partners who design, implement, and administer benefits. It provides a standard framework that can be adapted for local legal requirements and business needs.

Objectives:

Provide a consistent, compliant approach to dependent care benefits
Support employee wellbeing and productivity by easing dependent care costs
Optimize tax-advantaged opportunities where available under <Country> law
Establish clear roles, processes, controls, and metrics for program oversight
Enable scalable administration through vendor partnerships and technology

Scope and Applicability

This policy applies to the design, governance, and administration of all dependent care assistance benefits provided by <Company Name> to eligible employees.

In Scope

Tax-advantaged Dependent Care Flexible Spending Account (DCFSA) or equivalent under <Country> law
Employer-funded dependent care subsidies, credits, or matching contributions up to <Amount> annually
Administration of eligible dependent care expenses, reimbursement processes, and claims substantiation
Vendor selection, implementation, data integration, and ongoing vendor management
Payroll deductions, employer contributions, and required tax reporting
Nondiscrimination testing and compliance controls as applicable under <Country> law
Policy governance, audits, and reporting

Out of Scope

Medical Flexible Spending Accounts, Health Savings Accounts, or Health Reimbursement Arrangements
Paid parental leave and general leave policies (refer to Leave of Absence Policy)
Backup care marketplaces and emergency care services not funded under this program (unless explicitly included in a plan design variant)
Child tuition programs unrelated to dependent care
Permanent relocation or childcare relocation allowances managed by Mobility/TA

Program Overview

The Dependent Care Assistance Program (DCAP) at <Company Name> is a benefits framework that may include:

A tax-advantaged account (e.g., DCFSA) allowing employees to set aside pre-tax funds up to <Amount> per calendar year for eligible dependent care expenses, subject to <Country> law and any applicable limits
Optional employer contributions or matching funds up to <Amount> per plan year to promote equitable access
Optional direct-pay or reimbursement models via <Vendor Name> for approved providers
A governance model designed to ensure compliance, data privacy, and fiscal integrity

The program is designed to support employees who incur expenses for the care of eligible dependents that enable the employee (and spouse, if applicable) to work, look for work, or attend school.

Guiding Principles

Compliance First: Align to applicable laws and regulations in <Country> and relevant jurisdictions
Equity and Inclusion: Use plan design levers (e.g., employer match tiers by pay band) to improve access for lower-income employees
Simplicity: Provide straightforward rules, simple enrollment, and clear claims processes
Stewardship: Ensure strong financial controls, accurate reporting, and audit readiness
Employee Experience: Offer intuitive tools, timely reimbursements, and clear communications

Governance, Roles, and Responsibilities

The following roles and responsibilities apply to planning, execution, and oversight.

Role	Key Responsibilities	Deliverables	Accountable/Approver
Total Rewards (Benefits)	Plan strategy, design, and policy governance; vendor selection and management; annual calendar and communications oversight	Plan design brief, policy updates, vendor scorecards, annual metrics	Head of Total Rewards
Payroll	Pre-tax deductions setup, employer contribution funding, W-2 or equivalent tax reporting, off-cycle corrections	Payroll configuration documents, funding files, tax reporting confirmation	Payroll Director
Legal/Compliance	Legal review, nondiscrimination testing oversight where applicable, policy approvals, regulatory monitoring	Legal sign-off, compliance memos, testing results	General Counsel or Delegate
Finance/Accounting	Budgeting for employer contributions, accruals, GL mapping, reconciliations, audit support	Accrual schedules, GL mapping, monthly reconciliations	Finance Controller
Benefits Operations	Day-to-day vendor oversight, issue resolution, escalations, QA of data files, employee case management support	SOPs, escalation logs, QA checklists, case trends	Benefits Operations Manager
Information Security	Vendor security due diligence, data transfer controls, incident response coordination	Security assessment, data processing addendum review	CISO or Delegate
Procurement	RFP process, commercial negotiations, contract management, SLAs/penalties	Contract, pricing schedules, SLA exhibits	Procurement Lead
Vendor (<Vendor Name>)	Claims adjudication, substantiation, customer support, reporting, and service levels as contracted	Claims processing, call and email support, monthly performance reports	Vendor Account Manager
Internal Audit	Control testing and audits, remediation tracking	Audit reports, control testing results	Chief Audit Executive

Eligibility

Employee Eligibility

Regular employees scheduled to work at least <Hours> hours per week
Eligibility begins on <Date or Waiting Period> following hire or rehire, unless otherwise specified
Temporary, interns, and contractors are excluded unless explicitly included by <Company Name>

Dependent Eligibility

Eligible dependents must meet requirements under applicable law. Typically includes:

A qualifying child under age <Age> whom the employee claims as a tax dependent and who requires care to enable the employee to work
A spouse or dependent who is physically or mentally incapable of self-care and regularly spends at least eight hours per day in the home
Dependents must have a valid tax identification number for claims and reporting purposes

Special Eligibility Considerations

Dual-employee households at <Company Name> must comply with combined annual limit rules
If an employee’s spouse is a full-time student or incapable of self-care, imputed earned income rules may apply
Eligibility during unpaid leave varies by type of leave; see Leave of Absence Policy and the Payroll section

Plan Design and Parameters

Plan Year and Key Deadlines

Plan year: <Plan Year Period> (e.g., calendar year)
Grace period or carryover: <Grace Period or Carryover Policy> subject to law and plan design
Claims run-out period: <Number of Days> days after plan year end
Enrollment window: <Open Enrollment Dates>

Contribution Limits and Funding

Employee pre-tax contribution minimum: <Amount> per plan year
Employee pre-tax contribution maximum: Up to <Amount> per plan year, not to exceed legal limits in <Country>
Employer contribution or match: <Amount> or up to <Percentage> of employee contribution, capped at <Amount>
Funding frequency: Per pay period, aligned with <Payroll Frequency>
Contribution changes: Permitted only during qualified life events or annual enrollment unless otherwise permitted by law

Eligible Expenses (Examples)

Expenses must be necessary to enable the employee (and spouse, if applicable) to work, look for work, or attend school and meet substantiation standards.

Licensed child-care centers, day nurseries, and preschools
In-home babysitters or nannies with tax identification; payroll tax compliance is the employee’s responsibility
Before- and after-school programs
Daytime summer day camps (not overnight)
Adult day care for dependents incapable of self-care
Application or enrollment fees that are required and directly related to care
Transportation provided by the care facility where integral to care

Ineligible Expenses (Examples)

Education/tuition for children in kindergarten and above (unless specifically permitted under <Country> law)
Overnight camps
Tutoring, music lessons, and enrichment programs not primarily for care
Care provided by a dependent under <Age> or by someone the employee claims as a dependent
Expenses incurred while the employee is not working or looking for work (except brief, legally permitted absences)
Medical care, nursing services, or long-term care facilities
Meals, activity, or incidental fees not integral to care

Claims and Substantiation Rules

Expenses must be incurred during the plan year (and grace period if applicable) while the participant is eligible
Required substantiation includes provider name, tax ID, dates of service, dependent name, and amount
Recurring dependent care may be substantiated via provider certification where permitted
Debit card usage, if offered, must meet auto-substantiation rules; otherwise, documentation is required
Claims must be submitted within the run-out period; unsubstantiated or ineligible claims will be denied

Forfeiture and Use-It-Or-Lose-It

Unused funds after the run-out period (and beyond any grace/carryover allowed) are forfeited as required by plan rules
Forfeitures are used to offset plan administrative costs, employer contributions, or future plan expenses, consistent with plan terms

Nondiscrimination Testing and Compliance

If applicable under <Country> law, plans must pass eligibility, contributions/benefits, and concentration tests to ensure benefits do not favor highly compensated employees
Total Rewards and Legal will coordinate annual testing with <Vendor Name> and remediate failures (e.g., capping HCE contributions or refunding excess amounts)

Tax Treatment and Reporting

Employee contributions are generally pre-tax for eligible expenses up to legal limits; amounts above limits are taxable
Employer contributions count toward the annual limit and may be taxable if limits are exceeded
Annual reporting requirements (e.g., wage statements) will be fulfilled in coordination with Payroll and <Vendor Name>

Enrollment and Changes

Enrollment Methods

Online enrollment through <Benefits Platform Name>
Paper or call-center enrollment only as an accommodation via <Vendor Name>

Timing

New hires: Within <Number> days of eligibility date
Qualified life events: Within <Number> days of the event; changes must be consistent with the event
Annual enrollment: During <Open Enrollment Dates> with elections effective on <Date>

Enrollment Steps (Employee Journey)

Log into <Benefits Platform Name>
Review DCAP overview and contribution calculator
Elect pre-tax contribution amount and confirm dependent eligibility
If applicable, elect employer match acceptance and acknowledge plan terms
Submit enrollment and receive confirmation via email or portal
Check first paycheck after effective date to confirm deduction

Mid-Year Changes

Permitted only for qualifying life events per plan rules and law (e.g., change in provider, cost, or dependent status)
Changes are prospective; prior expenses are not adjusted
Documentation is required for audit trail

Claims Administration

Vendor Operations

<Vendor Name> adjudicates claims under plan rules and applicable law
Service Level Agreements: Average speed to answer <Seconds>, email response within <Hours>, claims turnaround <Business Days>, financial accuracy <Percentage>, claim auto-adjudication rate <Percentage>

Submission Channels

Mobile app or web portal upload
Fax or mail for exceptions (not preferred)
Debit card purchasing if offered

Appeals Process

Initial denial notification provided with reason code and required documentation
Employee may appeal within <Number> days with additional evidence
Vendor reviews and issues a determination within <Number> business days
Final internal escalation to <Company Name> Benefits Operations for plan interpretation questions

Overpayments and Corrections

Overpayments due to ineligible expenses or failed substantiation will be recouped by offsetting future reimbursements or payroll deductions where permitted by law
Year-end corrections for excess contributions will follow the Payroll and Tax Reporting section

Payroll and Accounting

Payroll Setup

Create pre-tax deduction code <Code> with taxability aligned to <Country> rules
Configure per-pay contributions based on annual election and <Payroll Frequency>
Coordinate employer contributions via employer-paid code <Code> and GL mapping

Funding and Reconciliation

Per-pay funding file from <Payroll System> to <Vendor Name> with contribution details
Monthly reconciliation between payroll totals, vendor ledger, bank disbursements, and GL
Discrepancies exceeding <Amount> threshold escalated to Benefits Operations and Finance

Tax Reporting

Report annual dependent care assistance amounts on wage statements (e.g., Box <Number>) as required
Ensure proper taxation of amounts exceeding legal limits
Document year-end processes, deadlines, and audit evidence

Leaves of Absence and Terminations

Unpaid leave: Contributions may be suspended; employee may continue to submit claims for eligible expenses incurred during coverage where allowed
Paid leave: Contributions continue per payroll unless employee requests a permitted change
Termination: Contributions stop; claims allowed for eligible expenses incurred through termination date unless COBRA or continuation applies under <Country> law

Data Privacy and Security

Only minimum necessary data shared with <Vendor Name> via secure file transfer with encryption at rest and in transit
Role-based access to systems and reports; quarterly access reviews
Incident response: Vendor must notify <Company Name> within <Hours> of a suspected incident; joint remediation per data processing addendum
Data retention: Claims and plan records retained <Years> years or per Records Retention Schedule, whichever is longer

Vendor Management

Selection and Contracting

Use a formal RFP including evaluation of fees, capabilities, mobile experience, security posture, and references
Contract must include SLAs, performance guarantees, audit rights, data protection, and termination assistance

Ongoing Governance

Quarterly business reviews covering KPIs, call quality, claims turnaround, complaints, and improvement plans
Annual fee review and benchmarking against market
Corrective action plans for missed SLAs with service credits at <Percentage> of monthly admin fees

Compliance and Risk Management

Annual nondiscrimination testing by <Vendor Name> or <Third-Party> with Legal oversight
Policy changes reviewed by Legal prior to deployment
Controls inventory maintained for key processes (enrollment, payroll funding, claims, reporting)
Internal Audit conducts periodic reviews; findings tracked to remediation
Regulatory monitoring: Legal updates Total Rewards quarterly on relevant changes in <Country> law

Equity and Accessibility

Employer match tiers: For example, pay bands 1–2 receive up to <Percentage> match, bands 3–4 up to <Percentage>, band 5+ up to <Percentage>
Language access: Program materials available in <Languages>; interpreter services via vendor
Accessibility: WCAG-compliant digital tools; alternative channels for employees without smartphone access

Implementation Guidelines

Project Governance

Project sponsor: Head of Total Rewards
Project manager: Benefits Operations or PMO
Workstreams: Plan Design, Legal/Compliance, Payroll/Finance, Vendor, IT/Data, Communications, Change Management

Milestone Plan (Sample)

Plan design decisions finalized by <Date>
Contract executed with <Vendor Name> by <Date>
File specifications signed off by <Date>
Configuration and integration testing completed by <Date>
UAT and parallel payroll testing completed by <Date>
Employee communications launched on <Date>
Go-live on <Date> with hypercare through <Date>

Data Integration and Testing

Eligibility file from <HRIS> to <Vendor Name> including fields: Employee ID, status, coverage start, pay frequency, location, cost center
Payroll results file from <Vendor Name> to <Payroll System> with per-pay deductions and employer contributions
Test scenarios: New hire, termination, leave, rate changes, mid-year event, file failure/recovery, duplicate prevention
Acceptance criteria: 100% match on test cases; zero critical defects

Change Management

Stakeholder map: HRBPs, managers, ERGs, Payroll, Legal, Finance
Training: Quick reference guides, 15-minute webinars, and manager FAQs
Feedback loop: Survey within <Days> post-launch; monthly VOC review

Process and Controls

Enrollment Controls

Eligibility validated before enrollment; exception report for discrepancies
Dual-employee household cap control via system flags and HRIS relationships

Claims Controls

Vendor maintains blacklists for ineligible providers; real-time fraud analytics
Random sample QA of <Percentage> of high-dollar claims per month

Reconciliation Controls

Three-way reconciliation: Vendor ledger, bank disbursements, payroll totals
Threshold alerts when variance exceeds <Percentage> of payroll funding

Reporting Controls

Monthly executive dashboard with KPIs; sign-off by Benefits and Finance
Quarterly legal compliance attestations filed by Legal

Reporting and Metrics

Key performance indicators:

Participation rate by population segment, target <Percentage>
Average annual election amount, target <Amount>
Claims turnaround time, target ≤ <Business Days>
Call answer speed, target ≤ <Seconds>
Net promoter score (NPS) for program, target ≥ <Score>
Nondiscrimination tests: pass/fail status with remediation actions
Forfeitures as % of contributions, target ≤ <Percentage>
Equity metrics: participation and average election by pay band and location

Review and Approval Process

Policy Review Cycle

Annual review each <Month> or upon significant legal change
Interim updates require Legal approval and re-issuance of version number

Approval Workflow

Draft prepared by Total Rewards
Legal and Compliance review
Finance and Payroll review for funding and reporting impacts
Executive approval by HR Leadership
Publication to policy repository and notification to stakeholders

Version Control

Version log maintained within Benefits policy library
Summary of changes section below updated with each revision

Summary of Changes

Version	Date	Author	Summary
v<Number>	<Date>	Total Rewards	Initial release
v<Number>	<Date>	Total Rewards	Updated contribution limits, added grace period option
v<Number>	<Date>	Total Rewards	Revised vendor SLAs and equity match tiers

Risk Register (Program-Level)

Risk	Impact	Likelihood	Mitigation
Nondiscrimination test failure	Refunds to HCEs, employee dissatisfaction	<Low/Med/High>	Monitor participation by pay band, cap HCE elections, employer match targeted to LCEs
Data breach at vendor	Privacy harm, legal penalties	<Low/Med/High>	Strong DPA, SOC reports, encryption, incident drills
Payroll configuration error	Tax reporting issues, funding shortfalls	<Low/Med/High>	Dual-approval changes, parallel testing, reconciliation
High forfeitures	Perceived value loss	<Low/Med/High>	Communication nudges, calculators, mid-year reminders

Frequently Asked Questions (HR/Admin)

What are common eligible expenses to highlight?

Licensed daycare, preschool, before/after school programs, day camps, adult day care

How should we handle dual-employee households?

Configure HRIS relationships and caps; communicate combined limit and instruct employees to coordinate elections

What if an employee exceeds the annual limit?

Payroll coordinates taxable treatment for excess amounts and updates year-end reporting; notify the employee with an explanation of impact

Are receipts always required?

Documentation is required unless auto-substantiation is supported by plan design and vendor capabilities; periodic audits may still request documentation

Legal Notices

Participation and benefits are subject to applicable laws in <Country> and local jurisdictions
<Company Name> reserves the right to amend, suspend, or terminate this program at any time
This document is not a contract of employment or guarantee of future benefits
In the event of a conflict between this document and governing plan documents or law, the latter controls

Glossary

DCAP: Dependent Care Assistance Program
DCFSA: Dependent Care Flexible Spending Account, a pre-tax account for eligible dependent care expenses
Grace Period: Additional time after plan year end to incur expenses, if adopted
Run-Out Period: Time after plan year end to submit claims for expenses already incurred
Nondiscrimination Testing: Compliance tests to ensure benefits do not unduly favor highly compensated employees
HCE: Highly Compensated Employee, as defined under applicable law
Auto-Substantiation: Automated validation of claims based on transaction data
Forfeiture: Unused funds that revert to the plan under use-it-or-lose-it rules
SLA: Service Level Agreement defining vendor performance targets
UAT: User Acceptance Testing prior to go-live

Appendix A: Sample Annual Administration Calendar

Month	Activity
<January>	Year-end reconciliation, tax reporting, update plan limits
<February>	Nondiscrimination testing and remediation planning
<March>	Grace period end reminders and run-out communications
<April–June>	Vendor QBR, SLA review, mid-year engagement campaign
<July–August>	Plan design review, benchmarking, budget for employer match
<September–October>	Open enrollment configuration and UAT; finalize communications
<November–December>	Open enrollment, payroll validation, go-live checks

Appendix B: Sample Provider Verification Checklist

Provider legal name and tax identification number
Address and contact details
License or certification status (where required)
Description of services and operating hours
Statement that services enable the employee to work
Fee schedule and payment methods
Signed W-9 or equivalent tax form where applicable

Communication to Employees and Managers

The Dependent Care Assistance Program at <Company Name> is designed to help you manage the cost of caring for your eligible dependents so you can focus on your work and wellbeing. If you pay for daycare, preschool, before- or after-school programs, day camps, or adult day care that enables you and your spouse (if applicable) to work, this program may help you save money.

Here is how it works. During <Open Enrollment Dates> or when you first become eligible, you choose how much to set aside for the year, up to <Amount>. Your contributions are taken from your paycheck before taxes, which can lower your taxable income. If <Company Name> offers an employer contribution or match, we will add up to <Amount> or <Percentage> of your contribution, subject to the annual limit. You then submit claims to be reimbursed for eligible expenses you incur during the plan year. Many common expenses qualify, including licensed daycare, preschool, before- and after-school care, and daytime summer camps. Expenses like overnight camps, tutoring, and general education do not qualify.

Getting started is simple. Enroll online through <Benefits Platform Name>. A contribution calculator can help you choose an amount that fits your situation. After your election takes effect, you can pay with a benefits debit card if available or submit receipts through the <Vendor Name> website or mobile app. For each claim, make sure you include the provider’s name, tax ID, the dates of care, your dependent’s name, and the amount. Claims are typically processed within <Business Days> business days, and you can opt for direct deposit to get reimbursed faster.

Plan your contributions with care because the account follows a use-it-or-lose-it rule. Funds you do not use by year-end may be forfeited, though some plans allow a short grace period or small carryover. We will send reminders throughout the year so you can track your balance and avoid surprises. If your family situation changes — for example, a change in provider, cost, or dependent status — you may be able to adjust your election within <Number> days of the event. Visit <Benefits Platform Name> or contact <Vendor Name> for help with life event changes.

If you and your spouse both work for <Company Name> or if your spouse has a similar benefit through another employer, remember that you share one combined annual limit under the law. Payroll and our benefits vendor coordinate to help you stay within the limit, but it is important for you to keep track and update your elections if needed. At year-end, we will report the total amount of dependent care assistance on your wage statement as required by law.

Support is available every step of the way. The <Vendor Name> team is available by phone and chat to answer questions about eligible expenses, claims, and reimbursements. You can also find a concise summary of the program, a list of eligible and ineligible expenses, and FAQs on <Company Intranet Link>. If you have a complex situation or questions about your taxes, please consult your personal tax advisor.

We are committed to making this benefit easy to use. Our goal is timely service, clear answers, and practical tools that help you make the most of your Dependent Care Assistance Program. If you have suggestions for how we can improve the program or the digital experience, share your feedback through <Feedback Channel>.

Important reminders:

Enroll by <Enrollment Deadline> to participate for the next plan year
Submit claims within <Number of Days> days after the plan year ends
Keep your receipts and provider details — you may be asked to verify expenses
Check your paystub after enrollment to confirm your contributions are correct

This summary is for general information only. The official plan documents and applicable laws govern the program. <Company Name> may change or end the program at any time.

Document Information:

Document Type: Dependent Care Assistance
Category: Benefits & Wellness
Generated: August 25, 2025
Status: Sample Template
Next Review: <Insert Review Date>

Usage Instructions:

Replace all text in angle brackets < > with your company-specific information
Review all sections for applicability to your organization
Customize content to reflect your company's policies and local regulations
Have legal and HR leadership review before implementation
Update document header with your company's version control information
At bottom of the document you find a short example on how the content could be communicated to end-users, for instance employees.

This sample document is provided for reference only and should be customized to meet your organization's specific needs and local legal requirements.