Workforce Child Care Benefits

collage of happy children in daycare settings

Advancing Workforce Success Through Child Care Benefits

Background

Studies show that offering childcare benefits is not only an excellent recruitment and retention tool, but can also boost employee productivity and morale, reduce absenteeism and turnover, and inspire greater employer loyalty—and businesses qualify for tax benefits.

In addition, the first five years of a child’s life present a critical window for learning and growth and this is exactly the time when quality early childhood education makes a profound difference in a child’s life. Yet this pivotal window of opportunity is missed when quality early childhood education is unavailable or unaffordable.

A variety of options are available to employers who recognize the many benefits of investing in child care for their workforce, while simultaneously strengthening the infrastructure of highly qualified providers already established in the local community.

United Way of North Idaho’s Early Care and Education (ECE) Task Force can guide you through a solution that is right for your business.

Contact our team to develop a plan unique to your location, workforce, and resources:

Keri Cederquist
Community Impact Director
Keri@uwnorthidaho.org | 208-667-8112 x. 108

Mark Tucker
Executive Director
Mark@uwnorthidaho.org | 208-667-8112 x. 102
 


Child Care Scholarship Fund

Employers can set up a scholarship fund to subsidize employee’s child care tuition to an affordable rate (equaling 7% of household take-home pay) relative to the individual employee’s wages and tuition rate. The ECE Task Force provides the templates and step-by-step process to customize this program for your business and has managed over $50,000 in scholarships for working families in North Idaho.

Standard Tuition Subsidy

Employers can determine a set amount of child care tuition they subsidize each month for employees. For example, Shoshone Medical Center reimburses employees 49% of their tuition through a Memorandum of Agreement with a local licensed child care center.

The two options above may be eligible for an employer tax credit up to $150,000 per year if contracted with a qualified child care provider.

Dependent Care Assistance Plans

Employers can set up Dependent Care Assistance Plans (DCAPs) which are flexible spending accounts established under IRS Code Section 129. Employees can set aside up to $5000 per year in pre-tax salary for dependent care assistance. Pre-tax dollars means a tax savings to families of potentially 20%-40% of child care expenses depending on income level and tuition rates. Funds set aside through a flexible savings account reduce employer payroll as they are not subject to FICA or FUTA taxes.


Additional Resources

Summary of employer tax incentives: https://tinyurl.com/2b6z7jnk
Family Friendly Business Toolkit: https://idahoaeyc.org/business-toolkit
Child Care Impacts on Business: https://tinyurl.com/45heb846
Detailed employer-supported child care handbook: https://tinyurl.com/effbcc