More Flexible Rules Apply to DCAP Contribution Changes

Planning for childcare and summer camp expenses is especially challenging right now for families across the country, amid uncertainty about how the COVID-19 pandemic will play out in the coming months and affect those programs.

To make it easier for families to adjust to changing circumstances, the IRS rules regarding mid-year adjustments to contributions to the Dependent Care Assistance Program (DCAP) have been loosened for the next few months. 

A model DCAP Summary of Material Modification (SMM) and model Plan Document amendment will be posted to cooperative.com by July 1, 2020, that can be downloaded and distributed to DCAP plan participants.

Did you know?
Changes to contributions are always allowed for qualified life events. A change in the cost of childcare (an increase or decrease) is one reason that a contribution amount can be changed during the year.

Normally the request to change contribution amounts must be submitted within one month of the life event change. However, during the period from May 12 to September 30, 2020, adjustments can be made—ending, reducing or increasing contributions—with no time restriction.

Two important things to note:

• New changes submitted cannot have an effective date prior to May 12, 2020. Multiple changes can be made throughout the year if childcare expenses increase or decrease.

• DCAP contributions that have already been reimbursed, partially or fully, for a claim cannot be retroactively changed.

Participants who wish to change their DCAP contributions should complete a 125 Plan Change Form with your assistance.

If you have questions about how to help an employee make this change, call the Member Contact Center at 866.673.2299 (choose option 1, then 4) or email cba.fsa.hra@nreca.coop.