Flexible Spending Plan For Child-Care

roses25

I have a question for those of you that are familiar with using a flexible spending account to pay childcare.

This was my first time using a flexible spending plan and our plan goes from September 1st until August 31st. I tried to be very careful to plan so I didn't take out more than I'd use for childcare because if you don't use the money then you loose it. Currently I have about $750 left to use by August 31st. I can probably use about $500 of it during August. However, I'd still have about $250 that I'd loose if I don't claim it. Do you think I could pre-pay my babysitter in order to still be able to claim that $250? I would for sure use that $250 in the year of 2012 (probably right away in September). I'm just trying to figure out a workable way not to loose my money that has been deducted from my paycheck for the purpose of childcare. $250 would get me about 90 hours of childcare and I really don't care to use that this summer.

Carolyn

Shanny

Did I read that right??? $250 will get you 90 hours worth of child care? So you pay less than $3/hr for babysitting? Wow, how's that for a benefit of rural living!
I was going to suggest maybe giving it to your sitter as a bonus - especially with the new baby coming and her responsibilities obviously increasing. Just a thought. I'm still in shock!

michgirl

I live in the middle of NOWHERE, and my state licensed day care charges $2.50 per hour per kid. Some of these post talking about daycare boggles my mind! ON the flip side if you make 12 to 15 dollars an hour here you make "GOOD MONEY"! LOL

Flowergirl

Totally not to do with the original question, but $20 a day/$100 a week is also normal childcare cost here for one child.... If it was any more, there'd be no reason to work. That's how low the "middle class" wages are in this area.

I used to (full-time) nanny newborn triplets and occasionally their 3 yr old brother also for $10 an hour

roses25

Yes, you read that correct. I can't give it to her as a bonus as she's increasing my rates when the baby comes including the rate for Aiden. I've tried to explain to her that childcare doesn't get more expensive as the child gets older, it gets cheaper. I've also explained that she wants to charge more than everyone else in town charges. Due to this I'm sending Aiden to another mom that homeschools her kids 3 days a week and only to our current babysitter 2 days a week. I want Aiden to have some other kids to play with that are around his same age and also get in on some preschool. So that's another reason for sending him to this mom. The baby will go to our current babysitter 5 days a week.

There aren't many childcare options here, but other people that provide childcare and the one day-care in town charges anywhere from $2.00-$2.50 per hour for each child. Plus there's a discount for multiple children. It also includes food for the child while at day-care, and I provide the food for Aiden. So I pay quite a bit more than having someone else provide childcare. Child-care's cheap here. However, for any special activites for a child you end up paying in gas and time traveling. I miss the city, but I've got it good living in this rural area because of the small town atmosphere, they pay teachers well here (including that they pay full-retirement and health insurance), and I've got a small case-load of students. On the other hand Aiden doesn't have any preschool options other than preschool at home.

Carolyn

blkbrd3

Yes it's possible to prepay. I don't think you should share the fact that you're prepaying with the plan administrator though. But since you are using the funds for childcare and you have actually given the funds to your childcare provider, you should be just fine.

Your son is beautiful by the way.

Kari

I would try to pre-pay. I never have any leftover because the max we can take out is $5,000 and there are no daycares that cheap for even one child! But I did work out a cost, and with two kids in daycare (both getting a 10% discount for being a "multiple sibling"), I pay about $3.20 an hour.

Shaeley Mae

My response would be "no", you can't prepay ..... but that's only because I've had to submit tuition statements for reimbursement. If L's preschool gave me an advanced tuition statement (a statement in August, for September/October's fees), I think that would be a pretty glaring problem (as far as date cut offs are concerned). That said .... I could be totally wrong.
Perhaps you can call your benefits administrator for clarification and/or ideas.

Or maybe you can find a super fun day camp for him for a week or two this summer. That might qualify ....?

Kari

Day camps do qualify. You can ask your sitter to bill you in advance and doctor the dates so you don't lose money. If you call they won't allow pre-paying and they'll be put on alert that you're trying to spend it all quickly. Another option is to put Aiden in daycare and have some solo time. I do this and do my grocery shopping, errands, appointments, baking, lawn mowing, house cleaning, etc. So that when I do have the kids, I can focus on them more.

Zen

I never realized that flex pay could be used for child care! I'm usually so up on insurance protocols that I don't know how I missed this one. But you can be sure I'll be reading more carefully duing the next open enrollment -- thank you Carolyn!

Given what you've said, I'd ask the sitter about prepaying and go from there. She might be very happy to have the funds early.

As to rates for childcare, I only pay hourly for occasional sitters. For weekly childcare, it's a flat rate. $100 when Shiloh was in a home daycare, and $125 now for the preschool. These rates are low for our area and economy (about $50 less than the norm). It's a long way from having a nanny!

Shaeley Mae

Zen wrote:

I never realized that flex pay could be used for child care! I'm usually so up on insurance protocols that I don't know how I missed this one. But you can be sure I'll be reading more carefully duing the next open enrollment -- thank you Carolyn!

It's part of the FSA options (if your company offers them).
These are the max amounts per year:
Medical care: $5000
Dependent care: $5000

I take the full $5000 dependent care option each year. And FYI, it CANNOT be claimed again on your tax returms (but it's still much better than simply paying all of your child care "after taxes" and then claiming it your tax return).
I also take $500 for medical care each year ... just enough to cover co-pays, misc dental, and perscription sunglasses (every other year). And interestingly .... one of my employees used it for pull-ups last year.

mel

I should really look into the dependent care option. I've never done it because the preschool director said there is some paperwork, and it seemed fairly complicated (?) so I skipped it since we go through $5000 in less than 3 months. But since I can only claim $3000 per child at tax time, it would still help because we pay about $18k per year (Shanny, that's about $3.75 per hour per child) for preschool.

I would be very wary of pre-paying, especially since it would just put you in the same situation next year. There are some really cool summer day camps that you might be able to find, though!

blkbrd3

Generally paying for your dependent care expenses with pretax dollars is almost always the best option for most taxpayers.